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MARKETING MANAGEMENT - Marketing Environment

The Competitive Environment - Marketing Environment

   Posted On :  17.06.2018 11:41 pm

The interactive exchange in the marketplace as organizations vie with one another to satisfy customers creates the competitive environment.

The Competitive Environment

The interactive exchange in the marketplace as organizations vie with one another to satisfy customers creates the competitive environment. Marketing decisions by each individual firm influence consumer responses in the marketplace. They also affect the marketing strategies of competitors. As a consequence, decision makers must continually monitor competitors’ marketing activities – their products, channels, prices and promotions.

Structurally, competition can be viewed in the following way.

(i) Monopoly

Few organizations enjoy monopoly positions in the marketplace. In India, Indian Railways is a monopoly firm. Utilities such as electricity, water and cooking gas accept considerable regulation from local authorities. Other firms, such as manufacturers of pharmaceutical products, sometimes achieve temporary monopolies as a result of patents.

(ii) Oligopoly

When competitors are few and each one exercises some influence on market dynamics, it is called oligopoly. Firms in telecom, cement, and steel are examples. Prices and production levels are fixed by formation of cartels or pools.

(iii) Monopolistic competition

When competitors are many and each one has a unique product to offer same needs the competition is termed as monopolistic competition. It is called non-price competition and features competition. Products like toothpastes, shampoos, fairness creams, have number of brands rolled out by companies like HUL, P&G, Dabur, Godrej, CavinKare. They compete within a price range offering a different feature.
Yet another way of looking at competition is by considering the three types of competition.

Generic competition

Every product is in competition with every other product. The income of a consumer is divided into savings, consumption and investment.

Therefore, TV is in competition with products of savings like insurance or savings bonds, investment options like shares of companies, interest payments for housing loan, or consumption products like refrigerator, micro oven, Steel cupboard, scooter and holiday trip.

Form competition

The second type of competition involves products that users can substitute for one another. In the transportation industry, the no-frills, low-cost airliners compete with train and luxury bus services.
A change such as a price increase or an improvement in a product’s capabilities can directly affect demand for substitute products.
Brand competition Direct competition occurs among marketers of similar products, as when an insurance firm competes with other insurance firms. LIC competes with Postal department , Reliance, Birla and others.

Traditional economic analysis views competition as a battle among companies in a single industry or among firms that product substitute goods and services. Marketers must, however, accept the argument that all firms compete for a limited pool of discretionary buying power.
Because the competitive environment often determines the success or failure of a product, marketers must continually assess competitors’ marketing strategies. A firm must carefully monitor new product offerings with technological advances, price reductions, special promotions or other competitive variations, and the firm’s marketing mix may require adjustments to counter these changes.
Every firm’s marketers must develop an effective strategy for dealing with its competitive environment. One company may compete in a broad range of markets in many areas of the world. Another may specialize in particular market segments, such as those determined by customers’ geographic, age or income characteristics. Determining a competitive strategy involves answering three questions:

(1) Should we compete?

The answer to this questions depends on the firm’s resources, objectives and expectations for the market’s profit potential. A firm may decide not to pursue or continue operating a potentially successful venture that does not mesh with its resources, objectives or profit expectations.

(2) If so, in what markets should we compete?

The answer requires marketers to acknowledge their limited resources (sales personnel, advertising budgets, product development capabilities and so on). They must accept responsibility for allocating these resources to the areas of greatest opportunity.

(3) How should we compete?

This requires marketers to make product, pricing, distribution and promotional decisions that give their firm a competitive advantage in the marketplace. Firms can compete on a wide variety of claims, including product quality, price and customer service. For example, a retailer may gain competitive advantage by providing superior customer service, while another retailer competes by providing low prices.
With increased international competition and rapid changes in technology, many firms are using time as a strategic competitive weapon. A     time-based competition strategy seeks to develop and distribute goods and services more quickly than competitors. The flexibility and responsiveness of a time-based strategy enables the firm to improve product quality, reduce costs, respond to competition and expand the variety of its products to cover new market segments and enhance customer satisfaction. 
Tags : MARKETING MANAGEMENT - Marketing Environment
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