Question

Compose an Analysis on the following company.

(COE)/Company: NIKE

(COS)/Country: Australia

3.0 Global Competition Analysis.

3.1 Discuss Porter model of five competitive forces in your COS (threat of new entrants, buyers’ power, suppliers’ power, threat of substitutes, and degree of rivalry).

3.2 Primary competitor in your COS: Discuss the primary competitor and compare the strengths and weaknesses with your COE. It is better to use a table to compare the strengths and weaknesses of your COE and its primary competitor (3X3 table).

3.3 Secondary competition: Brief discussion of secondary competitors.

4.0 Target market analysis & segmentation.

4.1 Target market analysis (current and potential segments of consumers). Discuss the 2 strengths and 2 weaknesses of the current target market.

4.2 Target market segmentation (discuss 2 segments).

Answer 1

3.0.

Global Competitive analysis (or competitive research) is a field of strategic research that specializes in the collection and review of information about rival firms. It's an essential tactic for finding out what your competitors are doing and what kind of threat they present to your company's success.

The global company—whatever its nationality—tries to control leverage points, from cross-national production scale economies to the foreign competitors’ sources of cash flow. By taking unconventional action, such as lowering prices of an important product or in key markets, the company makes the competitor’s response more expensive and difficult. Its main objective is to improve its own effectiveness while eroding that of its competitors.

3.1.

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. Five Forces analysis is frequently used to identify an industry's structure to determine corporate strategy. Porter's model can be applied to any segment of the economy to understand the level of competition within the industry and enhance a company's long-term profitability. The Five Forces model is named after Harvard Business School professor, Michael E. Porter.

The five models are :

Threat of new entrants. This force determines how easy (or not) it is to enter a particular industry. If an industry is profitable and there are few barriers to enter, rivalry soon intensifies. When more organizations compete for the same market share, profits start to fall. It is essential for existing organizations to create high barriers to enter to deter new entrants. Threat of new entrants is high when:

• Low amount of capital is required to enter a market;
• Existing companies can do little to retaliate;
• Existing firms do not possess patents, trademarks or do not have established brand reputation;
• There is no government regulation;
• Customer switching costs are low (it doesn’t cost a lot of money for a firm to switch to other industries);
• There is low customer loyalty;
• Products are nearly identical;
• Economies of scale can be easily achieved

power of suppliers. Strong bargaining power allows suppliers to sell higher priced or low quality raw materials to their buyers. This directly affects the buying firms’ profits because it has to pay more for materials. Suppliers have strong bargaining power when:

• There are few suppliers but many buyers;
• Suppliers are large and threaten to forward integrate;
• Few substitute raw materials exist;
• Suppliers hold scarce resources;
• Cost of switching raw materials is especially high.

power of buyers. Buyers have the power to demand lower price or higher product quality from industry producers when their bargaining power is strong. Lower price means lower revenues for the producer, while higher quality products usually raise production costs. Both scenarios result in lower profits for producers. Buyers exert strong bargaining power when:

• Buying in large quantities or control many access points to the final customer;
• Only few buyers exist;
• Switching costs to other supplier are low;
• They threaten to backward integrate;
• There are many substitutes;
• Buyers are price sensitive.

Threat of substitutes. This force is especially threatening when buyers can easily find substitute products with attractive prices or better quality and when buyers can switch from one product or service to another with little cost. For example, to switch from coffee to tea doesn’t cost anything, unlike switching from car to bicycle.

Rivalry among existing competitors. This force is the major determinant on how competitive and profitable an industry is. In competitive industry, firms have to compete aggressively for a market share, which results in low profits. Rivalry among competitors is intense when:

• There are many competitors;
• Exit barriers are high;
• Industry of growth is slow or negative;
• Products are not differentiated and can be easily substituted;
• Competitors are of equal size;
• Low customer loyalty.

3.2.

Whistles have an aesthetic fairly similar to COS. Where COS focuses on designing clothing to last beyond the season, Whistles designs are far more trend led. They create stylish, smart clothing that retails at similar prices to COS with shirts priced at around £60-90 and coats at £200-400. Whistles is one of the top competitors for COS because they have a very similar customer. Most are women aged between 30-50.

Again, Jigsaw is a strong competitor for COS due to the similar styles and brand aesthetic. Although Jigsaw used to be far more classic, they have recently created themselves a more contemporary style, appealing to a younger audience. They have also improved their website and brochure by making it more modern and user friendly.

COS needs to be aware of Jigsaw so they don’t start to lose customers to them. The COS website isn’t as user friendly as Jigsaw’s. It’s simplistic design, which although means it is easy to navigate, lacks extra touches such as an efficient quick search option or styling advice. This is where COS could take inspiration to improve their sales.

Strengths and weaknesses are :

Strengths:

Extensive network

International brand

Network capacity

Leading Telecommunications Company in Pakistan.

Strong brand name

Good coverage

Speed

Weaknesses:

Rising prices

Foreign brand

Less known in the culture

Competition

High tax rates

3.3.

Secondary competition is when two or more businesses offer a different high-end or low-end version of your product or service to a similar market.

The following are some examples of secondary competitors. Gucci and Gap, both retail brands, target different markets: a high-end luxury- focused audience versus a practical, middle-class one. Then, there are video streaming providers like Netflix and YouTube: one you pay a subscription fee for premium content, the other lets you stream videos for free, but often at a cost of quality.

It’s quite often the case that when starting a business, it’s filled with a whirlwind of emotions. Yet, you quickly realize there are many boxes that you’ll need to tick in order to set yourself up on the right track: recruiting talented employees, building a successful social media marketing strategy, and so much more.

4.0.

Target market analysis

A target market analysis is an assessment of how your product or service fits into a specific market and where it will gain the most traction with customers. Target market analyses help businesses establish strategies for effective marketing and sales techniques. A company's target market is their core customer base or the demographics of customers most likely to buy their product or service.

A target market analysis provides a high-level perspective of the overall business field and usually outlines opportunities and restraining factors for companies hoping to enter that market. Benefits of a target market analysis include:

• Identifying the most and least valuable markets. Target market analyses help determine which markets are worth pursuing and which are not.
• Developing buyer personas. Often, creating an "ideal" buyer is part of the target market analysis for businesses to identify the specifics of their target demographic accurately.
• Finding gaps in the market to fill. A thorough market analysis might reveal untapped areas of the market that your company, product or service can accommodate.
• Assessing the viability of a product or service. Market testing can be a valuable part of a target market analysis, particularly for a brand new product or service. Feedback from potential customers in your target market can help determine how successful your product will be.
• Finding new markets. With surveys or other research methods, you may find a new market interested in your product.
• Improving business strategy. With the information garnered from the target market analysis, you can create a strong business strategy using data to support your decisions.

Market segmentation

Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations.

Some points in market segmentation:

• Company resources: When resources are restricted, a concentrated strategy may be more effective.
• Product variability: For highly uniform products (such as sugar or steel) an undifferentiated marketing may be more appropriate. For products that can be differentiated, (such as cars) then either a differentiated or concentrated approach is indicated.
• Product life cycle: For new products, one version may be used at the launch stage, but this may be expanded to a more segmented approach over time. As more competitors enter the market, it may be necessary to differentiate.
• Market characteristics: When all buyers have similar tastes or are unwilling to pay a premium for different quality, then undifferentiated marketing is indicated.

4.1.

In order to market your product or service, it is imperative that you tailor your marketing and sales efforts to specifically reach the segment of population that will most likely buy your product or service. It is critical that you first determine or clearly identify your primary market. Your energies and funds then can be spent more efficiently.

Targeting your market is simply defining who your primary customer will be. The market should be measurable, sufficiently large and reachable.

Strengths:

• Strong employee attitudes
• Excellent customer service
• Large market share
• Personal relationships with customers
• Leadership in product innovation
• Highly efficient, low-cost manufacturing
• High integrity

Weaknesses:

• Inadequate definition of customer for product/market development
• Confusing service policies
• Too many levels of reporting in the organizational structure
• Limited product availability
• Lack of involvement from top management in developing a new service
• Lack of quantitative goals

4.2.

Geographic Segmentation

Geographic segmentation divides consumers into segments based on where they live. You can go as deep as you want here, dividing people by nation, state, region, county, city or neighborhood.

Geographic segmentation recognizes that people are influenced by the places they live and work. These differences may be cultural. For example, in China, it is common to give gifts to your visitors. Elsewhere, differences may be traditional or political.

What's interesting about geographic segmentation is that, while it's effective as a market differentiator, its predictive power may be waning, especially for companies that do business internationally. Assuming that geography determines a person's spending power or social class is a false assumption in today's increasingly globalized world.

Psychographic Segmentation

Psychographic segmentation is the hardest segment to analyze because it is tied to two fairly private variables: personality profiles and lifestyle profiles. Psychographic segmentation asks such questions as: Does this consumer live in the moment or does he keep one eye on the future? Is she an extrovert or an introvert? How politically active is he? What are her interests and hobbies?.

Since many of these preferences are not visible, uncovering them requires down-and-dirty market research such as attitudinal surveys and interviews or the use of marketing artificial intelligence – that's big data – to guess people's lifestyles and personalities based on the websites they visit, their Facebook posts and similar information.