Answers to the following questions may indicate the possibility of a market changing significantly in the future.
1. Are industry boundaries clear and static? Are customers and competitors identifiable? Or are industry boundaries blurring and evolving?
2. Do firms compete as “distinct entities” or as families of suppliers and end product firms?
3. Is there competition for managing migration paths?
4. Is competition taking place at product line, business, and corporate levels? Do these levels of competition influence each other?
5. Can there be competition between clusters of firms to influence standards and industry evolution?
Phases of Competition
It is useful to distinguish between different phases in the development of competition.
Anticipating the Future
Increasingly, we find that change and turbulence, rather than stability, characterize many product-markets.
Hamel and Prahalad offer a compelling blueprint for analyzing the forces of change. While the details of their process cannot be captured in a few pages of discussion, the following questions are illustrative of the information needed to anticipate the future.
· What are the influences (discontinuities) present in the product-market that have the potential to profoundly transform market/competitor structure?
· Investigate each discontinuity in substantial depth.
· How will the trend impact customers?
· What is the likely economic impact?
· How is exploiting this trend?
· Who has the most to gain/lose?
· What new product opportunities will be created by this discontinuity?
· How can we learn more about this trend?
Market Size Estimation
Three key measures of market size are: market potential, sales forecast, and market share.
Market Potential
Market potential is the maximum amount of product sales that can be obtained from a defined product-market during a specified time period.
Sales Forecast
The sales forecast indicates the expected sales for a defined product-market during a specified time period.
The Boeing Current Market Outlook is a very complete analysis of demand for commercial airplanes and aviation support services. It is a useful basic forecasting guide for the various companies serving the commercial aviation market.
Market Share
Company sales divided by the total sales of all firms for a specified product-market determines the market share of a particular firm.
Evaluating Market Opportunity
Since a company‘s sales depend, in part, on its marketing plans, forecasts and marketing strategy are closely interrelated.
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