How does the knowledge about market and competitive space help in developing marketing strategy?

Markets and Strategies-

Knowledge about markets and competitive space is essential in guiding business and marketing strategies.First,we look at how markets impact strategy and discuss the importance of thinking outside the competitive box.

Markets and Strategies are Interlinked:

Market changes often require altering business and marketing strategies.Manages who do not understand their markets and how they will change in the future may find their strategies inadequate as buyers value requirements.Many forces are causing the transformation of industries create both market opportunities and threats by altering the nature and scope of products,markets and competitive space.

Thinking Outside the competitive box:

Not surprisingly there is a tendency for executives to think in terms of a stable competitive box around their businesses defined by technology,geography,competitors, and the existing customer base.This frame of reference enables analytically tools to be successfully applied,research to be carried out,and plans to be made.This traditional perspective is logical in stable markets but fails to  address the reality that the real threats as well as exciting opportunities may be present outside.

An Array of Challenges:

Changes in markets are drastically altering opportunities and competitive space and increasing the importance of strategic thinking in these changing markets.Disruptive innovation,commercialization of product designs,creation of new market space and fast changing markets are challenges that underline the need to identify changes in the market and diagnose the strategic implications of the changes.

Disruptive Innovation:

These innovations provide simpler and less costly ways to match the value requirements offered by the products of incumbent firms serving the market.Examples of disruptive innovations and new business models are illustrated by Alibaba.com on traditional bookstores,digital photography on cameras and film and steel mini mills on integrated mills.

Commoditization Threats:

When modularization occurs products become commodities ,making it difficult to earn anything more than subsistence returns.

For example,when the personal computer market became commoditized the opportunity for profits shifted to microprocessors and operating system software. Commercialization was a key factor for IBM,s management in deciding to move out of the PC market.The business was sold to Lenovo,the leading Chinese PC Company.

Creating New Market Space:

Kim and Mauborgne offer an interesting and relevant perspective on how companies can create new market space.These actions require finding and pursuing opportunities to offer potential buyers value in markets and segments that are not being served.The purpose is to target new opportunities where buyers value requirements are not being satisfied by existing products.

Fast Changing Markets:

Increasingly fewer markets are stable and instead many are changing rapidly.Fast changing markets require modifications in management's strategic thinking.Indications of changes are signaled by shifting customer value requirements,new technologies,changes in competitive space and new business models.

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