Marketing And Promotion Forces
- Date: 2007-02-02 - Word Count: 343
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Marketing management's job is to attract and build relationships with customers by creating customer value and satisfaction.
However, marketing managers cannot accomplish this task alone. Their success will depend on other actors in the company's microenvironment. Micro environment refers to the specific developments affecting the firm's individual industry: its customers, competitors and suppliers.
One of the most famous models for describing and scanning company's microenvironment is the Porter's five forces model. Michael Porter, the professor from Harvard Business School, studied a number of business organizations and proposed that business-level strategies are the result of five competitive forces in the company's microenvironment. More recently, Porter has examined the impact of the Internet on business level strategy. Web-based technology is influencing industries in both positive and negative ways and understanding this impact is essential for managers to accurately analyze their competitive environments and design appropriate strategic actions.
Porter's forces help determine a company's position vis--Ã --vis competitors, suppliers and customers; thus, it helps firms to scan their microenvironment. Potential new entrants: if barriers to new entry are weak then it will be impossible for companies to maintain monopoly profits. In some industries, such as soft drinks and pharmaceuticals, such barriers are crucial in explaining the high profit margins that have persisted. On the whole, however globalization, deregulation and the Internet are acting to reduce entry barriers in many markets.
Bargaining power of buyers: the drive and ability of customers to reduce prices also has a major effect of the profitability of the industry. Generally, as markets mature, customer pressure puts margin under increasing threat. Over time, as buyers obtain more information about product features and suppliers' costs their leverages increases. When this is combined with high price sensitivity, as it for example in basic chemicals or auto tires, buying power can cause profitability to disappear for all but the lowest cost competitors.
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However, marketing managers cannot accomplish this task alone. Their success will depend on other actors in the company's microenvironment. Micro environment refers to the specific developments affecting the firm's individual industry: its customers, competitors and suppliers.
One of the most famous models for describing and scanning company's microenvironment is the Porter's five forces model. Michael Porter, the professor from Harvard Business School, studied a number of business organizations and proposed that business-level strategies are the result of five competitive forces in the company's microenvironment. More recently, Porter has examined the impact of the Internet on business level strategy. Web-based technology is influencing industries in both positive and negative ways and understanding this impact is essential for managers to accurately analyze their competitive environments and design appropriate strategic actions.
Porter's forces help determine a company's position vis--Ã --vis competitors, suppliers and customers; thus, it helps firms to scan their microenvironment. Potential new entrants: if barriers to new entry are weak then it will be impossible for companies to maintain monopoly profits. In some industries, such as soft drinks and pharmaceuticals, such barriers are crucial in explaining the high profit margins that have persisted. On the whole, however globalization, deregulation and the Internet are acting to reduce entry barriers in many markets.
Bargaining power of buyers: the drive and ability of customers to reduce prices also has a major effect of the profitability of the industry. Generally, as markets mature, customer pressure puts margin under increasing threat. Over time, as buyers obtain more information about product features and suppliers' costs their leverages increases. When this is combined with high price sensitivity, as it for example in basic chemicals or auto tires, buying power can cause profitability to disappear for all but the lowest cost competitors.
Kate Gardens is a custom essay writing expert writer and UK customers support consultant at Customessays.co.uk. Get more details for art essay writing, art dissertation writing and find more tips for biology essays writing.
Related Tags: market, marketing, management, competitor, forces, porter
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