Explain the Industry concept and Market concept of competition, Or, Brand Competition versus Product-type Competition.

Customers with similar needs and wants respond in a similar manner to a marketing offer. These customers form the target market for an organisation. Therefore, any offering in a market that serves the similar need and want is a competition to the firm which is trying to serve these customers. For example, Internet is a competition to news magazines, book publishers, and retail stores.

A firm faces competition from the industry as well as market. The firm needs to identify all forms of competition which is trying to make the most of the opportunities in the market. This can be from the industry as well as markets about which the firm might not be aware of. For example, solar water heaters are threat to manufacturers of electric water heaters. So the firm not only has to study the manufacturers making electric water heaters but also the strategies of solar water heater manufacturers.

Industry concept of competition or Brand Competition –

Industry is the group of organisations that offers products or services that serve the same needs and wants of the target market. These offerings can be similar to the company’s offering, or can be each other’s substitutes.  This concept is also referred as Brand competition wherein various brands with same product types compete against each other in the same market.

The factors to be considered are –

• Industry size and growth gives the marketer an idea of the demand. Information on the sales, profits, costs, number of firms and employees helps a marketer do the analysis on the growth of the industry in recent years. The life cycle of the industry, demand in the market, and industry size help in formulating strong marketing strategies.
• Industry structure is the nature and competition intensity among the firms basis their numbers, their size, and differentiation of the offerings.
• Entry, Mobility and Exit barriers refer to the barriers a firm faces at different stages in the industry. Entry into a retail business is different as compared to an airline business. Major entry barriers are investments, brand image, access to resources like raw-materials, suppliers, distributors, skilled staff, legal or political environment, patents, and licensing. Mobility is the entry of the firm within the segments inside the industry. For example, Samsung electronics entering into Laptop manufacturing. There can be challenges that a company can face from other competitors like manufacturing facility, opening service centres in target markets, skilled staff for presentations, distributor’s agreement, etc. Exit barriers are in the form of legal issues, moral obligations to investors, customers, recovery on investments, government policies, etc. For example, if an automobile manufacturer shuts down its operations, in some countries it is an obligation for that firm to provide the automobile parts for 15 years after shut down.
• Cost structure refers to the costs involved in investment of plant, equipment, manufacturing, distribution, employees, direct labour, etc. The cost structure for an airline industry is different from that of a hotel industry.
• Degree of Vertical integration is the forward or backward integration within the supply chain. For example, a firm can have its own access to raw materials and distribution apart from manufacturing. This offers advantages as there is complete control on various functions
• Marketing strategies in the industry also help a marketer make correct decisions. These are the marketing objectives most relevant to the industry, target market segments (local, international, sub-segments, etc.), and marketing mix variables like product features and characteristics, commonly used terms, price variations, promotion tools used, and channels used.

The industry analysis provides framework for handling various market opportunities and designing a strong marketing strategy.

Market concept of competition/ Product-type competition –

Under the Market concept the perspective of competition goes beyond the industry concept and looks at potential and existing competitors at a broader level.

A competitor to a firm can be any other firm that satisfies the same need and wants of a customer in the target market. For example, a customer who wants to buy a scooter can also be lured by a motorbike manufacturer to fulfill his/her need.

Market concept of competition is also referred to as Product-type competition. Customers can see a need fulfilled from any product available in the market. A smart phone with a camera fulfils a need of a teenager who has a need to buy a basic camera for daily photo shots. Similarly, banks compete with mutual funds, internet is competing with cable and digital television service providers, and railways compete with airlines.

We can say that product-type competition is a competition between brands which offer dissimilar benefits or product-types to customers. A marketing manager has to clearly define the needs and wants of the customers in the market place first. Secondly, the study of various brands which can be offering similar or dissimilar product-types, needs to be done for a successful marketing strategy.

There is competition that a firm faces at the different stages of the Product Life Cycle. The organisation has to change its marketing strategy at every stage of this cycle. To study these in detail please see chapter- New Product development, Product and Product strategies.