CHP 1:
Michael Ndenga
Porters 5 forces
Threat of
new
entrants
Substitutes
threat
Customers
Channels
• These are important as they provide the medium
through which the company offers flow to the
customer. These include
▫ Retailers
▫ Wholesalers
▫ Distributors & dealers
▫ Agents
▫ Franchisees
▫ Multiple stores
• Channel design should done with many factors in
consideration. This will include;
▫ Customer: their number, characteristics, buying habits etc
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Cont…
▫ Product characteristics. This involves;
Perishability
Customisation
After-sales service/technical service
Franchising
▫ Distributor characteristics; their capacity and
influence
▫ Competitor channel choice; do their serve
competitors. If yes our stocks might suffer
▫ Supplier characteristics; this may determine their
ability to invest their own channels and therefore
by-passing the distributors
Customers
Business Competition
Cont…
• Whatever a firm’s objectives in its market the key to
achieving them is competitive advantage
• The 2 main kinds of approaches to achieving
competitive advantage is;
Positioning
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Positioning errors
• Underpositioning:
the brand doesn’t have a lcear identity in the
customer’s mind
• Overpositioning:
buyers have too narrow an image of brand
• Confused positioning:
too many claims made for the brand
• Doubtful positioning:
the positioning may not be credible in the eyes of the
buyer
# positioning variables: size, benefits, user profile,
product uniqueness, price/quality etc
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Competitor analysis
• Who are they?
It is easy to identify existing than potential ones
• What are their goals?
profit, marker share, cash-flow, technological
leadership, service levels
• What strategies are they pursuing?
• What are their strengths and weaknesses?
• How are they likely to respond?
▫ Laid back: they don’t respond
▫ Selective: respond to certain types of attack
▫ Tiger: they react to any attack
▫ Stochastic: impossible to predict their reaction
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Probability of event
High Medium Low
(Utopia) (dreams field)
Effect Low Likely , Unlikely,
Of desirable desirable
event (Things to
watch),
Medium
medium effect
(Danger) (Future crises)
Likely, Unlikely,
High undesirable undesirable