Notesale: Turn your study into money

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I
...
Assess the

degree and effects of
competition

III
...
Screen out less
relevant segments

IV
...
Segment the
supply market

V
...
1-1

• What are your objectives?
• How much time do you have?
• What happens if you don’t do it?
• What information do you have?

ITC

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...
Prepare for a

supply market
analysis

II
...
Forecast market
developments

VII
...
Understanding
what drives the
market

VI
...
Assess price
ITC

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...
3-2

Demand and Supply
Factors influencing
demand

 Price
 Available income
 Prices of substitute goods
 Prices of complementary
goods
 Buyers’ preferences and
tastes
 Buyers’ expectations
 The number of buyers

ITC

Factors influencing
supply
 Price
 Prices of inputs
 Technology
 Suppliers’
expectations
 The number of
sellers

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...
3-2b

Demand and Supply (cont’d)
Elasticity in demand…

…and in supply
S1

D1
D2

P1
P2

Q1 Q2

Q3 Quantity

Varying elasticity in
the demand curve…

Q3 Q2 Q1

…and in the supply
curve

D1

S1

Quantity

Bringing demand &
supply together
D1

S1

<1

<1
>1

>1
Quantity

ITC

S2

P1
P2

Quantity

Quantity
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...
3-1

Demand and Supply in the Market – Select a product or

service that your company currently purchases from a
competitive market
...


a) What are the factors that may affect the supply and
demand of this item?
b) What do you think is likely to be the elasticity of the
demand and supply curves?
c) Are there any recent changes that may cause a shift
in the demand and supply curves?
ITC

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...
Likelihood of

new suppliers
entering the market

1
...
Bargaining

power of suppliers
of inputs

Competition
amongst
suppliers

5
...
Availability of

substitute products
or services

ITC

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3-4

• Is it difficult & costly to enter the
market?
(restrictions, high investments, specific
know-how/technology, economies of
scale…)

ITC

STOP

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3-6

Your suppliers’ suppliers
Your supplier’s
supplier
Your supplier’s
supplier

Your
supplier

Your
company

Your supplier’s
supplier

steel

ITC

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...
?)
ITC

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...

Oligopoly: A few suppliers offer identical or similar
products
...

Oligopsony: A few buyers dominate the market
...
3-9

Some possible combinations
SUPPLY
Many
suppliers

DEMAND

ITC

Few suppliers

One supplier

Many
buyers

Perfect
competition

Oligopoly

Monopoly

Few
buyers

Oligopsony

Oligopoly/
oligopsony

Constrained
monopoly

One buyer

Monopsony

Constrained
monopsony

Monopoly/
monopsony

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...
3-11

Action Point

3
...
3-12

1
...
3-13

Action Point

3
...
3-14

Action Point

3
...
3-15

I
...
Assess the

degree and effects of
competition

III
...
Screen out
segments

IV
...
Segment the
supply market

V
...
4-1

• Projection
• Expert opinion
• Supply market testing
• Product-market life
cycle
ITC

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...
Trend:
a)

PAST

c)

b)

FUTURE

2
...
Seasonality

PAST

FUTURE

4
...
4-2a

Action Point

3
...
Trend:

2
...
Seasonality:
4
...
4-2a

Forecasting techniques:
quantitative analysis
Time series analysis
Drawing the “best fit” trend line
Moving straight average
Moving weighted average
Moving exponentially weighted forecasts
One step ahead single exponential forecasting
Trend- and seasonality-adjusted forecasts

Causal methods
Simple linear regression
Multiple linear regression
ITC

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...
4-2d

Quantity, price, etc
...
4-3

Continuous stable

Occasional
Quantity

Quantity
Time

Time

Continuous decreasing

Continuous increasing

Quantity

Quantity
Time

Time

Continuous with
seasonal variations

Continuous fluctuating
Quantity

Quantity
Time

ITC

Time

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4
...
4-4a

Sales
per
unit of
time

Launch
ITC

Growth

Maturity Decline
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4
...
Electric fans

2
...
Mineral water

ITC

M3:U3:3
...
Prepare for a

supply market
analysis

II
...
Forecast market
developments

VII
...
Understanding
what drives the
market

VI
...
Assess price
ITC

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...
5-2

Action Point

3
...
List what you think the relevant market drivers are
...
5-3

I
...
Assess the

degree and effects of
competition

III
...
Screen out
segments

IV
...
Segment the
supply market

V
...
6-1

Cost of Production

PRICE
Value to the
Customer
ITC

Competition &
Market Factors
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...
6-3

Price differences amongst suppliers are explained by
different circumstances and marketing strategies
...
g
...
6-4

Action Point

3
...
-1

Assessing the price—choose an item and analyse its

price

• Standard price:
• The price at which you are buying it:
• Cost structure:
• Material
• Direct labour
• Overheads
• Profits
• Supplier’s main objectives:
• How to obtain a price reduction?
ITC

M3:U3:3
...
Prepare for a

supply market
analysis

II
...
Forecast market
developments

VII
...
Understanding
what drives the
market

VI
...
Assess price
ITC

M3:U3:3
...
7-2

Supply Market
Segment A:
suppliers of
standard
components

Segment B:
Suppliers of
specialised
components

ITC

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...


2) Screen out some segments based
on your existing knowledge and
common sense
...

ITC

Unit 4
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7-5

Action Point

3
...


• Different technology choices?
r
r
r

Yes
No
Don’t know

-

If yes, list these
...


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7-2

Which segmentation variables are relevant - Part II
• Segment options which represent different risks and
opportunities
...


ITC

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...
7-8

Action Point

3
...
7-9

I
...
Assess the

degree and effects of
competition

III
...
Screen out
segments

IV
...
Segment the
supply market

V
...
8-1

Analysing each segment takes time!
Don’t waste time on segments which are
unlikely to be useful!
Don’t segment:
• When there is only one supplier or one segment is not any
different from another (in terms of risk & opportunity)
• Where certain countries, technologies or supply channels are
not accessible to you
(e
...
, costs of transport is too high, you can’t use a certain
technology, the quantities you require are not big enough to
buy directly from manufacturers
...
8-2

Action Point

3
...
8-3

Segments to exclude from the supply market analysis
Supply target
Product differentiation
High quality and reliability
Immediate availability and
flexibility on delivery dates
Long term availability

Segments that you might exclude
u

u

u

u

Standard technologies
...

Countries and regions with complex and/or
unreliable logistics
...


Supplier responsiveness

u

Long and complex supply channels
...


Low administrative cost of
acquisition
Cost of ownership
ITC

u

u

Countries where the communications
infrastructure is poor
...

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8-2

Initial screening
Segmentation
variable

Screening segments
Segments excluded
Segment

Justification

List of segments
remaining

Country

Technology

Supply
channel

ITC

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