Before moving ahead, let's remember an important precept concerning industry structure: profitability is determined by the characteristics of its inudstry. Therefore, different competitive conditions in different industries equals different average profitabilities.
The topic of this month's column pertains to the relative attractiveness of the industry's structure and its market segments versus the strengths of the enterprise serving it.
Chemark typically uses two tools to measure a client's position. First, is the product, or market, lifecycle model and the second is the GE 9-Square.
In each of the "cycle" quadrants, the chart shows the key elements associated with that position. For example, in a new product introduction phase, the marketing objective would be to "gain awareness"; direct competition is probably nil; product line is one; Price point is either skimming (high profit, high-end of market) or penetration (price to gain share); promotion is focused on transforming information and educating the potential buyers; and place, or distribution, would be limited at the outset.
Once you and your competitors' products are positioned within the lifecycle model, the first outputs can be placed into the second analysis model.
Opportunities can be clustered onto one 9-Square model, thus showing the relative position of your offerings versus the competition in each market.
The GE-9-Square tool helps form the basic market elements of a strategic plan by considering four attributes simultaneously:
• Attractiveness of market
• Your strengths in that market
• Size of market segment
• Average growth rates