Embedded Files
New competitors often come from three major sources: (1) companies competing in a related product-market, (2) companies* with related technologies, and/or (3) companies already targeting similar: customer groups with other products. Market entry by a new competitor is more likely under these conditions:
• High profit margins are being achieved by market incumbents.
• Future growth opportunities in the market are attractive.
• No major market-entry barriers are present.
• Competition is limited to one or a few competitors,
• Gaining an equivalent (or better) competitive advantage over the existing firms
serving the market is feasible. If one or more of these conditions is present in a competitive situation, new competition will probably appear. During the mid-1970s Tylenol held most of the no aspirin pain relief market, Tylenol's profits were very large, and its marketing costs were low for a consumer product. No conÂsumer advertising had been used to promote Tylenol Instead, promotion efforts were conÂcentrated in medical and dental professional publications and safes force contacts with docÂtors. Because of the large market opportunity, the attractive profit margins, the market dominance by one firm, and the ease of product duplication, the entry of a new competitor was not surprising. Daryl entered the market with an aggressive advertising campaign and prices substantially below Tylenol's. Tylenol's management immediately reduced its prices to meet Daryl’s. Interestingly, a decade later Tylenol dominated the market. Even the cyanide deaths in 1983, which were attributed to tampering with Tylenol packages, failed to topple Tylenol from its strong market position. A responsive effort was made to immediately recall Tylenol from More shelves and implement protective packaging.
The strategic marketing process
Journal of Strategic Marketing
SMART is a custom marketing research
Page updated
Google Sites
Report abuse