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Principles of Marketing Fall 2013 Lecture Slides 3


Principles of Marketing Fall 2013 Lecture Slides 3 Instructor : RAZA ILLAHE Lahore Leads University SWOT analysis is a planning method used to evaluate Strenghts and ... – PowerPoint PPT presentation

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Title: Principles of Marketing Fall 2013 Lecture Slides 3

Principles of Marketing Fall 2013 Lecture
Slides 3
Instructor RAZA ILLAHE Lahore Leads
  • SWOT analysis is a planning method used to
    evaluate Strenghts and Weaknesses and an
    organisation as well as Opportunities and Threats
  • that an organisation faces.
  • To understand SWOT, We will perform SWOT
    analysis of a large pet food division of a

  • An analysis of the internal and external
    audits which draws attention to the critical
    organisational strengths and weaknesses and the
    opportunities and threats facing the company

  • Strengths
  • Market leader in the dry cat food market.
  • Have leading world position in food technology.
  • Market leader in luxury pet foods.
  • The groups excellent worldwide distribution.
  • Pet food market leader in several big markets,
    including France, Italy, Spain and South America.

  • Weaknesses
  • Number three in the wet pet food market.
  • Too many of product range with several low-volume
  • Most brand names are little known.
  • Relatively low advertising and promotions budget.
  • Product range needs many new manufacturing
  • Poor store presence in several large markets
    Germany, UK, USA and Canada.
  • Overall poor profit performance.

  • Managers need to identify the main threats
    and opportunities also that their company faces.
    The purpose of the analysis is to make the
    manager anticipate important developments that
    can have an impact on the firm.

  • Opportunities
  • Economic climate. Because of improved economic
    conditions, pet ownership is increasing
  • in almost all segments of the population.
  • Demographic changes. (1) Increasing single
    parenthood, dual-income families and ageing
  • will increase the trend towards convenient pet
    foods and (2) the aged
  • population will grow and increasingly keep pets
    as company.
  • Market. The pet food market will follow the human
    market in the concern for healthy
  • eating and pre-prepared luxury foods.
  • Technology. New forms of pet food that are low in
    fat and calories, yet highly nutritious
  • and tasty, will soon emerge. These products will
    appeal strongly to many of todays pet
  • food buyers, whose health concerns extend to
    their pets.

  • Threats
  • Competitive activity. A large competitor has just
    announced that it will introduce a new premium
    pet food line, backed by a huge advertising and
    sales promotion blitz.
  • Channel pressure. Industry analysts predict that
    supermarket chains will face more than 10,000
    new grocery product introductions next year.
  • Demographic changes. Increasing single parenthood
    and dual-income families will
  • encourage the trends towards (1) pets that need
    less care ,and (2) smaller pets that eat less.
  • Politics. European Union legislation will force
    manufacturers to disclose the content
  • of their pet food. This will adversely affect
    the attractiveness of some ingredients

Porter's Five Forces
Five forces model was created by M. Porter to
understand how five key competitive forces are
affecting an industry. These forces determine an
industry structure and the level of competition
in that industry. If these forces are stronger
then the industry is less profitable it is. An
industry with low barriers to enter, having less
buyers and suppliers but high substitute products
and high number of competitors will be seen as
very competitive and thus, not so attractive due
to its low profitability. The tool is very
useful in formulating firms strategy as it
reveals how powerful each of the five key forces
is in a particular industry.

Five Forces Analysis
  • Threat of new entrants. This force determines how
    easy (or not) it is to enter a particular
    industry. If an industry is profitable and there
    are less barriers to enter, then rivalry soon get
    trougher. When more organizations compete for the
    same market share, profits start to fall. .
    Threat of new entrants is high when
  • Low amount of capital is required to enter a
  • Existing companies can do very little to strike
  • Existing firms do not possess patents, trademarks
    or do not have established brand reputation
  • There is no government related regulation
  • It doesnt cost a lot of money for a firm to
    switch to other industries)
  • Products are similar
  • Economies of scale / Low Production Cost can be
    easily achieved.

  • Bargaining power of suppliers. Strong
    bargaining power allows suppliers to sell higher
    priced or low quality raw materials to their
    buyers. This directly affects the buying firms
    profits because it has to pay more for materials.
    Suppliers have strong bargaining power when
  • There are few suppliers but many buyers
  • Suppliers are large and threaten to take over
    your organisation
  • Few substitute raw materials exist
  • Suppliers hold scarce resources
  • Cost of switching raw materials is especially

  • Bargaining power of buyers. Buyers have the power
    to demand lower price or higher product quality
    from industry producers when their bargaining
    power is strong. Lower price means lower revenues
    for the producer, while higher quality products
    usually raise production costs. Both scenarios
    result in lower profits for producers. Buyers
    exert strong bargaining power when
  • Buying in large quantities
  • Control many access points to the final customer
  • Only few buyers exist
  • Switching costs to other supplier are low
  • There are many substitutes
  • Buyers are price sensitive.

  • Threat of substitutes This force is especially
    threatening when buyers can easily find
    substitute products with attractive prices or
    better quality and when buyers can switch from
    one product or service to another with little
    cost. For example, to switch from coffee to tea
    doesnt cost anything, unlike switching from car
    to bicycle.

  • Rivalry among existing competitors.
  • Competitive rivals are organisations with similar
    products and services aimed at the same customer
    group direct competitors. In competitive
    industry, firms have to compete aggressively for
    a market share, which results in low profits.
    Rivalry among competitors is intense when
  • There are many competitors
  • Exit barriers are high
  • Industry of growth is slow
  • Products are not unique and can be easily
  • Competitors are of equal size
  • There is high fixed cost