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Industry Analysis. Chapter 03. Category Attractiveness Summary. Aggregate Category Factors. Category size Category growth Stage in product life cycle Sales cyclicity Seasonality Profits. Attractiveness of Market Variables. Category Attractiveness over the Product Life Cycle.
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Industry Analysis Chapter 03
Aggregate Category Factors • Category size • Category growth • Stage in product life cycle • Sales cyclicity • Seasonality • Profits
Category Factors • Threat of new entrants • Bargaining power of buyers • Bargaining power of suppliers • Current category rivalry • Pressure from substitutes • Category capacity
Factors in Assessing the Structure of Industries • Threat of new entrants • Bargaining power of buyers • Bargaining power of suppliers • Amount of intracategory rivalry • Threat of substitute products or services
Threat of new entrants • Economies of Scale • Product Differentiation • Capital Requirements • Switching Costs • Distribution
Buyer Bargaining Power is High When: • Product bought is a large percentage of the buyer’s cost. • Product bought is undifferentiated. • Buyers earn low profits. • Buyer threatens to backward integrate. • Buyer has full information. • Substitutes exist for the seller’s product or service.
Supplier Bargaining Power is High When: • Suppliers are highly concentrated, that is, dominated by a few firms. • There is no substitute for the product supplied. • Supplier has differentiated its product or built in switching costs. • Supply is limited.
Major Characteristics of Categories Exhibiting Intensive Rivalries • Many or balanced competitors • Slow growth • High fixed costs • Lack of product differentiation • Personal rivalries
Environmental Factors • Technological • Political • Economic • Regulatory • Social
Evidence of Inequality, as Cited by Federal Reserve Chairman Ben Bernanke