BUS631 Study Guide
Unit 5: Sustainable Competitive Advantage
5a. Evaluate the growth potential of a large industry
- How do you evaluate industry growth potential?
- Why is it important to evaluate industry growth potential?
- What difference is there when evaluating a large industry growth potential?
Evaluating a large industry's growth potential is important for brand managers because it is an indicator of the growth in that industry, and it may result in additional sales. If the market share is larger, then it may be worth it to promote a product that meets the needs of consumers in that industry. Just looking at the market share is not enough.
An industry's growth potential can be measured by reviewing sales, profits, innovation, and how productive the industry is in related areas or competition. Each of these areas is an indicator of growth potential. As a brand manager, you will need to determine how that industry might grow and how long that growth might last.
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5b. Analyze how a mature brand sustains its relevancy and extends into a new product category
- How does a mature brand have growth potential?
- Why is it important to analyze mature brands and how they stay relevant?
- How might a mature brand extend into a new product category?
A mature brand is one that has been around for a decade or longer. It has stood the test of time, and the products have been relevant to more than one generation. An example of this might be home-related products that homeowners need to sustain their property. These are products that perhaps the competition has tried to copy unsuccessfully.
A successful mature brand is trusted by consumers, and it makes sense that the company has produced similar products that would appeal to consumers in that market. By extending customer loyalty to new products and developing new product categories, a company can capitalize on the trust consumers have for the brand.
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5c. Analyze the players in an oversaturated consumer category
- What is market saturation?
- How do you determine if a market is saturated?
- How do you determine who the competition is in an oversaturated market?
Market saturation occurs when the sales market is maximized. Growth will most likely only occur if products are updated to meet any current market demands. A company may be able to take existing demand from a competitor, but that may be the only growth opportunity that exists during market saturation. By looking at the company with the top sales in that industry, you can determine who the main competition is, and it is possible that those companies are considering leaving the market because sales have declined. This may be an opportunity for those companies who choose to remain in the industry.
One indicator of market saturation is when a brand does not gain any new or very few new customers for that product category. As this number begins to trickle down, it will be important for a brand manager to recognize the issue and develop a plan of action. This might include whether to stop promoting the product category, attempt to remove competition by taking on those additional customers, or updating the products to be more competitive.
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5d. Evaluate the impact of financial metrics on a brand portfolio analysis
- What financial metrics should be taken into consideration for a brand portfolio analysis?
- What are financial metrics?
- Why is it important to develop a brand portfolio analysis?
Financial metrics are important to consider when developing a brand portfolio analysis because you do not want to put more money into an industry that is on the decline. Financial metrics that might be considered for a brand portfolio analysis are cash flow, profits, and market share. These indicators may help to determine if an industry is on the rise or the decline.
A brand portfolio analysis may be conducted on all brands under one umbrella, and this will help a brand manager to completely understand the productivity of all products that may be sold under that brand. It is an important process that should not be ignored. This process will assess the growth potential of that industry, potential profits, and strengths of the industry.
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5e. Analyze an underdeveloped product category for global potential
- What is an example of an underdeveloped product category?
- How can you determine underdeveloped product categories that may have global potential?
- How can you determine which brands have underdeveloped products?
Underdeveloped product categories are important to analyze so you can determine potential unfulfilled needs in the marketplace. Sometimes you may have a product category that is doing well domestically and may have global potential. These categories should be explored to maximize sales and profit.
An example of an underdeveloped product category might be the technology industry. New technology products are being created and tested. Sometimes, these products are entirely new, and sometimes, they may be an updated version of an old favorite. Many brands have expanded globally to take advantage of additional sales. The Apple iPhone is one of those brands. By selling the phones domestically, Apple made money, but by taking the iPhone global, they began to see higher profits as more phones could be sold.
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Unit 5 Vocabulary
This vocabulary list includes terms you will need to know to successfully complete the final exam.
- brand portfolio analysis
- financial metrics
- large industry growth potential
- market saturation
- underdeveloped product categories