MARKET 1 Lecture Notes - Lecture 15: Switching Barriers, Ikea, Marketing Mix
Document Summary
Competition is the process by which the invisible hand" of the market seeks to solve the basic economic problem of maximizing satisfaction from the consumption of scarce resources. As a phenomenon (new product, new species) approaches a limit to growth, it begins to exhibit what has been described as hunting behavior as it seeks to find a way round the barrier. Technological innovation is both an evolutionary and a revolutionary process. There are 7 barriers for entry: economies of scale, product differentiation the key competitive factor, capital requirements, switching costs, access to distribution channels, cost disadvantages independent of scale, government policy. Identifying substitute products is a matter of searching for other products that can perform the same function as the product of the industry. It is more concentrated than the industry that it sells to: the industry is not an important customer of the supplier group, the supplier"s product is an important input to the buyer"s business.
