The Blacks Leisure Group is operating in one of the most competitive industries today. The leisure industry encompasses a range of services and products such as horse racing, fitness classes, casinos, cinemas, music concerts, water sports, land sports, videogames, bird watching and others. However, these products may be classified under the following major categories; tourism, sports, recreation and hospitality. Owing to the diversity in this industry, it is very necessary for Blacks Leisure Group to familiarize itself with all the latest industry trends, competitor information and consumer preferences in order to be a market leader. The report shall examine all the issues surrounding competitive advantage in the industry. (Barney, 1997)
Importance of developing and sustaining competitive advantage for Blacks Leisure Group
Development and sustenance of competitive advantage is crucial to any business in the Leisure industry, consequently, the same applies to the company under analysis. Blacks Leisure group ought to sustain competitive advantage because of the following: First of all, the world has become increasingly interconnected. Globalisation has presented new challenges to leisure companies within the UK and beyond. Some come from the rapidly industrialised East (Asian continent) while others hail from the well established developed nations such as the US. These companies are looking to expand their service base and are therefore tapping into the company’s market.
Blacks Leisure Group should ensure that they sustain competitive advantage because if they fail to do so then online companies might drive them out of business. The advent of technology and the proliferation of the internet have further aggravated the situation. It is necessary for Blacks to ensure that they can expand their level of distribution in a cost efficient manner just like the online companies do. As if all the latter competitors are not enough to drive new changes in the industry, the company has to improve its product offering in order to battle it out with some of the larger Leisure groups. These Leisure companies have very large brand names and may have undue advantage over Blacks owing to their image and company strength. (Grant, 2005)
In the wake of the competition emanating from every single direction, Blacks should develop and sustain an advantage or competitive advantage over its players in the industry. This is because the market has evolved, gone are the days when companies would simply focus on their clients alone. Marketers and managers should not underestimate the effects that competition has because if they fail to do, then their profits will decline. The situation may aggravate and cause fluctuating sales of the respective products. Thereafter, it is likely that the company will be pushed out of business. Consequently, Black Leisure group should be vigilant about establishing a sound market positions and managing their brand selectively.
Environmental marketing dynamics and the need for strategic change in order to sustain competitive advantage
The world has slowly changed its gaol posts with regard to the definition of who real competitors are. Consequently, there are so many dynamics that come into play when trying to select which companies are Black Leisure’s competitors. The company may assume that its competitors are other Leisure groups in the country. However, there are potential entrants that may not have been considered. Taking the example of what has happened in the reading industry, group leaders such as Barnes and Nobel used up a substantial amount of their resources establishing large chains. However, the company underestimated the effect of technology because during the late nineties, another industry player came up with a way of accessing numerous books without spending too much on inventory. This company was called Amzon.com. The same situation applies to the Leisure industry. Many leisure consumers want to access services in the most convenient way possible. Online transactions have caused many consumers to leave tangible companies such as Blacks. They are now taking most of their business to the internet. Blacks should give online transactions precedence because this has become a vital part of the marketing environment today. (Baird, 1994)
In order to understand one’s market dynamics, it is necessary to look at competition through a wide range of angles. Competition may be defined in relation to the following; Industry concept or Marketing concept
Marketers ought to analyse their respective industries o determine whether they fall under the following
- Pure Monopoly
- Monopolistic competition
- Pure competition
Purely monopolistic industries are those that have only one company offering the service or product, Oligopolistic industries are those ones that have largely sized companies that offer the same commodities. On the other hand, monopolistic competition refers to those industries where there are a variety of products or services and competition is sustained through offering the products in a superior manner. Pure competition exists in industries where the competitors offer the same product or service. Consequently, competition is based on advertisement and marketing. (Dyer and Ernest, 1991)
Taking the example of Blacks Leisure Group, its industry falls under the monopolistic competition. In this case, there is market segmentation. Consequently, the company offers only a specific range of services to the consumer in a superior manner. The dynamics that affect such an industry (monopolistic competition) are quite diverse. The first issue that one should consider is entry vs. exit barriers within the industry. The Leisure industry has very minimal entry barriers owing to the fact that it has low capital requirements and patents are not that important too. On top of that, exit barriers are rather high because it likely that the assets will be obsolete by the time one is leaving the exit industries. These dynamics need to be incorporated by Blacks in order to stay ahead.
The next environmental issue that should be considered by Blacks is the level of vertical integration. In the Leisure industry, there are numerous cases of vertical integration. Some companies opt to integrate their leisure equipment such as sports gear, they rent those facilities to their clients and also coordinate their accommodation among others. This trend has become very common but Blacks should avoid this approach because certain parts of the value chain are inflexible. Consequently, it is better for the company to outsource some of its pressing activities. This allows the company to focus on the services that it does best while saving a substantial portion of its budget on the specialty service.
Lastly, different industries have different levels of globalisation. The leisure industry is one of the most heavily hit. This has caused a large number of these companies to compete on a global platform. Their services, marketing approaches and other company ideas have been tailored to embrace the issue of globalisation. Blacks Leisure group is not an exception, the company depends on numerous foreigners for business. Consequently, its marketing approach is tailored towards the international market. The company needs to break into other market segments owing to the fact that numerous leisure companies do the same. It would be necessary to check on some other consumers that may be interested in their services. (Aaker, 1984)
Marketers consider competition in a different light. However, they define competitors as any company or entity that meet the same consumer need. Consequently, even if the services under consideration may not seem related, they may qualify as competitors. These competitors can be divided d into various categories depending on how closely relate their commodities are.
Taking the example of Blacks Leisure Group, the company cannot ascertain that its only competitors are the ones that offer similar leisure service. While these companies may actually fall in eth same category as Blacks, one cannot under look the diversity of the Leisure industry. Some of the closely related companies include hotels, camping guides and tour operators. However, other leisure products still meet the same consumer need and these include, television show companies, movie companies, video games, music or radio companies, fitness centres, night clubs, casinos, tennis operators and many others. Consequently, it is very advisable for company to shift from defining competitors in a conventional way as the marketing environment has changed. Those companies that seem to come from a totally different industry may end up being the most influential in that respective industry . It is therefore necessary to ensure that one frequently monitors these different competitors because they could take first place.
After identifying all the competitors that fall in the same category, then it is necessary to asses the strategies, objectives and strengths needed to sustain competitive advantage within ones’ domain. (Barney, 1991)
When analysing competition, it is necessary to determine which companies are following the same strategic path as Black Leisure group. The company could look at any of the following items; whether the competitor under consideration has a wide or narrow line compared to Blacks. A larger line always possesses greater competition than a narrower line. On top of that, the company could analyse the manufacturing costs of its competitor, if they have the same costs, then the company ought to watch out for it. This should then be followed by an analysis of service offering. If the company offers a high quality then it is definitely a force worth reckoning. This should be followed by a consideration of the kind of price on offer. Those companies that have the same features as the company under consideration in terms of the latter four factors will fall under the same strategic group.
After doing an analysis of the strategies used by its’ competitors then the company should look out for the objectives of their competitors. Some companies are driven by the need for growing their market share, others place more precedence on increasing their profitability, alternatively, other companies need to be service leaders while others need to develop their technologies. Blacks then needs to look at their competitor’s strengths, this refers to how large their share of the market is, they should also look at the level of support which the company has garnered in terms of support for their products. By examining all the latter issues, Blacks can identify some loopholes among its competitors and establish itself in the market. (Benter and Booms, 1981)
How Porters five forces and Value Chain analysis can assist in understanding the marketing environment and competitive advantage
Porters five forces
The porter’s five forces are as follows
Threat of rivalry
Blacks needs to worry about this generic force because the leisure industry is highly competitive. Entry barriers are not very high. Additionally, investors have high stakes if they leave. As if this is not enough, capital costs are also strenuous. The overall effect is frequent advertisement battles, product introductions and frequent price battles. In order to stay ahead of it competitors, Blacks needs to become very aggressive. There is very fierce rivalry in this industry and only the most vigilant company garner enough support.
Threats of new entrants
In the leisure industry, it is relatively easy to enter into the industry. The reasons for this is that capital cost requirements are not as high as they are in other industries like aviation. Additionally, patent requirements in the leisure industry are not that high too. This means that Blacks has to be ready for intense competition. The company ought to look for a unique selling point in order to sustain competitive advantage. (Porter, 1985)
Threats of buyers
Owing to the fact that the Leisure industry is highly differentiated, then the company has potential to do well because they can offer their services in a superior manner to their clients. However, it is relatively easy to switch from one leisure company to another, this gives the buyers a higher advantage, Blacks Leisure Group should tackle this moderate buyer strength by offering superior quality products that the consumers cannot reject.
Threats of suppliers
The company operates in an industry segment that has many substitutes for the products consequently, suppliers do into have a lot of bargaining power. One of the actions that the company can make to cope with the threats of suppliers is by teaming up with other leisure groups to be more influential in their respective market.
Threats of substitutes
There are numerous substitutes in the leisure industry. Therefore, Blacks should invest in research to forecast some of this future threats.
Value chain analysis
Inbound logistics; this involves, transportation, material handling material storage, communication, testing and information systems that are related to the supplier. Outbound logistics refer to all the latter that are related to the consumer. Black Leisure Group needs to consider how it can outsource its information systems which can be improve performance here. Marketing and sales technologies; refer to all media, audio and communications involved in selling the product. The company should consider incorporating technological system in service operations. Operations technologies; refer to the process and materials involved in the service offering of the company. Blacks Leisure Group should consider merging some of their business units to sustaining competitive advantage (Thompson & Strickland III, 1992)
The Black Leisure Group operates in a highly competitive market. Consequently, the company’s environmental dynamics cannot be ignored. Some of the things that the company can do to sustain competitive advantage include offering superior services, outsourcing their inbound and outbound logistic, integrating business units, teaming up with leisure groups to strengthen their buyer power from suppliers, intensifying technological advancements and encompassing the global market more aggressively. All these steps will go a long way in enhancing their position in the market. (Amit, 2007)
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