Agroindustrial project analysi

THE MARKETING FACTOR 39gional, national, or multinational companies, old or new or brandedor unbranded products. The likelihood and significance of newentrants (future competition) in the market must also be assessed,and analysts should consider competition from substitute products(for example, synthetics for cotton, or soft drinks for fruit juices)as well. Products should be identified with their broad industrialclassifications: the textile mill is in the fiber business instead of thecotton business, and the juice processor is in. the beverage businessinstead of the fruit juice business. The interdependent nature ofagroindustries implies that they must further broaden the conceptof competition. Suppliers of raw material who can integrate forwardto process their own product are potential competitors-a dairyfarm, for instance, could add a processing plant for its milk. Similarly,large buyers may integrate backward to produce a productthey use-a supermarket chain, for instance, might construct avegetable cannery.A structural analysis should also identify the number of competitorsto determine the oligopolistic tendencies in the market.The location of other firms' markets and raw materials also carriesimplications for competition. Finally, the size of competing firms innet worth (assets), sales volume, and market shares should be examined.Market share is an indication of industrial concentration andsuggests the market power of the firms. Data across years is usefulfor revealing competitive trends in the market.Documenting market structure is analogous to the process ofmarket segmentation described previously, which dealt with positioningthe product relative to consumer groups. The goal here isto lay out the various competing segments so as to identify theoptions for positioning the product at a competitive advantage. Tounderstand those options more fully, it is necessary to examinethe basis upon which firms compete.Basis of competitionCompetition occurs simultaneously along several parameters. Ina perfectly competitive society, price is the primary method ofcompeting. Market imperfections, such as oligopolistic structures,make perfect competition purely theoretical. Nonetheless, that priceis an important competitive tool is indicated by consumers' sensitivityto price and the prevalence in the market of price discounting.Product quality is a second parameter of competition. Price and