The level of technological development in the industry creates an opportunity for a marketer to develop new products. The consumer also tends to benefit from these developments. The Indian Automobile Industry provides an illustration in this regard .Until 1984, a prospective car buyer had to content with old obsolete
Cars like the Ambassador and the Premier and a two-wheeler buyer with a Lambretta, a Bajaj or a Rajdoot mobike .However, with the introduction of Maruti 800 cc , which caught the imagination of consumers, Hindustan Motors(manufacturers of Ambassador cars) and premier Automobiles had to look into the engine designs and other ergonomics of their vehicles. This led to the launch of luxury cars like the Contessa from Hindustan Motors and the 118 NE from Premier Automobiles .The threat from Maruti has been so real and serious that these manufacturers had to improve their vehicles performance in terms of fuel efficiency , driving comfort and also the aesthetic appeal of the car by introducing new dash board, steering wheel, various colors, etc Both these manufacturers have now launched foreign brands Hindustan Motors has launched General Motors’ Opel Astra, while Premier has tied up with Peugeot and Fiat UNO of Italy .Similar developments were visible in two wheeler, light commercial vehicle and the telecommunication industries.
However, technological developments are greatly influenced by Government policies and the industry ‘s response in terms of investments in R&D.A point to be understood is that, these developments may affect a firm’s raw material, packaging, operations products and services. For example, technological developments in packaging and plastics industry has brought in new packages in the form of tetra packs , pet bottles, cellophane, etc. This has definitely reduced the cost of packaging , besides making the pack attractive and carrying products more convenient .Like wise containerized movement of goods, deep freezers, trawlers fitted with deep freezers etc. Have affected the operations of all firms including those involved in the seafood industry .Perishable goods can be transported in a safer manner. Developments in information technology have also affected firms’ competitive position.
Governments all over the world are an important aspect of their economy and even in the so called free economy, viz., US government intervention in industry is a reality .The extent of interventions varies. While in the US this is relatively low ( firms are free to enter or leave the industry), in the developing countries it is high .India has a controlled economy where the Government decide the rules of the game .be it the extent of foreign private investment ,or goods to be exported or imported or even whether a unit can be allowed to produce a product.
It isn’t that the Government only sets the policies. In these countries, the Government is an important buyer and seller of goods and services Public sector firms, defence forces, and other Government agencies participate in the economy as buyers and sellers of goods and services.
The suppliers to a firm can also alter its competitive position and marketing capabilities .These are raw material suppliers, energy suppliers, supplier of labor and capital. According to Michael Porter the relationship- between suppliers and the firm epitomizes a power equation between them. This equation is based on the industry conditions and the extent to which each of them is dependent on the other:
Broadly, the bargaining power of the buyer firm increases in the following circumstances.
- The buyer firm is a monopoly or in an oligopoly position and buys large volumes relative to seller’s sales.
- The products a buyer firm purchases represent a significant fraction of the buyer’s cost or purchases .Here the buyer firm is likely to shop for the most favorable price.
- The buyer firm can easily switch its vendor as it faces few switching costs.
- The buyer firm earns low profits and hence has a pressure to lower its purchasing costs.
- The buyer firm poses a real threat of backward integration.
- The supplier’s product/services is unimportant to the quality of the buyer ‘s finished products/services.
- The buyer firm has full information on the seller’s industry
These factors change over a period of time or as a result of company’s strategic decisions thereby affecting the buyer’s bargaining power. On the other hand, the bargaining power of the supplier gets maximized in the following situations:
- The seller is a monopoly or an oligopoly firm.
- The supplier is not obliged to contend with other substitute products for sale to the buyer group.
- The buyer is not an important customer.
- The supplier’s product is an important input to the buyer’s business and finished product.
- The supplier’s product are differentiated or it has built up switching costs.
- The supplier poses a real threat of forward integration.
Again these factors keep changing over a period of time depending upon the industry conditions and Government policy.