The unit size, especially of paper companies, has increased dramatically and the number of players in the marketplace has decreased. A long list of factors can impact the level of competition and rivalry among firms in an industry: Substitute products are products which serve the same function or meet the same need for the customer. Those factors having an impact on demand are called demand drivers. This sort of information is also used in the policy planning of the whole forest sector. The planning situation determines the level of detail required. Contrary to the paper industry, the wood industry emphasizes long term supply and supply by countries or regions more than future supply in the medium term. Porters models of sustainable competitive advantage were so popular in the 1980s because they provided a framework for this kind of information. Where buyers are powerful, suppliers will be subject to high pressures to alter products and/or reduce prices. Intensifying competition also requires advanced marketing. Choosing the right channels and intermediaries is extremely important for market success. These capital requirements might be for items beyond plant and equipment, such as customer credit and inventories. Cost Disadvantages Independent of Scale patents or other forms of proprietary technology, access to raw materials, and company location can all impact the relative advantage open to a potential entrant. In practice, the supply situation is expected to change in the future when forest industry companies announce the construction of new mills or machines, re-builds of existing mills or machines, start-ups of a green-field mill, or shutdowns of old mills or machines. Thus, softwood lumber manufacturers that wish to gain market share cannot rely on the growth of the marketplace, they must go and take share from the competition. For example, some companies may focus on their competition while drafting a strategic plan, while others may focus on customer information. Markets with high barriers to entry have a low threat of entry by competitors and vice versa. Kotler[16] lists the following characteristics: Information about Industrial Customers in Marketing Planning, The following list is an example how the concept industrial buying can be measured when we acquire information for marketing planning. Therefore, the ability to acquire, store, share, integrate, and apply knowledge is considered the most important capability for creating competitive advantage. This meant that companies accustomed to growing along with the market were suddenly faced with the need to gain a more in-depth understanding of their competitors. The other macro environment category contains those factors traditionally considered in a PEST analysis. SWOT helps to draw the conclusions based on that information. It could also result from the need to carry a specific business as a compliment to another part of the company.
The order of importance is about the same in both industries except as to future demand by countries. The importance of medium-term demand based on a products end-use has increased, while the relative importance of long-term demand information has decreased. 
High exit barriers exit barriers exist when a high level of investment makes getting out of an industry or market costly for a company. The Information Environment Model (IEM) can be used in connection with SWOT analysis. How customers perceive the producers value proposition is impacted by the needs and requirements of the operation process (raw material procurement and production).
Product Differentiation strong brand and customer loyalty toward existing companies is difficult for a potential entrant to overcome. Large retailers (e.g., big box retailers) such as The Home Depot and Obi are examples from the mechanical forest industry. To succeed in this, high quality information is needed. Marketing channels of a business unit must be adjusted to the marketing channel structure of the whole company instead of making independent channel decisions. 1998. The economic development of markets is always an important indicator for the market analyst. Other Macro Environment Information in Marketing Planning. In large forest industry (paper industry) companies, the logistics department takes care of all transportation issues in the company and marketing people have very little involvement. Supply is the quantity of goods or services producers are willing to sell at a certain price, in a certain market at a certain time. As with demand, specific product-type supply information is considered most important. It may also include indicators of technological development, technological changes, and opportunities for innovation. The buying industry is not an important customer group. In the paper industry, there has been significant concerns about electronic media and its potential for serving as a substitute for various types of paper. Competitive Strategy, Techniques for Analyzing Industries and Competitors. Trade policy, governmental agencies, etc. This relative ease of entry resulted in a highly competitive marketplace for sawmillers. The forms of secondary information sources vary from newspaper articles and on-line, up-to-date data to costly research reports conducted by private consulting companies. The questions were based on operationalizations of various main blocks of the IEM. How market information may be actualized, based on the Information Environment Model, for analysis in marketing planning. The forest industry has seen a large move toward disintermediation. Value Proposition for Joinery Manufacturers in the UK Market. The order of importance is nearly the same in the paper and wood industries. In this situation, the buyer will likely buy from whichever supplier offers the lowest price. How can the Information Environment Model be used to specify information necessary for marketing planning? Historically in Scandinavia, it was so easy to enter the sawmilling industry that when markets were attractive, new sawmills were created. Those intermediaries that have been left out in the disintermediation process will be anxious to support new entrants. Table 3-1: Examples of Information Sources for Marketing Planning of Wood Products. The natural dynamics of the marketplace result in an equilibrium price where supply roughly meets demand buyers will drive prices higher if they are willing to buy more than is supplied, and will drive prices lower if they are willing to buy less than is available. Development of product norms, regulations, standards etc. One example of a critical type of information might be a given products stage of development in the marketplace. The customer block in the IEM is developed into a detailed framework for the customer survey (Figure 3-4). Those conducting marketing planning are mainly interested in demand and supply figures. by paper grades), Future supply in the medium term (1-3 years), Economic development of the market by industries, General technical development of the markets.
It is important to carefully evaluate the information upon which conclusions regarding opportunities and threats are made. The following list is an example of the sort of information we might find useful about competitors. Of course, if the environment were static, no changes in strategy would ever be necessary the company could define a proper set of goals, objectives, and plans, and would not need to continually analyze and appraisethese strategies. Companies are growing larger and more global, serving more diverse geographical markets.
Mayo, A. The industrial customer survey targets the buying center or the group of people that influences buying decisions. John Wiley & Sons, Inc. New York, New York. As marketing of forest products has become more customer-oriented, grades and end-uses of products have become more sophisticated. The buyer operates in a low-profit industry. A wide range of reporting for producers, suppliers, buyers, and. Product demand is said to follow a saturation curve, created by slow initial demand and then a fast increase which creates a steep upward slope in the curve. The measures of this separate frame show exactly what information about customers will be produced. Third Edition. The nature of marketing planning and the need for information follow the development of market demand. An equally important aspect is face-to-face interaction of employees and social relationships that result in the exchange of ideas and knowledge among members of the organization.[9]. The Free Press. When choosing a market area, a company must fit its marketing channels to the distribution structures available in that market. The example contains market analysis based on secondary material and industrial customer analysis based on a survey using personal interviews. Department of Forest Economics. An example of this is the popularity of Ansoffs strategic thinking (see Chapter 4) in the 1960s and 1970s as we can see from Ansoffs Window, product and market decisions are emphasized while competition and competitors have a minor role. In wood industries country bound information is considered more important. In these projects market analyses have produced market and customer information to be used in marketing plans structured according to the IMMP. What are the types and typical sources of information about the marketing environment in the forest industries? Our Information Environment Model is portrayed in Figure 3-3, where it can be seen in the context of marketing planning. The following is a ranked list showing order of importance of various information areas in marketing planning. At the time of introduction there is low production abilities, minimal demand, and low demand growth. The time horizons, especially of the paper business, have shortened resulting in an emphasis on medium-term supply information. Judicial regulation connected to a companys operations is called the legal environment. Similar issues also hold for transportation systems. It can also be criticized because it emphasizes beating the competition rather than satisfying customer needs. 51(12):25-30. The model has been created, tested, and used in numerous market analyses, both at the University and company level. Thus far, however, while electronic media has reduced demand for newsprint, online shopping has increased demand for packaging and the move towards a paperless society anticipated by some has not materialized. International Tropical Timber Organization, Various statistics regarding tropical hardwoods as well as a. 
The other macro environment in IEM corresponds directly to PEST. Key demand drivers for paper products in a certain market area include: For marketing planning purposes, demand can be measured as follows: Generally speaking, information concerning demand is very important in marketing planning for both paper and wood products.
His concepts became popular after the post-World War II economic boom, when inflation in developed nations was a significant problem and economic growth was very low. In early 2000s both product and market norms, regulations and standards were considered more important in the Finnish wood industry than in the paper industry. This could result from specialized or high value assets such as those in the paper sector. Information dealing with both Macro and Micro Environments is needed for strategic marketing decisions. Davenport, T.H. Exploring Corporate Strategy. The only difference between paper and wood industries is that the information regarding distribution systems is more important for the wood industry. The list is in order of importance according to the opinions of Finnish paper industry business information specialists.[17]. In the earlier mentioned surveys targeting Finnish paper and wood industry companies, the importance of various types of information in marketing planning was investigated. The Micro Environment contains information concerning the behavior of customers, competitors, and distribution systems.
Masters Thesis. London. The project follows the procedures of strategic marketing presented earlier in this book.
Benchmarking is when a company analyzes its competitors to find best business procedures leading to best performance. The ultimate goal should be to keep customers satisfied the best competitive advantages are those appreciated by customers. Depending on their marketing philosophy, companies can emphasize competition and approach competitors in different ways. Conversely, the buyers power is enhanced if the seller faces high switching costs. 