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• It’s main focus is marketing, apart from that it rents advertisement boards
to post advertisements
Competition depends on
•Firm concentration & their relative market share : More the number of
companies, greater is the competition for resources & market share.
•Product pricing: When one company reduces its prices, other companies
are forced to follow the suit.
•Product differentiation: Improving features, and making innovative
changes. If products are more or less the same, competition is intense.
•Low switching costs: When a customer can freely switch over from one
company to another, the rivalry intensifies.
Ad Promotion company faces high competition as firm
concentration is high.
There are about 980 registered companies in Tehran, all
vying for the same market share.
Price reduction by one company will force Ad Promotion
too to do so to retain its customers. This sharply
reduces its profit margins.
Since customer loyalty is difficult to retain in this
industry, one should look at new innovative ways to
attract new customers and retain existing ones.
It refers to the power of the customers, and how
much pressure they can put on margins.
The measure of customer power is by the answer
to the question “How much of company’s income
is from customers’ purchase?”
Strong customers can force a decrease in costs or
increase in quality.
Iranian foreign policies have lead to decrease in
number of companies that want to advertise.
Since Ad Promotion’s main source of income is
from customer purchases, it intends to win
maximum customer satisfaction.
Suppliers exercise control over the company by
increasing prices or reduction of quality.
If there are few suppliers/contractors and
many companies dependent on them, then they
have a lot a power.
However, in the environmental media-owners
industry, there are many contractors, so they
have less bargaining power.
Since the contractors’ work is very limited such
as printing & maintaining flaxy faces, they
exercise less control over Ad Promotion.
New entrants could change major determinants of
market environment like market share, prices,
customer loyalty.
In the environmental media industry, high initial
investment is required, which acts a substantial
barrier to entry.
The Tehran municipality has issued enormous number
of legal grounds for environmental media
construction without realizing its potential, leading
to reduced demand for it.
Exists if alternate products are available with
lower prices, for the same purpose and better
performance parameters.
It will help attracting a significant proportion of
the market volume & hence reduce the potential
sales volumes of existing players. Buyer
inclination towards substitute will increase.
If Switching Costs are less, customers will easily
shift to substitute product.
Strategic Partners- companies that supply
their services to the company
They are associated with profitability and
success
The less the number of strategic partners-
more the bargaining power
Strategic partners in environmental media are
called advertising agencies.
Advertising Agencies: Agencies responsible for designing
and implementing a company’s advertising campaign
In Iran there is a rule that if a media owner hires a media for customer from
another media owner, the leaseholder is projected as “Agency” and the lesser
company should pay a % of the contract’s price as the agency right.