Marketing Basics: Definition, Concepts, and Strategies

**Chapter 1** The American Marketing Association states that marketing is an organizational function and a set of processes aimed at creating, communicating, and delivering value to customers and managing relationships with them in a way that benefits the organization and its stakeholders. Many mis...

**Chapter 1** The American Marketing Association states that marketing is an organizational function and a set of processes aimed at creating, communicating, and delivering value to customers and managing relationships with them in a way that benefits the organization and its stakeholders. Many mistakenly believe that marketing means advertising or self-promotion. In reality, marketing is a much more complex and broad activity; in fact, it emphasizes the importance of transferring authentic value to the customer through goods, services, and ideas sold in the market. Moreover, it should be noted that both the organization carrying out the marketing activity and the stakeholders involved (customers, employees, shareholders, suppliers) must benefit from it. To achieve this, marketing seeks to: 1\. Identify the needs and wants of potential customers 2\. Satisfy those needs and wants Potential customers include both individuals making purchases for themselves and their families, as well as businesses or other organizations making purchases for their own use or for resale. What enables both objectives is an act of exchange, that is, the commercialization of an object, good, service, or idea between a buyer and seller in such a way that both benefit. Although it is the marketing function of an organization that is responsible for identifying and satisfying consumer needs, many other people, groups, and forces contribute to defining its activities. First and foremost is the organization itself, whose mission and goals determine its type and objectives. Within the organization, management is responsible for defining these objectives. The marketing function works closely with a network of other functions to provide products that meet customer needs and allow the organization to survive and develop. The marketing function has the task of facilitating relationships, partnerships, and alliances with customers, shareholders, suppliers, and other organizations. Environmental factors, such as social, technological, economic, competitive, and legislative factors, also contribute to defining marketing activities. Finally, society as a whole influences marketing choices and is in turn influenced by them. The organization must maintain a constant balance between the often divergent interests of individuals and groups. You can\'t have low prices and high production costs. For marketing to exist, at least 4 conditions must be met: 1\. Two or more parties (individuals or organizations) with needs to be satisfied 2\. Desire or ability to satisfy them 3\. A way or channel through which to communicate 4\. Something to exchange Discovering and satisfying consumer needs are two fundamental aspects of understanding marketing. The first objective of marketing is to identify consumer needs, which may seem trivial, but sometimes it is very difficult when, for example, even consumers don\'t know what they want. Moreover, it is not easy to know which questions are suitable to ask consumers to discover their true needs. Those who professionally deal with innovation estimate that only about 5% of new consumer products (such as those in supermarkets) introduced to the market each year survive in the long term. Robert McMath, who has analyzed more than 70,000 of these new products launched on the market, proposes proceeding through two fundamental phases: 1) focus on the advantage that the consumer derives from the products and 2) learn from the past. Therefore, first of all, it is necessary to identify what are the products and desires of consumers and only then produce what is needed to satisfy them. However, this whole process serves to satisfy both parties. Need occurs when an individual feels deprived of primary necessities such as food, clothing, or shelter. Desire, on the other hand, is a need determined by the individual\'s learning, culture, and personality. Psychologists and economists are still debating the exact difference between the two terms, so here they will be used as synonyms. One of the main activities of a company\'s marketing function is the careful analysis of its consumers to understand both needs and desires, but also trends and factors that influence them. A certain fact is that marketing wants to influence purchases, and many wonder when it is appropriate for the government and companies to step in to defend consumers. It is not always easy to estimate when this is the case, and this leads to another important factor: how much legal and social norms influence marketing itself. Potential consumers create a market, that is, a group of people who have the desire and ability to purchase a given product. Ultimately, all markets are made up of people. Individuals who are aware of having a need to satisfy may express the desire to purchase the product, but this is not enough; they must also have the ability to purchase it, in terms of faculty, time, and/or money. We\'re not just talking about material purchases, but it\'s possible to purchase ideas that turn into actions like annual blood pressure checks. Since a company cannot satisfy everyone\'s needs, its efforts focus on one or more groups of potential consumers (target market). Once the consumers of the target market have been identified, the company must proceed to satisfy their needs. Those who work in marketing, often the figure of the marketing manager, must therefore develop a marketing campaign through which to reach consumers, using a combination of four groups of tools defined as the 4 Ps: 1\. Product: a good, service, or idea that satisfies consumer needs 2\. Price: what must be given in exchange for the product 3\. Promotion: a means of communication between buyer and seller 4\. Place: where the consumer can come into contact with the product These 4 products together constitute the marketing mix, that is, the set of 4 levers (4 Ps) that the company uses to satisfy its objectives and consumer desires. These 4 factors are controllable by the marketing manager, and their role is fundamental in managing and building relationships with the target market. There is an enormous variety of factors that cannot fall under the control of marketing and the organization. These factors can be summarized in five groups: 1\) social forces 2\) economic 3\) technological 4\) competitive 5\) regulatory or political-institutional. Examples of these forces are 1) what consumers themselves desire and want, 2) the evolution of technology, 3) the trend of the economy in terms of expansion or recession, 4) actions taken by competitors, and 5) regulations undertaken by governments. All these forces constitute uncontrollable factors because they transcend the will of the individual or the single company. They can be accelerators or brakes on marketing initiatives. Often, marketing managers consider environmental factors as constraints that are completely beyond their power of action. Nevertheless, recent studies and great sales successes have shown that determined companies with adequate capabilities can influence some environmental factors, making important strides from a technological or competitive point of view, or by committing to revising wrong regulations. A company\'s marketing program aims to connect it with its customers. To clarify this relationship, it\'s essential to understand key concepts such as customer value, customer relationship, and relationship marketing. The strong competition and turbulence that characterize today\'s markets have led numerous companies and organizations to initiate corporate reorganization programs. Managers are searching for systems that guarantee success in this new and intense global competition scenario. The key to a company\'s success is thus transferred to customer loyalty, aiming to offer them unique value: the novelty lies in a more careful attempt to understand how this value is perceived. Therefore, we define customer value as the unique combination of benefits obtained by target buyers, which includes quality, price, ease of use, timely delivery, and pre- and post-sale service. Research has shown that success can hardly be achieved with an undifferentiated mass offering. It is necessary, therefore, to establish long-term relationships with customers to offer unique and distinctive value compared to the competition. This can consist of economic advantage (better price), better product performance (better product), or level of personalization (better service). Starting from the last decade, relationship marketing has developed, which consists of creating and maintaining excellent relationships with customers. It allows the organization not only to be in constant contact with consumers but also with other main stakeholders (employees, suppliers, etc.) to ensure long-term benefits for all. Relationship marketing thus means establishing relationships that are as personalized as possible, capable of building lasting relationships that continue after the single act of exchange. It received great impetus after the development of the internet. As an interactive communication medium, it has proven to be the ideal tool for the full deployment of the logic underlying the relational approach. However, to adopt a relational logic, the simple use of direct marketing like the internet is scarcely effective in the absence of a unitary approach, such as to guarantee the uniqueness of communication through different channels. This is even more important, especially in companies with multiple contact or distribution channels, such as sales agents, points of sale, and internet channels with e-commerce sites, but also call centers or the more evolved contact center. Precisely to respond to the need for coherent communication across different channels and to get the best out of a relational type of relationship with customers, Customer Relationship Management (CRM) has developed. It represents the broadest and most sophisticated declination of the concept of relationship marketing. It substantially uses the contribution of new technologies to collect information, analyze it, and finally prepare ad hoc actions, to progressively develop a relationship based on trust and knowledge, a greater propensity to purchase, better satisfaction, thus making the relationship more lasting, becoming a competitive advantage for the company. The phases that characterize a CRM are 4: 1) data collection, 2) their analysis, 3) action planning, 4) execution of these actions. It is a continuous process. The CRM approach is based on unitary management of customer interaction and requires integration of both the processes connected to this interaction (sales, marketing, and customer service) and the various communication channels. The company must therefore develop an information system capable not only of recording every possible contact that has occurred with customers but also of storing them all in a unitary way, regardless of which channel and in which situation they occurred. Secondly, to derive significant information from such data, analysis is necessary through the use of business intelligence or Marketing Intelligence tools. Okay, here\'s the translation of the provided text: Once customers have been identified, it is possible to differentiate them into segments, and in this phase, a careful analysis of data is essential to then define successful actions. Thanks to CRM, the company improves its knowledge of its customers, is able to identify those who generate greater profitability, and therefore also to concentrate its efforts on them. However, the opportunity to implement CRM programs must be carefully evaluated because these are costly activities that require the activation of a complex set of elements. Installing CRM components does not equate to making the company customer-oriented. CRM is not a simple matter of marketing or information systems, but concerns the company and its vision as a whole. CRM is closely linked to strategy, communication, integration between business processes, people, and culture, which places the customer at the center of attention, both when relationships occur between businesses and when they occur between businesses and consumers. In Italy, companies that have developed CRM policies include Esselunga and Interdis (now VeGè). Effective relationships allow the company to understand what consumers really want. Once these needs have been identified, the company must know how to translate the information obtained into ideas for the development of new products and concretize these ideas into a marketing program, that is, a plan that details all the necessary actions, activating the various levers of the marketing mix, in order to favor exchange. Potential customers can react to the offer positively (buying) or negatively. Consumer needs lead to the ideation of new products that are effectively realized and push to continue the search for other new needs. To understand why marketing has established itself as one of the determining forces in the modern global economy, it is necessary to consider 1) the evolution of the market, 2) ethics and social responsibility in marketing, and 3) the breadth and depth of marketing activities. Many market-oriented organizations have gone through 4 phases: 1\. **Production Orientation**: when demand exceeds supply, where consumers are willing to buy any product in order to make the best use of it; therefore, products sell themselves, you just need to improve productive efficiency. 2\. **Sales Orientation**: when the increase in productive efficiency leads to an excess of supply, so more is produced than what is sold. This results in a system in which companies try to attract new buyers, commit to selling what is produced and no longer to produce what is sold. 3\. **Marketing Orientation**: when the potential of sales orientation is exhausted, here the company sets the objective of satisfying the needs and desires of consumers. Here the marketing concept is established, a market approach expressed clearly for the first time in 1952, in the annual report of General Electric: \"The concept moves marketing to the beginning of the production cycle and not to the end, and introduces it in every business phase\". Marketing orientation is therefore all focused on the consumer, but many companies found it very difficult to activate this approach. 4\. **Customer or Market Orientation**: when the implementation of the marketing model naturally leads to a market orientation. Market orientation means that the organization intends to focus its efforts on: 1) a constant collection of information on customer needs; 2) their sharing among all those within it who contribute to the constitution of products intended to satisfy them; 3) the use of this information to create value for the customer. Precisely in this perspective, CRM is fundamental, because it allows to identify potential buyers to the full extent and develop a long-term positive image of the organization and its goods and services. However, this process requires the commitment and participation of all managers and employees of the organization and an increasing use of information and communication technologies and the internet in particular. In the absence of these premises, many of the very expensive systems developed to computerize CRM have proved useless, because they are unable to identify the different segments of the target market. With the change in business orientation, societal expectations have also shifted. Today, marketing no longer emphasizes the interests of producers, but those of consumers. Additionally, companies are increasingly encouraged to consider the consequences their actions might have on society and the environment. This has made it more important to define guidelines for ethical and socially responsible behavior to help managers in their attempt to find a balance between the interests of the company, consumers, and society. Many aspects of marketing are not specifically regulated by law, yet they can be ethically controversial, requiring careful consideration by businesses to avoid negative consequences. Ethical issues often involve only the buyer and seller. However, there are also issues that affect the entire society. For example, if an individual buys motor oil and then dumps the used oil on the road, it affects the whole society. The question that arises is: should the seller of oil be concerned about potential damage caused by its users? And how? This is one of the problems that shows the importance of corporate social responsibility, meaning that companies must consider the social impact of their products, not only direct impacts on customers but also indirect impacts on the community. The implications of a company\'s marketing choices on social welfare must therefore be evaluated, and some scholars emphasize the importance of the concept of social marketing, or the need to satisfy consumer needs in a way that brings well-being to society. The concept of social marketing is closely linked to the concept of macromarketing, which studies the aggregate flow of goods and services in relation to societal well-being. Macromarketing also addresses broader issues such as the cost of marketing, advertising waste, and the consequences that the marketing system can have in terms of pollution and resource scarcity. Micromarketing, on the other hand, analyzes how a company manages its marketing activities and allocates its resources to customer well-being. Marketing involves every individual and organization. To understand how, we must analyze: 1\. Who does marketing: All organizations, from those producing goods like Fiat, or services like Alitalia, or those selling like Rinascente. Marketing has as its object what they have to offer. Today, however, new types of marketing exist. For example, even non-profit organizations do marketing. Schools and universities also use marketing programs to attract funds and students. Cities, states, and countries turn to marketing to attract tourists, host events, and obtain new investments to develop the labor market. Marketing can also be used in awareness campaigns or political campaigns. 2\. What is the object of marketing: It has as its object goods, services, and ideas. Goods are physical, services are intangible, while ideas are abstract but imply reflections on causes and actions. A product can be either a good, service, or idea indifferently. 3\. Who buys and uses the object: Both individuals and organizations buy and use goods that are the object of marketing actions. Final consumers are defined as all individuals who use goods and services purchased for family use (to use them and derive utility, not to resell them). Organizations, or industrial buyers, are defined as all producers, wholesalers and retailers, and government agencies that purchase goods and services for their own use or to sell them (to fuel a production cycle, to resell a product, or to make it available to the community). Although the terms customers, consumers, and buyers are used interchangeably, they are actually entities with very different behaviors. 4\. Who benefits from marketing activities: In our free market society, there are 3 groups that benefit: 1) consumers who buy, 2) organizations that sell, and 3) the community as a whole. Competition between alternative goods and services allows consumers to find value in better products, lower prices, or more sophisticated ancillary services. Allowing consumers to choose means satisfying them and giving them the opportunity to increase their well-being. Organizations offering products aimed at satisfying needs through effective marketing programs are multiplying, due to increasingly fierce competition, favored by technological innovation. A market-based approach, therefore marketing, can also benefit society as a whole, stimulating competition, improving the quality of products and services, and at the same time contributing to price reduction. All this makes countries more competitive internationally and favors the creation of new jobs and better living standards for citizens. 5\. How it benefits from these activities: Marketing creates utility, that is, the benefits or value that the customer obtains when using the product. This utility derives from the exchange process that underlies marketing. There are 4 types of utility: 1) form utility, 2) place utility, 3) time utility, 4) possession utility. Form utility is the value that consumers give to the production or alteration of a good or service. Place utility is the value that consumers attribute to the availability of a good or service where they need it, while time utility consists of the value that consumers assign to the availability of a good or service when they need it. Possession utility, on the other hand, consists of the value that consumers give to the ease with which they can purchase a product in order to use it. Although form utility is thought to be beyond marketing activity and more related to productive activity, an organization\'s marketing activities also influence the characteristics and presentation of the product. Marketing creates utility by bridging the space (place utility) and time (time utility) that separate consumers from the products offered (form utility), allowing them to possess and use them (possession utility). **Chapter 2** Strategic planning is a formalized activity aimed at defining business strategies to generate the decisions and actions necessary to realize the organization\'s vision for the future. It is a managerial process designed to develop and maintain an effective correspondence between the organization\'s objectives, its resources, and the opportunities offered by the reference environment. For businesses, the market-oriented strategic planning plan constitutes a logical and instrumental model that allows them to face the challenges posed by a competitive and constantly changing environment like the current one. The relevance of the planning process for defining strategies and structuring and evaluating actions is due to a series of changes that have occurred in the economic-competitive scenario in recent decades. In the phase of economic growth following World War II, companies found themselves in a favorable environment. With the slowdown in economic growth and, therefore, with the increased level of competition, the need for a systematic approach to defining and implementing strategic choices spread. Companies\' attention towards analyzing competitive forces operating in the market and the ultimate causes of profitability increased, as did the search for a sustainable competitive advantage. A change of this type led to a redefinition of how to look at the company, starting from its breakdown into elementary units of activity, up to the definition of analysis models and tools, such as portfolio matrices, capable of providing formal and qualitative support for strategy definition. Organizations can broadly be divided into businesses and non-profit organizations. A business is a private organization that serves its customers to make a profit, which is essential for its survival. Profit is the compensation a company receives for taking the risk of offering a product for sale and corresponds to the difference between revenues obtained and costs incurred (R = Ri - CT). A non-profit organization, on the contrary, is a non-governmental entity that serves its customers without profit being among its objectives. Businesses, especially large and complex ones, can be structured across different organizational levels. This distinction is important in strategic planning because the scope of goal definition changes based on the level considered. The corporate level coincides with the central management of the company and is the level at which top managers develop the overall strategy of the organization. Companies active in more than one market and offering a wide range of products, such as Johnson & Johnson, manage a portfolio of activities that fall under different strategic business areas (SBAs), or strategic business segments, or product-market areas. The term STRATEGIC BUSINESS AREA (SBA), or Strategic Business Unit (SBU), refers to a portion of the organization that markets a set of related products intended for a well-defined group of customers. SBAs are defined based on elements of homogeneity that allow grouping products into subsets to be managed with high interdependence. While in the past, the tendency was to base this on productive homogeneity, today, consistent with a marketing and customer orientation, reference is made to the homogeneity of satisfied needs. For this reason, products based on very different technologies but similar in value proposition to the consumer can coexist in the same portfolio. In defining an SBA, one must consider who is being served, the type of need satisfied, and the technology used to do so. An SBA must possess two fundamental requirements: 1\. It must consist of a single set of activities that can be the subject of an autonomous planning process. 2\. It must have a specific competitive reference system with which it constantly compares itself. Each SBA is managed by a manager who assumes responsibility for strategic planning and performance in terms of profits. The SBA level is where management makes decisions regarding strategies necessary to seize all opportunities that can create value in the reference market. Strategic decisions made at this level are therefore much more specific than those concerning the corporate level. There is also a hierarchy here for the decisions that management makes. Marketing and other specialized activities, such as finance, research and development, and human resource management, are present in each SBA as functions, i.e., groups of specialized professionals who work daily to oversee a certain area of the company\'s activity. The term \"area\" is often used to indicate such specialized functions, such as the marketing area or the information systems area. Decisions made at the functional level have an operational character and refer to specific areas of business management. The main role of marketing is to look outside the organization to keep it always oriented towards customer value. A diagram of a company AI-generated content may be incorrect. In a large company with numerous SBAs (Strategic Business Areas), marketing can be called upon to help identify major consumer trends as a guide for allocation choices among different SBAs, thus supporting corporate planning. At the SBA level, marketing may be tasked with ensuring the organization\'s leadership in developing a new integrated customer service program that covers all SBAs, for example. Not all companies need to distinguish between SBA and corporate levels. In smaller ones, they often coincide, while in larger ones they are divided to promote efficient and effective functioning. Marketing is part of a team of functional specialists, and it is here that it performs most of an organization\'s work. It is at this level that customer audits are conducted, products are created, and needs are met. The marketing area is not a standalone area; rather, it collaborates with all others to satisfy customers and create value. For the development of new products or the implementation of new projects, it is now common to use cross-functional teams, i.e., small groups of people from different functions who are responsible for achieving a set of common objectives. The purpose of cross-functional teams is to achieve greater efficiency by reducing the time needed to complete a given project and preventing conflicts between functions through direct and continuous interaction. All organizations need a reason for being and a line of direction that makes it possible to practice them. This is where important factors such as field of activity, mission, culture, and objectives come into play. When an activity sets out to do something, at first it may seem clear, but as you go along it\'s easy for the question to arise spontaneously: \"What is my field of activity?\" (i.e., the reference business), or who are the customers and what do I offer to create value for them? One way to define an organization\'s field of activity is to try to know those to whom it offers its products and the value they receive, placing customer orientation. A business area, therefore, is like a process to satisfy a customer and not a process for the production of goods. *Example of an SBA: a company that deals with snow sports equipment, setting as a signal the sale of skis and rackets will limit its business area compared to signaling fun in the snow, without going too far to avoid misunderstandings or having the opposite effect.* Once the field of activity, or the SBA(s), is established, the organization can define its mission, which is the declared objective, establishing its clientele, markets, products, technologies, and values. Often, the written statement of long-term objectives, also called vision, is inspired by something that aims to elicit loyalty and consensus from employees and all those with whom the organization is in contact. The mission, therefore, is a statement capable of expressing clearly and concisely the distinctive element of the company\'s offer to the market. This statement should express, more or less explicitly, the fundamental guidelines according to which to operate, the purposes towards which the company is oriented, and the structural elements that will be implemented to execute the objective. The mission should be an expression of the company\'s history, values spread at managerial and operational levels, how it views the environment in which it operates, its resources, and its distinctive competencies. From the mission should flow fluidly the implications about strategic and operational lines to follow in both ordinary and critical situations, indications on competitive environments, and ways to motivate employees, giving them the possibility to attribute meaning to their work. Examples of missions: Walt Disney declares that its mission is to make people happy, Google wants to organize the world\'s information to make it universally accessible\... other missions can be more related to the product being sold, such as Nokia wanting to connect people by helping them satisfy the natural need for social relationships. The organization must relate not only to its customers but also to its stakeholders, i.e., all people and organizations influenced by its behaviors. These can be employees, owners, and customers, but also other companies and organizations with which the company has relationships, such as suppliers, commercial intermediaries, and unions, and the communities with which it interacts. The task of communicating the mission falls to marketing at the corporate level, which can be done in various ways from written form to videos or murals. Whether at the corporate, functional, or SBA level, organizational culture exists as a unitary fact, i.e., as the set of all values, ideas, attitudes learned and shared by all members of an organization. Objectives translate the mission into targeted performances that must be achieved within a predefined timeframe. These objectives allow evaluating how the organization is realizing its mission. Objectives are present at corporate, SBA, and functional levels. All objectives at the lower level must contribute to achieving those at the next higher level. Company objectives are varied and can be pursued jointly: 1\. Profit 2\. Sales 3\. Market share: the company may decide to increase its market share, even at the expense of higher profits, in anticipation of future advantages, for example, to prevent competitors from entering. Market share is the ratio between total sales realized by the company and total sales realized by all companies in the sector, including the company itself. 4\. Quality 5\. Customer satisfaction: the company exists thanks to customers. The degree of customer satisfaction can be evaluated directly through surveys or deduced from data such as the number of complaints filed or the percentage of orders placed within 24 hours of receipt. 6\. Employee well-being 7\. Social responsibility: the company must find a meeting point between the various interests of customers, employees, shareholders to promote the general well-being of all, even at the expense of its short-term profits. There are private organizations that do not have profit as their objective, such as museums and hospitals. Before making decisions, a company must evaluate its current position and what it wants to achieve. To understand one\'s position, it is necessary to comprehend the microenvironment in which one operates and assess the health status of one\'s activities. Among the various elements of the microenvironment, it is important for the company to understand who its customers are, what its competencies are, and who the competition is. A company\'s customers are all those who consume the product, however, they are not all the same. They can be distinguished by tastes, have different preferences on fat content in the case of a physical product, differences regarding prices, or varying consumption based on the season. Decisions must be focused on different sets of customers because only in this way can real value be guaranteed to them, trying to serve not only current customers but also potential customers who could do so if it had the desired characteristics. Establishing what makes an organization\'s activity distinctive means defining what its capabilities or competencies are. Competence is nothing more than the set of specific capabilities, defined in terms of skills, technologies, and resources, that distinguish one organization from another with which it competes. By leveraging these competencies, an organization can achieve success, but only if they can guarantee it a competitive advantage, that is, unique strengths compared to the competition, which can be higher quality, a faster response to the market, lower costs, or greater innovation. Quality means the characteristics and properties of a product that determine its ability to satisfy customer needs. One tool with which quality improvement can be pursued is benchmarking, that is, trying to discover how the competition manages to obtain better results to imitate or surpass it. Benchmarking can lead to analyzing activities that are not even within one\'s competence. In the era of global competition, the conflicts between sectors that can be defined as competition and those that are not considered as such are increasingly blurred. The companies that manage to establish themselves are those that continuously keep competition under control, observe its evolution, and manage to respond to it by defining effective strategies. The attribution of objectives and resources to a Strategic Business Unit (SBU) depends on its health status, therefore on the role it can play within the overall strategy of a company. One of the tasks of strategic planning is to establish which areas of activity to divest and which to maintain, and within the latter, which to manage directly and which in partnership or outsource. For this, there are various analytical systems that allow comparing the characteristics of SBUs and expressing an evaluation on them. Among the most widespread, we find BCG (Boston Consulting Group) and the GE (General Electric) matrix, called growth/market share and attractiveness/competitive position respectively. Both matrices allow distinguishing between activities those to invest in for future profitability and which to abandon. The BCG has the advantage of being simpler, although it takes fewer variables. The GE, although more complex to implement, takes a larger set of variables and their relative weights, giving more precise and detailed information. The ideal would be to deploy them together and integrate the information taken from each. Regarding the evaluation of the opportunity to outsource some activities, the performance/strategic relevance matrix can be implemented, which allows identifying the activities that represent the company\'s strengths and evaluating which processes to carry out directly, which in partnership, and which to delegate externally. The BCG portfolio analysis model uses quantitative indicators of performance and development objectives to analyze an organization\'s business areas, as if these were a series of separate investments. In addition to being used at the SBU level, the BCG analysis model has been applied at the product line, individual product, and brand levels.. The vertical axis represents the market growth rate, which is the annual growth rate of the reference market or sector in which a particular SBU competes. The horizontal axis represents the relative market share, which is the ratio between the sales volume of the SBU and the sales volume of the leading company in the sector in which it competes. The cash cow quadrant corresponds to situations of limited growth but with high market penetration. This condition is typical in the maturity phase of the life cycle, so high investments are not necessary for developing awareness and sales of products. Given the limited investments and high level of sales, these SBUs generate substantial profits that go well beyond the amount of resources needed to maintain their position and thus constitute the main source of profitability for the company. Part of the profits developed here can be invested in other SBUs to ensure their future development. The star quadrant identifies products with high values for both growth rate and market share, a situation that characterizes the development phase in a product\'s life cycle. These are often the company\'s flagship products, but they may require financial commitment to maintain their position and future growth. If their growth slows down, they end up in the cash cow quadrant. Despite sales, stars are usually not great generators of short-term liquidity. The question mark quadrant identifies products with a high expansion rate but with a low market share. This condition is typical of many products in the initial phase of their life cycle. Question marks require high investments both in terms of promotion and increase in production capacity because they need to develop and consolidate their presence in the market. In the short term, consequently, they do not generate profits or sometimes incur losses. The dog quadrant represents SBUs with low market share and modest growth rate. This quadrant is typical of the final phase of a product\'s life cycle, where its market access is limited and growth prospects are lacking. The most appropriate choice, unless there are signs of recovery, is to divest them, as they represent an unnecessary burden or a loss. A company\'s SBUs almost always start as question marks, then move clockwise across the various quadrants, becoming stars first, then cash cows, and finally dogs. A balanced portfolio should contain an adequate quantity of cash cow products (present profitability), some stars (medium-term profitability), and question marks (future profitability), while it is preferable that dogs are eliminated. Most companies have only limited possibilities to influence the market growth rate, so in the context of portfolio activity analysis, the only option is to try to change the relative market share, establishing the appropriate quadrant with consequent actions taken for each SBU. However, the BCG matrix has some limitations. In fact, it can be limiting to evaluate the attractiveness of an activity only through its growth rate, or to associate a competitive advantage position with a high market share. The dimensions of attractiveness and competitive position, in fact, can depend on many factors. The attractiveness of a market depends on the degree of accessibility for the company, its size, the presence of a well-structured distribution system, favorable legislation, limited presence of competitors, while competitive advantage can derive from a strong image, high market share, commercial organization, or many other factors. Attractiveness and competitive position are the result of multiple factors, and careful measurement of these two factors can be improved using the scorecard tool. A scorecard is a grid constructed with respect to various criteria that reports a series of parameters relevant to evaluating a company\'s performance with respect to certain aspects of interest. It can have dynamic analysis purposes, i.e., over time, or benchmarking, where competitors\' values are measured. The average recorded in the scorecard gives one or more summary scores of the company\'s overall performance. This score can result from a simple or weighted average if some factors have greater weight than others. The logic of the scorecard is the basis for the GE matrix analysis method. Like BCG, it relates an assessment of market attractiveness to the competitive position the company has in it. While BCG uses only two indicators, the growth rate for attractiveness and relative market share for competitive position, GE considers the various factors that together contribute to defining them. The factors used to measure attractiveness are the variables that best explain the characteristics of the sector and strategic group; those related to competitive position are based on the company\'s strengths. GE is not based on objective measurements, but on management\'s evaluation of the various factors that together contribute to defining attractiveness and competitive position. For each value, numbers from 1 to 7 are assigned, with 1 indicating the worst possible condition and 7 the best. The value of attractiveness and competitive position will be given by the average of the factors used. By crossing the obtained data, a 3 X 3 matrix is created that identifies 9 quadrants: A screen shot of a computer AI-generated content may be incorrect. However, there are limitations to this model: 1\. There is a high degree of subjectivity in evaluating the indicators. 2\. When the number of factors used to indicate attractiveness and competitive position is high, the process becomes lengthy and cumbersome, especially with limited availability of precise information. 3\. The value of each indicator is an aggregate of factors, so the result will vary based on the aggregation method, depending on whether or not weighting is used. BCG and GE differ not only in how they define and measure attractiveness and competitive position but also in the degree of precision that results. The two matrices may produce different values, but this should not discourage their use, as it stimulates and guides reflection. After analyzing the different health status of SBUs, it may be appropriate to evaluate the internal capabilities of the SBU, namely strengths and weaknesses, related to both the various activities performed (marketing, finance, production, and organization) and the individual products it oversees. This evaluation is based on the strategic relevance that the activity or product has for the company, i.e., its contribution to seizing market opportunities and ensuring success in the SBU. The second evaluation factor concerns the company\'s performance related to activities or products. A schematic representation of these evaluations can be made through the \"performance/importance\" matrix, which can be equally applied to both the different elements of the SBU\'s value chain and the individual products it manages.  The performance level is defined for activities based on the efficiency/effectiveness with which the company carries them out, and for products based on the results obtained in the market. The level of importance depends on the strategic relevance of the activity or product. The first quadrant (divestment) contains activities or products that have no particular strategic relevance and for which the company has no distinctive capabilities. The investment priority quadrant, on the other hand, contains activities or products in which the company does not excel; however, due to their strategic relevance, it becomes fundamental to concentrate efforts to increase performance. The maintenance quadrant identifies products or activities on which the SBU\'s efforts are concentrated and which are its strong point. The company will need to constantly monitor the environment to anticipate developments that could modify their position. The low priority quadrant identifies activities and products in which the company has good performance, but which do not have strategic relevance in the reference situation. The company may maintain these products and activities in case changes in the reference context increase their importance. If the maintenance quadrant identifies the SBU\'s strengths, the investment priority quadrant identifies its major weaknesses. For the latter, work will be needed to internally develop the capabilities and competencies necessary to increase their performance level. Alternatively, the company may collaborate with a partner (another company) to address the weakness. In the same perspective, the company may also adopt a partnership for low-priority products or activities, making its competencies available to a company operating in a context where these have strategic relevance. Once the current position has been evaluated, the next step is determining the future position. Growth elements in business strategy are present in almost all strategies of every company, whether it\'s an increase in sales, market share, profit, or organizational size. Besides being a necessary condition for surviving competition, growth is a sign of vitality in the company. It stimulates initiatives and improves staff and management motivation. Strategies can be defined: 1\. Within the scope of current activities (intensive growth) 2\. Within the supply chain in which the company operates (integrative growth) 3\. In new areas (diversification growth) Within each scope, different specific strategies can be identified: Intensive growth: 1\. Market penetration 2\. Product development 3\. Market development Integrative growth: 1\. Upstream integration 2\. Downstream integration 3\. Horizontal integration Diversified growth: 1\. Concentric diversification 2\. Pure diversification An intensive growth strategy, achieved through further penetration of the current market, is justified if the opportunities offered by available products and/or current markets have not been fully exploited. This strategy can essentially translate into 3 objectives: primary demand development, consumption frequency development, and customer acquisition from competitors. Primary demand development is an action usually carried out by the market leader and aims to increase demand by converting non-consumers into consumers. Consumption frequency development involves stimulating current product consumers to consume it in greater quantities per occasion, with greater regularity across different occasions, or in new consumption situations. Finally, taking customers from competitors translates into aggressive marketing policies aimed at incentivizing consumers to switch brands, for example through price promotions or free sample offers. The product development strategy applies when there are untapped potentials in the current market that cannot be fully exploited with the existing product. To leverage these, new variants must be developed, segmenting the market and expanding the product range. This can be done through higher or lower quality variants, opting for vertical differentiation, or targeting a set of customers with different preferences regarding the product\'s characteristics, opting for horizontal differentiation. This means working on subjective rather than objective quality as in the first case, to better adhere to consumer subgroups\' preferences, offering combinations of characteristics different from existing ones. Finally, expanding the product range consists of adding complementary products to the existing one to complete the consumer offering system. The market development strategy is implemented when the current market/segment is saturated, but there are other markets/segments where the product can be successfully sold. The success of this type of development is mainly based on the company\'s distribution and internationalization capabilities. The new market can be represented by new demand segments, for example, introducing a product typically intended for the industrial market into a consumer market, like L\'Oreal selling not only to hairdressers but also in salons or to end consumers. Another way to develop the market is through the use of new distribution channels, such as Coca-Cola selling through vending machines in schools or offices. A final method of market development is geographical expansion, or exporting products to different geographical markets. These three different reference strategies are only possible if there are new opportunities for the available product in the current operating market. Hence the decision whether to continue evaluating the inherent potential of the supply chain or decide to enter other markets. Growth hypotheses related to one\'s own supply chain fall within a new integrative strategy. Such strategies make sense when the company believes it can improve its profitability by directly controlling strategically important activities typical of its suppliers (upstream integration) or customers (downstream integration). Taking control means performing these activities directly where the competencies already exist or acquiring other companies that possess them. The objective of such a strategy may be to ensure the regularity of a supply source or control of the distribution network. In addition to upstream and downstream integration strategies, there is a third model, horizontal integration, which consists of acquiring competitors, such as McDonald\'s with rival Burger King. The final type of growth strategy is represented by diversification, thus seeking development opportunities simultaneously for a new product and in a new market. This path is usually considered when there are no adequate opportunities for intensive or integrative growth. Diversified growth is the most dangerous and costly development path for the company, but it\'s also the one that could bring the highest level of innovation and allow for independence from a specific context. Diversification can be concentric or pure. The former refers to cases where the company moves into sectors that present the same synergy and complementarity to the one in which it already operates, counting on the possibilities of reallocating part of the existing competencies and developing new ones. The latter refers to cases where the company moves into new sectors and typically resorts to acquisitions to fill the gap. The Ansoff matrix, which relates the dimensions of product (current vs. new) and market (current vs. new), is useful for classifying intensive and diversified growth strategies and evaluating the implications in terms of changing competencies necessary to successfully pursue the identified growth paths. From the intersection of the two dimensions, a 2x2 matrix is derived where each quadrant shows a different path with specific characteristics in terms of potential/innovation and risk. A blue squares with black text AI-generated content may be incorrect. Faced with development needs, the first path a company should evaluate is to deepen its core business, i.e., improve its presence in markets/segments where it is already active. When opportunities on this front are limited, it should consider approaching new markets and/or products. A market penetration strategy is feasible when the company has not yet fully exploited the opportunities offered by its current markets/segments or products, and plans to achieve primary demand development, increase consumption frequency, or take customers from competitors. This type of operation doesn\'t have high costs or investment risks, as it involves greater exploitation of already obtained technological competencies, but it also offers the lowest level of innovation and thus lower long-term potential. The product development strategy is employed when the company believes there are potentials in the current market that can\'t be exploited with existing products, so a new product is useful. This strategy implies maintaining or strengthening current competencies and innovation on the technological front. Innovation can offer high growth potential, but higher risks on the new product\'s success and higher costs for its development. The market development strategy is used when the company believes that the already developed product can be successfully exported to a new market (both in geographical and sector terms). This type of operation allows maintaining and exploiting technological competencies but requires developing marketing techniques. In this case too, the development possibilities are good. The fourth alternative involves diversification, which is appropriate when the company realizes that the potential of current products and markets is not sufficient in the long term. This entails higher costs/risks for the company in the need to develop new competencies, both technological and marketing. This can be concentric if it enters a market with similar synergy, or pure if it changes radically. To ensure coherence between objectives defined at the corporate level, their declination in the marketing plans of SBUs, and subsequent implementation, it\'s appropriate for a company to define a fundamental strategic orientation. Porter\'s model is useful here, identifying 4 basic competitive strategies that can be adopted by any company, regardless of its products and the sector in which it operates, to obtain a competitive advantage. The basic strategies can be classified based on two dimensions. The first clarifies the nature of the competitive advantage, which can lie in cost leadership or in the ability to distinguish oneself from competition by developing differential elements in the offer. The second delimits the competitive scope, which can be broad (aimed at a large number of segments) or limited (specialized on one or few segments).  1\. Cost Leadership: A strategy of this type allows for strong price competitiveness that is exercised across the entire market or a high number of segments. It requires compressing all cost items through strong efficiency that will require equally substantial economies of scale, without sacrificing the product too much. For example, Walmart achieves this through its logistics infrastructure and excellent electronic data exchange system with suppliers, resulting in cost savings and lower selling prices. 2\. A differentiation strategy, on the other hand, assumes that products present significant differential elements in functional and symbolic terms, so that different segments are willing to pay a premium price compared to that of competitors. 3\. A cost focus strategy requires pursuing high efficiency to offer products at low prices, which, however, are intended for a limited number of market segments. For example, Alps Eagles flights, which compete with limited routes at aggressive prices. 4\. A differentiation focus strategy involves specialization in a narrow portion of the market, which one tries to satisfy in the best way compared to competitors, focusing on satisfaction elements typical of that segment. For example, Club Med villages for singles only. Once identified, the strategy will constitute the prerequisite for framing, developing, and implementing the marketing plan. **Chapter 4** Competitive analysis aims to identify and measure the structural and dynamic components of the competitive scenario, enabling the company to identify present threats and opportunities and, aware of its strengths and weaknesses, define the most suitable strategy for achieving a lasting competitive advantage. The analysis can cover an industry context or a comparison between multiple industries. Moreover, the purpose can be predictive, when it serves to identify among multiple industries or positions within an industry the one with the highest probability of success, or diagnostic, when the objective is to verify the health status of the industry in which one operates or even change industries. By crossing scope and purpose, one can define the path that a company should ideally follow, beginning with the selection of the industry in which to operate, within which to find a sustainable competitive positioning. Once found, it will be necessary to constantly monitor sustainability to evaluate necessary small corrections, while maintaining constant attention to opportunities offered by other industries. All this can be summarized as: 1\. Macro-environment analysis: aims to find factors of general interest to capture the main ongoing trends with their potential or threats. 2\. Industry analysis: consists of studying the relevant factors specific to the industry of interest to identify its structural characteristics and therefore constraints. 3\. Competitive analysis: involves an evaluation of the competitive forces internal to the industry that may constitute a threat. 4\. Internal analysis: consists of identifying activities and resources that allow the company to plan its market offering, but also to identify elements that can constitute a current or potential critical success factor. The macro-environment analysis serves to identify the most important triggers and opportunities for a company\'s activity, but also to identify the most important dynamics at work in the political, economic, and social systems in which it operates. The dynamics of the demographic environment are very important for evaluating the opportunities offered by different markets. These dynamics refer to factors such as population growth, birth rate, migration balances, and composition by age, sex, and ethnicity. The analysis of the economic environment involves monitoring a series of factors such as GDP growth and disposable income, wealth distribution and income differentials, propensity to consume and save, the distribution of consumer spending among major expenditure categories, and the inflation rate. This type of analysis plays a central role in evaluating the state of the market in which one operates and its profitability. It provides the basic data for all forecasts made in the budget base when setting objectives for the following year\[9\]. Among the economic variables, it\'s necessary to distinguish between gross income, disposable income, and spendable income. Gross income is the total income, disposable income is what remains after paying taxes, and finally, spendable income is what can be spent from the total that remains, of which a part will still be allocated for savings. The physical environment refers to the natural environment and everything related to it. This includes the possibilities of exploiting the territory, but also the need to preserve it in a perspective of sustainable development. Information is also gathered on raw materials for industry, accessible energy sources, and opportunities for agricultural and tourism development. The technological environment is represented by factors related to scientific discoveries, technological advancements, and their current and potential applications. In terms of innovative scope, these factors, particularly ICT (Information and Communication Technology), are the most impactful. The development of e-commerce has, in fact, overturned the balance of sales channels, opening up a new scenario with very significant implications for the competitive dynamics of numerous sectors, especially in services. Network technologies have influenced all business activities and functions and are used today for sales monitoring, information sharing between and within business functions, real-time communication with suppliers, management of accounting data, and in every other possible management area. In addition to open systems like the internet, companies are increasingly equipped with intranet systems, which allow communication within the organization, and extranet, for direct communication with suppliers, distributors, and other partners such as advertising agencies. The analysis of the political-institutional environment concerns factors generated by the activities of entities and institutions that represent the community as a whole, such as the government and state bodies, or particular groups of individuals, such as political parties or trade unions. For companies, the government\'s economic and social policy interventions, the legislative system, and market regulation are relevant, as they determine what will be possible for the company to implement, whether it can find new spaces in previously closed markets or whether barriers are created in other markets. Monitoring the sociocultural environment means referring to the values, beliefs, moral norms, and lifestyles prevalent in a given society. These are fundamental elements for defining the rules of behavior to adopt in managing all moments of interaction between a company and its market. As such, they are central to the development of marketing activities. The analysis of the sociocultural structure is crucial for giving meaning and personality to the brands that identify a company\'s products. Brands are no longer just simple names or signs, but immaterial elements that connote values and behaviors, thereby enriching the benefit transferred to consumers. Once the general characteristics of the operating system are clarified, it\'s possible to focus on the specific sector of interest and examine its structure. Understanding a sector\'s structure means identifying the constraints the company will face and which actions are possible and most advantageous to implement. The most well-known reference model for sector analysis is called Structure-Conduct-Performance (SCP). It\'s based on the assumption that the structural conditions of the reference environment determine the boundaries within which a company can act and prefigure its possible actions with the results it could obtain. In practice, it\'s a structuralist model that shows the constraints limiting the company\'s degrees of freedom. The most relevant criticism raised against it concerns the need to also consider the feedback effects that companies\' behavior has on the market structure. For example, in a fragmented market, the ability of a small group of companies to operate successfully could favor the exit of many competitors. In already concentrated markets, the feedback could consist of actions taken by companies that have the size and capacity to intervene to remove some of the constraints that limit their freedoms. The SCP model is based on the assumption that the results obtained by different companies are a function of the structural characteristics of the environment in which they operate and their mode of operation. The variables that define and detect a sector\'s structure are: 1\. Market form 2\. Entry and mobility barriers 3\. Cost structure 4\. Possibility of vertical integration 5\. Level of internationalization The market form is a concept that summarizes the modes of competitive interaction between companies operating in a given area of activity, which depend particularly on their number, their power of mutual conditioning, and the degree of product differentiation. The reference models are: 1\. Perfect competition: A very high number of companies, and none of them can influence price levels with their behavior. 2\. Monopoly: The opposite situation to perfect competition, where only one company satisfies demand and decides the price. 3\. Oligopoly: An intermediate situation, characterized by a small number of companies competing while considering each other\'s moves. Depending on whether the product is differentiated or not, it\'s called differentiated or pure oligopoly. 4\. Monopolistic competition: There are both prerequisites of perfect competition (high number of companies) and monopoly (each company offers a differentiated product that makes it unique to some extent), and the outcome of the competitive game can, depending on the cases, approach either perfect competition or monopoly. To define market forms, it\'s therefore necessary to refer to the degree of product differentiation and the number of companies or, better, the level of market concentration, which allows understanding how various companies share the available demand. When the supply is not very concentrated (fragmented), the market is divided more or less equally among many companies, and none of them can influence it with their actions. However, when the supply is highly concentrated, few companies are present in the market, and their actions and decisions affect the market itself. The level of concentration in an industry can be measured with indices such as the Herfindahl-Hirschman Index (the value of concentration is given by the sum of the market shares of all companies squared) or the CR4 concentration ratio (in which the level of concentration is expressed by the sum of the market shares of the top 4 companies in the industry). Among the structural characteristics of an industry, the barriers that limit the possibilities of movement of companies based on their strategies are very important. In particular, a distinction is made between entry barriers, mobility barriers, exit and downsizing barriers. Entry barriers are those factors that make it difficult (expensive) for a new entrant to enter an industry. These include: high capital requirements for initial investment; the need to have patents and licenses; unavailability of a well-known brand\... barriers of this type can also hinder internal mobility within the sector; therefore, a company cannot move to more attractive segments. Exit and downsizing barriers are factors that hinder the reduction or cessation of activity in a certain sector. These include moral and contractual commitments to stakeholders, constraints imposed by authorities, a high level of vertical integration, etc. Another key element in understanding a sector is the cost structure. A company\'s total costs consist of a fixed part (costs that the company incurs even when the quantity of product is 0) and a variable part (linked to the volume of activity produced). Different cost structures imply different marketing procedures, different profit opportunities, and different risks. When the fixed cost component is substantial, the cost structure is said to be rigid, since total costs are not very sensitive to variations in product output. In a cost structure in which variables predominate, therefore flexible, the correlation between increased volumes and total costs is high, while the advantages of economies of scale are less consistent. Furthermore, a rigid cost structure constitutes a defense against the potential threat of new entrants, on the one hand, but also a risk in cases of economic recession, in which a flexible cost structure would be preferable. Since economies of scale are more relevant in the face of a rigid cost structure (since they allow the absorption of fixed costs), companies operating in a scenario of this type will aim for rapid volume development, obtainable through aggressive pricing policies. It follows that total revenues will be lower than in the price scenario of variable costs. It follows that reaching the break-even point between revenues and total costs will be faster in the second case. However, once the break-even is reached, the profit margin is higher in the first case. For this reason, a variable cost structure is more suitable for situations in which sales volumes are low, while in the case of large volumes, it is better to adopt a rigid cost structure. The opportunity for vertical integration both upstream and downstream represents another descriptive variable of the sector. For a company to be able to carry out integration processes can mean obtaining advantages such as cost reduction, better control of the value chain, greater proximity to the consumer, commercial and fiscal advantages. This type of approach is successful in many Italian fashion houses, such as Dolce & Gabbana. While some sectors have a local configuration, others in increasing numbers are now defined on a global scale. Competition in global scenarios forces companies operating in them to give maximum impetus to the development of relevant technology, as well as to the achievement of economies of scale (greater number of products, lower total costs). Globalization has effects on small and medium-sized enterprises, constituting for them not only a threat but also a strong opportunity. The industry analysis focuses on the macro-environment and macro-competitive variables. This must be followed by a more detailed analysis relating to the specific competitive context in which the company operates. The competitive analysis consists of a series of sub-phases: 1\. Identification of competitors 2\. Identification of competitors\' strategies 3\. Evaluation of competitors\' strengths and weaknesses 4\. Evaluation of competitors\' reaction capabilities In the process of competitive analysis, a first fundamental step is the identification of competitors and, to do so, it is necessary to consider competition from 3 complementary perspectives: industry, market, and extended. According to the first criterion, competition is constituted by companies that offer the market a product or class of products with a high degree of substitutability. The latter is measurable based on the cross-elasticity of demand: a high (negative) cross-elasticity between two products means that an increase in the price of one leads to a strong increase in the demand for the other. The second criterion, rather than starting from characteristics related to production and product, refers to the needs satisfied. In this perspective, competitors are companies that satisfy similar needs. The third criterion, that of extended competition, is even more general and leads to including all competitive factors whose combined effect determines the long-term remuneration of invested capital. These factors can be identified and synthesized through Porter\'s 5 forces model, where dangers can be constituted not only by current competitors but also by potential entrants, customers, substitute products, and suppliers. Competition between companies in a certain sector manifests itself through the use of all marketing levers: price maneuvers, advertising campaigns, service improvement, launch of new products\... The level of competitive tension depends on various factors such as the market form and degree of concentration, the growth rate of demand, the cost structure, opportunities for differentiation, and exit barriers. Typically, a high level of concentration, which determines a strong interdependence between companies, offers greater possibilities to define strategies and constitute a competitive advantage capable of increasing the company\'s profitability. If the market is very fragmented, it is difficult to move away from conditions that approach those of perfect competition, where the only criterion that allows staying in the market is cost reduction. The growth rate of demand plays a fundamental role. In strongly developing markets, in fact, tension is lower because the progressive increase in demand allows all competitors to grow without interfering with others. In mature markets, however, companies must subtract sales from competitors. High internal competitive tension in the sector is also observed in cases where unit profit margins are reduced and all companies must aim for large sales volumes to ensure adequate profitability. If the opportunities to differentiate products are limited, then the elasticity of demand increases and therefore competitive tension. To identify competitors, the company adopts two perspectives: one defined at the industry level, the other at the market level. Potential entrants constitute a threat because they increase the contestability of the market and thus reduce profit prospects. Another important danger is that a new entrant may introduce an innovation to the market that erodes, if not nullifies, the competitive advantage of existing firms. This is the case of Apple, which operated only in the personal computer sector, when it then inserted itself into the portable audio device market, altering the existing equilibrium. The same thing happened when it entered the telephone sector. Potential entrants can be identified among: 1\. Companies whose entry represents a logical development path relative to the activity carried out, for example clothing brands extending to accessories. 2\. Companies whose market entry provides a source of synergy with respect to the current activity, for example Parmalat which, in addition to milk, bottles water and fruit juices. 3\. Customer or supplier companies that could decide to integrate upstream or downstream, consider brands that use a distributor\'s sign that enter into direct competition with those of the industry. 4\. All companies that can easily overcome the entry barriers of a sector. The existence of entry barriers plays a fundamental role in making the entry of new competitors less easy. The main barriers are: 1\. Economies of scale: for which a new entrant must necessarily start producing on a large scale to avoid incurring cost disadvantages. 2\. Brand differentiation and loyalty: which develop consumer loyalty and reduce the danger that the new entrant steals market share. 3\. Capital requirements: that is, the need to make substantial investments to be able to start the activity in a sector. 4\. Transfer costs: economic and psychological effort that the customer must bear to change the product. 5\. Access to distribution channels: that is, the difficulties in identifying distributors and getting them to accept the new product. 6\. Other barriers independent of company size: such as patents, special purchasing conditions for already established companies, experience effect. The possibility of substitute products increases the elasticity of demand and, consequently, constitutes a threat to those operating in a given sector. Substitutes are considered products made within the same sector and therefore based on similar technologies. From a marketing perspective, however, all those products that, while based on different technologies, are suitable for satisfying similar needs can be considered substitutes. The more generic the definition of the need, the wider the range of substitutes. Customers too, if they have strong bargaining power, can constitute a threat to the profitability of the activity. The greater the power, the greater the price reduction they can demand from suppliers, thus reducing their margins. The customer\'s bargaining power increases when: 1\. Demand is highly concentrated, consisting of a small number of customers who purchase considerable quantities. 2\. Products offered on the market are poorly differentiated, resulting in a high level of substitutability. 3\. Transfer costs (i.e., switching from one supplier to another) for customers are low. 4\. The customer is perfectly, or almost, informed about the market situation, prices, and the supplier\'s cost structure. In addition to customers, suppliers can also pose a threat if they have high bargaining power, which allows them to impose higher prices, increasing costs. Their power is strong when: 1\. The supplier group is more concentrated than the buyers. 2\. The supplier is not threatened by the presence of substitutes. 3\. The product is highly differentiated. 4\. The company represents a marginal customer for the supplier. 5\. The supplier\'s product is an important means of production for the customer company. Other possible internal threats to a sector are constituted by exit barriers, such as specialized plants that cannot be converted for production in other sectors. Identifying one\'s current and potential competitors is necessary to define the boundaries of the competitive scenario. However, not all competitors constitute an imminent and direct threat. The competitors to which the company must pay greater attention are those that operate in the same sector by implementing similar behaviors, i.e., belonging to the same strategic group. A strategic group is a set of companies that target the same objective market and apply the same strategies; the analysis of strategic groups is, therefore, a technique aimed at segmenting the competition. The criteria for segmenting competitors, i.e., the strategic dimensions according to which to define strategic groups, are many. Strategic dimensions refer to all areas on which a company can act in order to exploit the structural and dynamic characteristics of the sector. These dimensions may concern choices related to how many and which markets to serve, with which and how many products, with what level of vertical integration and internationalization, with what brand or price positioning. To avoid operating in an arbitrary and dispersive manner, therefore, it is good to identify one\'s competitive position and then identify the most relevant strategic dimensions for the sector. The competitive position is given by the market and product choices made by the company. This preliminary step allows contesting subsequent evaluations. For example, companies both in the clothing sector can operate with a high market positioning and high vertical integration, but they may not be direct competitors if one targets the female market and the other the male market. Product and market, therefore, represent the first two dimensions from which to start the analysis of strategic groups. An operation of this type uses a map of the competitive position, not to be confused with the Ansoff matrix, in which market segmentation is reported on one axis and the classification of different product types on the other. This type of mapping allows identifying, on one hand, how extensively a company covers the market, rather than focused, and on the other, who are the direct competitors in different competitive positions. In addition to the competitive position map, in the analysis of strategic groups, it is good to use other strategic variable matrices that better describe the behavior and conduct of companies in a given sector. The strategic group map allows a clustering of companies by homogeneity of market served, product type, and behavior. Based on the strategic dimensions taken into consideration, different groupings can be obtained. For example, in the case of the fashion sector, within the same competitive position, many brands can be found without them necessarily being in close competition. The main competitors are those that adopt the same basic strategies, such as those related to price range and level of downstream integration (distribution through multi-brand retailers, direct distribution through single-brand stores, network distribution through franchising), from which different competitive premises derive. In fact, a higher price range will need higher quality, while a lower price range will be more attentive to cost containment. Moreover, a limited level of integration, while on one hand involves fewer risks and investments in real estate, human resources, and training, on the other hand imposes the development of a commercial network with related management costs and contractual complexity. On the contrary, high integration allows greater proximity to the market, better conveying of one\'s communication, but requires significant investments and entrepreneurial risks. A company looking to launch a new clothing brand will need to evaluate which strategic group to position itself in, given the implications of this choice. Once current and potential competitors are identified, and those overlapping in competitive position and related strategic choices are determined, the company must assess their strengths and weaknesses. The elements to consider are multiple and concern all activities and resources of individual companies. One way to identify strengths and weaknesses is through analyzing competitors\' value chains. The final phase of competitor analysis concerns their reaction capability, i.e., the possibilities and ways through which they react to the company\'s various competitive actions. In real markets, generally far from the monopolistic or perfect competition model, there is a high level of interdependence between companies. For this reason, a company acts based on competitors\' actual actions and predicted reactions. A competitor can decide whether to react to a competitive attack (such as price cuts, communication campaigns, new points of sale). When deciding to promote an action in the market, one must evaluate if and how competitors can react and with what probability they will do so. A company might decide to expand its market share through a price reduction policy. However, if among its competitors there is one that boasts a cost leadership, supported by a solid financial situation, fairly high margins, and still improvable production capacity, it is likely to react, in turn, with the same lever. This would trigger a \"price war\" that the first company will hardly be able to sustain, as the competitor has more advantageous cost structures. Based on reaction modes, competitors can be divided into: 1\. Poorly reactive competitors: rarely respond and with little vigor to competitive attacks. This situation is often due to poor internal leadership or limited resource availability. 2\. Selective competitors: respond only to certain attacks; a cost leader, for example, might react to a competitor\'s price reduction but remain indifferent to an increase in advertising spending. 3\. Reactive competitors: react consistently to any attack. 4\. Unpredictable competitors: show no regularity in reaction modes, it\'s difficult to understand if they will react to a competitive attack, if they will do so with the same lever or another, and with what intensity. After examining the general characteristics of the reference environment, those of the sector, and those of the competitor system, the final phase concerns the analysis of the company itself, particularly the processes, activities, and resources through which it realizes its offer to the consumer. The analysis of the macro-environment, sector, and competition are focused on the external dimension of strategy, providing indications on which competitive positions a company has an advantage in practicing. Once this information is gathered, however, it is necessary for the company to look internally to understand how, given the characteristics of the scenario in which it operates, it can avoid/nullify threats and seize and exploit opportunities. For this purpose, it is necessary to conduct an analysis of its own strengths and weaknesses, as already seen for competitors. This moves to the internal component of strategy, which analyzes the productive technology and its system of competencies with a dual objective: 1) identify which of the various competitive positions can be most successfully presided over; 2) understand what to do to improve performance on an already presided competitive position. The purpose of analyzing and identifying resources and competencies is to pinpoint the activities and resources that can allow a company to improve productivity or market power. The set of internal processes that enable the construction of the offer has been defined as the value chain, where value is understood from the consumer\'s point of view. The value chain proposes a breakdown of business processes to highlight strategically relevant activities, to evaluate their costs and existing and potential sources of differentiation. A company can achieve a competitive advantage only if it manages to perform strategic activities at lower costs and with qualitatively better results than the competition. The value chain analysis allows precisely to highlight the cost, but also the contribution, generated by each phase of the production and marketing process, to the determination of the total cost and market value of the product. The margin, finally, is the difference between the market value and the costs incurred to perform each of the activities that make up the process. The activities of the value chain can be distinguished into: 1\. Primary activities: those functional to the effective transformation of inputs into outputs and their transfer to the customer. 2\. Inbound logistics: management of incoming raw material flows and inventories 3\. Production: production times, waste reduction, optimization of production capacity, possibility of customizing product variants. 4\. Outbound logistics: rapid and effective management of orders and deliveries, adequate inventory levels. 5\. Marketing and sales: branding and communication, building customer relationships and satisfaction, quality and intensity of the sales force. 6\. After-sales services to customers: customer assistance and training, repair services, financial support to retailers and customers 7\. Support activities: those that allow the performance of primary activities, ensuring their realization, management, and coordination. 8\. Procurement: quality and reliability of raw materials, components, and procurement processes 9\. Technology development: rapid ideation and development of new products and improvement of production processes. 10\. Human resource management: staff training to support quality and competitiveness objectives; stimuli and incentives for objectives. 11\. Infrastructure activities: building the company\'s reputation; defining and disseminating the company\'s culture and customer orientation The activities of the value chain are part of an independent system. The performance of one activity influences the performance of others and is influenced by them in turn. Activities are the source of competitive advantage to the extent that a company manages to achieve a reduction in its costs or increase the marginal contribution of one or more activities in building value for the consumer. The use of the value chain can be extended horizontally to competitors to create a benchmark that allows evaluating how well the company performs in different activities compared to its direct adversaries. The extension can be vertical upstream and/or downstream, i.e., respectively to suppliers or customers. In this way, possible synergies or opportunities for vertical integration can be evaluated. In fact, a company can assess whether it is able to generate greater value by performing some activities instead of the customer. In the case of business-to-business markets (B2B), one can think of large fashion brands that have opened single-brand stores and closed collaborations with multi-brand retailers; or in the case of business-to-consumer markets, it can be represented by the home delivery service for which the distributor assumes the burden of home delivery of groceries on behalf of the customer. Finally, one can opt for an intersectoral comparison and evaluate diversification processes in those sectors where it is possible to exploit one\'s skills generating competitive advantage. The company, by analyzing the value chain, can identify activities useful for building operational competitive advantage, which is a condition based on the ability to distinguish itself from competitors. However, the most durable and sustainable competitive advantage, which can be defined as strategic, requires market superiority due to a condition of uniqueness. Not all resources are a source of strategic competitive advantage, but only those that meet specific characteristics of value, rarity, and non-imitability, and that the company knows how to manage competently to exploit their potential. A tool for this type of evaluation is the VRIO model: Value, Rarity, Imitability, Organization. The question of value is inherent to the potential of a resource or capability of the company in responding to an opportunity or threat present in the environment. If a company does not possess such a resource, it will find itself in a situation of competitive disadvantage. If it exists but is equally present among competitors, it will be competitive parity. Only if the resource has some degree of uniqueness (rarity) can it give rise to a competitive advantage. It will be temporary if competitors can easily imitate it, while it will be sustainable if the resource is difficult to acquire/imitate and translates into an advantage only if the company has the ability to develop its potential. The VRIO model supports the analysis of core strategies, the so-called secret of success, which Reve has broken down into 6 elements: 1\. Possession of critical resources 2\. Availability of unique technology 3\. Consolidation of core competencies 4\. Learning capacity 5\. Consumer goodwill 6\. Key relationships In the analysis of the strategic core, each of the sets of transitions that constitute the activities of the value chain is analyzed in terms of criticality, specificity, replicability, and value potential. Based on this analysis, the company evaluates which activities and decisions to govern internally, which to entrust to strategic alliances, and which are convenient to purchase on the market. Activities that are closely linked to the strategic core should never be delegated to alliances or the market, but directly overseen. In fact, the strategic core often consists of technological, marketing, or organizational competencies that represent the secret of a company\'s success. Moreover, the analysis of the strategic core applied to the company\'s internal processes allows understanding which movement in the value system has a greater strategic potential. The four possible strategic paths can be: 1\. Upstream strategy: upstream integration, technological improvements, new products 2\. Downstream strategy: downstream integration, differentiation, new markets 3\. Horizontal strategy: market penetration, competitor acquisition 4\. Related strategy: diversification into other products or markets Horizontal strategies are those with the lowest level of risk but the least innovative scope, vertical strategies (up or downstream) impose efforts and risks on the company but promise good results, and finally, diversification strategies are the riskiest but have the highest innovative scope. Behind every purchase, whether it\'s a good or a service, lies a decision-making process that should be analyzed in all its phases and is defined as the purchase decision process or buying process. Typically, it consists of 5 stages: 1\. Problem perception: existence of a need 2\. Information search: search for value 3\. Evaluation of alternatives: defining value 4\. Purchase decision: buying value 5\. Post-purchase behavior: use or consumption of value Problem perception is the first phase that triggers the purchase decision process and consists of the consumer recognizing a difference between an ideal situation and the current one. This difference generates a state of need or desire in the individual that motivates them to act. Marketing can act in this phase through advertising or sales personnel by highlighting the characteristics of their products that are desirable to the consumer because the goods they own or those of the competition don\'t have them. The second phase of the buying process consists of searching for information necessary to identify the most suitable product to solve the perceived problem. The information search phase allows the consumer to more clearly identify the problem and solution methods because it: 1. Provides criteria for making the purchase; 2. Identifies brands that meet these criteria; 3. Develops the perception of value in the consumer. For this purpose, the consumer will carry out an internal search, that is, they will refer to experiences already had with certain products and brands. This type of search is sufficient in the case of high-frequency purchase products, with which the consumer has a certain familiarity. In other cases, when the consumer does not have adequate experiences and knowledge about the product category, to avoid the risk of making an erroneous decision, the information search is integrated by what is defined as an external search. The main sources of external information are: 1. personal sources such as friends and family; 2. public sources, such as television programs and various organizations that offer support in product evaluations; 3. commercial sources, that is, all information provided by companies, namely advertising, websites, sales staff, as well as promotions and demonstrations at points of sale. The information in the second phase of the purchase process is then used to proceed to the solution of one of the possible available alternatives. The evaluation of alternatives takes place based on evaluation criteria, i.e., the functional and symbolic characteristics associated with a certain category of products that the consumer uses to compare different brands and identify the most suitable alternative. The role of marketing in relation to this phase consists of understanding which criteria are most relevant for the choice and intervening on this basis by modifying the characteristics of the product and communication in order to offer the best value for money. Starting from all the products available on the market, the consumer selects those that meet their criteria, which will comprise the consideration set, and then identify among these the product that best meets all their needs. Once the alternatives have been evaluated, the consumer can proceed with the actual purchase, and this involves decisions relating to 1. where to do it and 2. when to do it. The choice of place of purchase depends on various factors, related to criteria for choosing a point of sale. In addition to product availability (assortment), the consumer may consider other elements such as sales conditions (price level, payment methods), any merchandise return policies, and assistance. In the purchase decision, evaluations of the point of sale are added to those of the product, and in some cases, the characteristics of the former can be so important that the consumer decides to buy not the product they had chosen, but another, only because it is sold in a store that offers more advantageous conditions compared to the product deemed best. The choice of when to make the purchase is often determined by a series of factors such as the presence of sales and promotions, the effectiveness of personal selling, contingent situations such as urgent need or limited time available, up to the same financial availability that can induce postponing the purchase. After a purchase, the consumer evaluates the product\'s adequacy compared to their expectations. The possibility of consumer satisfaction can depend on actual product deficiencies or excessively high expectations. In the first case, it would be better to review the product; in the second, to verify if expectations are generated by incorrect communication and, if necessary, modify it. Moreover, the possibility that the consumer is unable to use the product correctly should be considered. In this case, appropriate communication or customer service could solve the problem. Managing customer satisfaction is crucial. Only a satisfied customer becomes loyal, while an unsatisfied one could generate negative word-of-mouth for the company. A study on the subject shows that a satisfied customer communicates this to three other people, while an unsatisfied customer tells nine others. To avoid this, companies increasingly invest resources in monitoring post-purchase customer behavior and offer complaint collection and management services. Another relevant aspect of post-purchase behavior relates to the possibility of cognitive dissonance. This is a psychological condition generated by an individual\'s doubt about the adequacy of their decision. A consumer might not be convinced about the chosen product compared to discarded alternatives and seek, more or less consciously, signals that convince them they made the right choice. They can do this by comparing with other product consumers, asking friends and acquaintances for opinions and advice, etc. Not all purchasing processes occur in the same way. In some cases, these can require very long times, a high effort in information search, or careful evaluation of alternatives. In other cases, the process can be very quick and based on little information already possessed by the consumer, or even always occur in the same way following established routines. This fundamentally depends on the degree of involvement which, in turn, can depend on the type of product, the situation, and the consumer\'s characteristics. Involvement depends on the personal, social, and economic significance that the consumer attributes to the purchase and, therefore, on the risk that the consumer associates with an incorrect choice. A high-involvement purchase occurs when what you want to buy: 1) has a high price; 2) can have important personal consequences; 3) influence one\'s personal image. The higher the perceived risk, the more the consumer seeks information, examines the characteristics of the product and available brands, forms opinions, and participates in word-of-mouth. Based on the degree of purchase complexity, the decision-making process can be distinguished into: extended problem solving, limited problem solving, and routine problem solving. In extended problem solving, the consumer follows all five phases of the purchasing process and dedicates much time to searching for external information, identifying and evaluating all possible alternatives. The consideration set is evaluated according to a detailed number of characteristics. This method is used in high-involvement purchasing situations, such as automobiles. When the purchase concerns a product that is not particularly complex, but at the same time not completely trivialized, the consumer follows a limited problem solving strategy. They thus focus their attention on a reduced number of product attributes and limit themselves to seeking information through personal sources, such as friends and acquaintances. This behavior can also be due to lack of time or the need to have the product immediately. Routine problem solving is used for low-priced and frequently purchased items, such as supermarket goods. The consumer identifies a problem, makes a decision, and doesn\'t spend much time evaluating possible alternatives. The level of involvement here is low because there\'s less risk associated with purchasing the product