3. Aggregate Category Factors
Category size
Category growth
Stage in product life cycle
Sales cyclicity
Seasonality
Profits

4. Attractiveness of Market Variables

5. Category Attractiveness over the Product Life Cycle
Stage of product life cycle
Category size
Category growth
Category attractiveness
Introduction
Small
Low
Growth
Moderate
High
Maturity
Large
Low/high
Decline
Negative
Sales
Time

6. Category Factors Threat of new entrants Bargaining power of buyers
Bargaining power of suppliers
Current category rivalry
Pressure from substitutes
Category capacity

7. Environmental Factors
Technological
Political
Economic
Regulatory
Social

8. Factors in Assessing the Structure of Industries
Threat of new entrants
Bargaining power of buyers
Bargaining power of suppliers
Amount of intracategory rivalry
Threat of substitute products or services

9. Buyer Bargaining Power is High When:
Product bought is a large percentage of the buyer’s cost.
Product bought is undifferentiated.
Buyers earn low profits.
Buyer threatens to backward integrate.
Buyer has full information.
Substitutes exist for the seller’s product or service.

10. Supplier Bargaining Power is High When:
Suppliers are highly concentrated, that is, dominated by a few firms.
There is no substitute for the product supplied.
Supplier has differentiated its product or built in switching costs.
Supply is limited.

11. Major Characteristics of Categories Exhibiting Intensive Rivalries
Many or balanced competitors
Slow growth
High fixed costs
Lack of product differentiation
Personal rivalries

12. Impact of Category Factors on Attractiveness

13. Typology of Technical Developments
Welfare
Diffusion
Innovation
Invention
Information
Materials
Transportation
Energy
Genetic*
Commercial
Defense
Technology
Process
Impetus
* Includes agronomic and biomedical developments.

14. Conceptualizing Political Risks

15. Projected Change in U.S. Population 1995-2005

16. U.S. Income Inequality

17. Share of Food Purchases

18. Energy Bars: Category Attractiveness Summary
Aggregate Market
Analysis
Category Size
$504 mm energy bar category in 2001
Attractiveness ++
Energy bar category contains four primary brands, plus their sub-brands and over 100 smaller players

19. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
Average annual growth rate of 57% between 1997 and 2001
Category Growth
U.S. energy bar category sales forecasted at $750 mm in 2003 for a continued expected growth of 22%
Attractiveness ++
IIndustry reports suggest current annual growth for the energy bar market 25%-30%
CCategory expanding: new competitors are entering, existing brands are expanding with new products and flavors, market penetration and usage occasion is increasing

20. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
Both the category and Odwalla Bars specifically are both securely in early stages of growth phase
Product Life Cycle
Attractiveness ++

21. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
While energy bars are premium-priced for their convenience and nutrient level, the base dollar point of $1-$3 per bar is low such that they are not directly impacted by GDP variations
Sales Cyclicity
Attractiveness +

22. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
Year-round sales
Seasonality
CCategory overall may experience a slight sales increase in the spring and summer month during “race season” and as users are engaged in more outdoor activities and desire quick, portable energy.
Attractiveness ++

23. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
As most major competitors are within the product portfolios of larger consumer goods companies, it is difficult to benchmark profitability within the energy bar category specifically. Nevertheless, the recent acquisition of the leading competitors reflects an expectation for strong profit potential.
Profits
Attractiveness +
Increased category competitiveness may lead to lower pricing and profits

24. Energy Bars: Attractiveness Summary (cont)
Analysis
Category
Strong potential for new competitors given that the category is profitable, fairly easy to enter, and increasingly relevant to consumers.
Threat of New Entrants/Exits
FFurther, with the “big three” brands strongly in place [PowerBar, Clif (including Luna), and Balance], it is most likely that small competitors will enter through the natural foods channel, creating more direct competition with Odwalla bars.
Attractiveness -

25. Energy Bars: Attractiveness Summary (cont)
Analysis
Category
Competitors within the broader category of snack bars would likely experience economies of scale with a relatively easy entry into the energy bar market
Economies of Scale
Attractiveness -

26. Energy Bars: Attractiveness Summary (cont)
Analysis
Category
Within the mainstream energy bars, differentiation is largely through brand, taste, and flavor variety. With the exception of targeted nutrition products like protein- or carbohydrate-specific products, nutritional levels are largely at parity.
Capital Requirements
Attractiveness -

27. Energy Bars: Attractiveness Summary (cont)
Analysis
Category
Switching costs are very low, opening the door to potential competitors
Switching Costs
Attractiveness -

28. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
As there are not specialty requirements for distribution (refrigeration, etc.), it would be very easy for any of the “center of the store” consumer food companies to enter the category and add on to their existing distribution structure. This is particularly true for companies that have an established relationship with the category buyer.
Distribution
Attractiveness -
Shelf life

29. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
Lots of competitors with relatively similar options distinguished by brand and taste keeps retailer power strong
Bargaining Power of Buyers
Attractiveness -

30. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
As the suppliers of raw inputs for energy bars are largely agricultural, the commodity nature of agriculture keeps prices and supplier power low. While still relatively low, supplier power will be higher for nutrient supplement suppliers
Bargaining Power of Suppliers
Attractiveness +

31. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
Considerable
Pressure from Substitutes
FFresh fruit, cereal bars, smoothies, candy bars, etc. are all suitable portable substitutes for the mainstream energy bar consumer. True athletes are most likely to substitute with higher nutrient level energy bars
Attractiveness -

32. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
Appears to be high given current scenario of more than 100 manufacturers and many more products. But, still, it is too early to determine true capacity
Category Capacity
Attractiveness +

33. Energy Bars: Attractiveness Summary (cont)
Aggregate Market
Analysis
Very high. Differentiation largely by taste and flavor variety, and by targeting unique market segments
Current Category Rivalry
Attractiveness -

34. Energy Bars: Attractiveness Summary (cont)
Analysis
Environmental
Technology could play a significant role with respect to manufacturing efficiencies and taste profiles
Technological
Attractiveness +

35. Energy Bars: Attractiveness Summary (cont)
Analysis
Environmental
While premium priced, energy bars have so far seemed to fair the recession well. Still, however, if economic conditions persist, consumers may opt for less expensive alternatives like fresh fruit or non-energy snack bars
Economic
Attractiveness +

36. Energy Bars: Attractiveness Summary (cont)
Analysis
Environmental
The energy bar category is regulated by the FDA as are other food products. There are not to our knowledge, however, additional regulations directed toward the energy bar category.
Political/ Regulatory
Attractiveness

37. Energy Bars: Attractiveness Summary (cont)
Analysis
Environmental
As lives get busier and mealtimes shrink, energy bars will continue to be an acceptable meal replacement.
Social
Attractiveness ++

38. PDA: Category Attractiveness Analysis
Aggregate Market Factors
Attractiveness
Market Size +
$2.3 billion
Market Growth +
0%-40%
Product Life Cycle
Growth +
Profits
Good
+/0
Sales Cyclicity
one +
Sales Seasonality +
one

39. PDA: Category Attractiveness Analysis
Category Factors
Attractiveness
Threat of New Entrants
Moderate; R&D required, distribution
Bargaining Power of Buyers +
Low, high switching costs
Bargaining Power of Suppliers
Moderate; PCs use similar components -
Category Rivalry
Intense
Pressure from Substitutes
High -
Category Capacity +
Not a problem for now

40. PDA: Category Attractiveness Analysis
Environmental Factors:
Attractiveness
Technological
Very sensitive -
Political/ Regulatory
Telecommunications deregulation +
Economic
Relatively inexpensive +
Social
More work done on the road +