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Marketing Strategy for Management
MKT4010
Lecture 2
Competitor Analysis
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• Knowledge Refreshment– Marketing Strategy– Process of formulating it
• Competitor Analysis– Identifying Competitors– Understanding Competitors
Lecture Outline
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The Strategic Marketing Process..
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InternalEnvironment
InternalEnvironment
Competitors
Consumers
Macro- Environment
The Industry
TheFirm
Situation Analysis
Micro-Environment
As highlighted inLecture 5
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IdentifyingCompetitors
UnderstandingCompetitors
Competitor Analysis
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Look at competitors from the customers’perspective
– Customer Choices• What would you buy if Kit-Kat was not
available?• What would be substituted for coffee if price
is increased?• What other universities have you
considered?– Product Use Associations
• Identify list of use situations or applications• Name all products appropriate for each use
Identifying Competitors –Customer Approaches
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Are:Organisations within an industry withsimilar strategic characteristics,following similar strategies or competing on similar basis
Identifying Competitors –Strategic Groups
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IdentifyFactors
Differentiating
CompetitorsDevelo
pStrategi
cMaps
Piece
Together
Strategic
Maps
Fir m
Forming Strategic Groups…
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Sources: Based on M.E. Porter, Competitive Strategy, Free Press, 1980; and J. McGee and H. Thomas, ‘Strategic groups: theory, research and taxonomy’, Strategic Management Journal, vol. 7, no. 2 (1986), pp. 141–160.
Factors Differentiating Among Competitors …
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Services
Extent of Ro ute Sy stem
Broad
Narrow
Basic Many Added
GermanwingsBmibabyflybe
EasyjetRyanair
Aer LingusVirgin
Express
Example Strategic Map: Budget Airlines
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Are:– Factors which impede the ability of firms
to enter or exit an industryInclude:
– Entry Barriers• Cost Advantage• Product Differentiation• Capital Requirements• Customer Switching costs• Access to distribution Channels
– Exit Barriers• Specialised Assets• Fixed Costs• Government Policy
Strategic Groups:Mobility Barriers
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Assesscompetitors’current and
futureobjectives
Assesscompetitors’
currentstrategy
Assesscompetitors’capabilities
profile
Predict competitors’ futurestrategies
Components of Competitor Analysis
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Assesscompetitors’current and
futureobjectives
Ø What are they trying to achieve?Ø Why are they trying to achieve it?Ø Are they satisfied with their
achievements?
Key Indicators:
Stated goals Market assumptionsOwnership Investment priorities
Competitor Objectives…
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Comp
etitor
Challenger
FrontalAttach
Comp
etitor
FlankingAttack
Challenger
Competitor
Challenger
EncirclementAttack
Objective: Build Market Share…
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Purpose Choice:
Size: US$ 3bn Growth:+10% p.a (lower in UK butlarger market) Share:Kellogg’s 50-60% Head-on
againstKelloggs
Flankingvia
Segment
Totally newbreakfast
formatCP Resources: Brandname, Grocerynetworking, Uniqueproduct range, Low costmanufacture, Own label
’20%MarketShare’
Chosen strategies:1.Concentrate resources2.Econs of scale3.Tackle country-by-country
4.Kelloggs flanking attack viaproduct innovation
5.Acquire in UK
Example - European Breakfast Cereals:Cereal Partners
1990: buy Shredded Wheat, UK
1991-96: extend UK range
1991: launch France , Spain, Portugal
1992: launch Italy
1993: launch Germany etc
Environment:
Resources:
Purpose:
Implementation:
Options:
Options:
Options:
Lynch (2003) Corporate Strategy 3/ed
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Assesscompetitors’current
strategies
Ø What market targets are they pursuing?Ø What is their strategic focus?Ø What marketing mix do they use?Ø
How do they organise their marketing?
Key Indicators:Advertising media and messages Price levels charged
New product introduction rates Distribution channels used
Recruitment advertisements
Competitor Strategies…
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Assesscompetitors’capabilities
profile
Ø Marketing culture?Ø Marketing assets and competences?Ø Production and operation competencies?Ø Financial resources?Ø Human Resources?
Key Indicators:
Customer relationship strength Product availability New product success rates Promotional expenditure
Quality of the people
Competitor Capabilities…
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Porter’s Value Chain
SupportActivities
PrimaryActivities
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
InboundLogistics
Operat-ions
Out-boundLogis-tics
Market-ing &Sales
Service
MARGIN
M A R G I N
Value added defined as the market value of
its output minus the costs of its inputs
The Value Chain of an organisation…
Competitor Capabilities…
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• Importance of Competitor Analysis• Competitor identification• Competitor Analysis
– Strategies– Objectives– Capabilities
•
Summary