lindell’s lecture notes chapters 3 & 4 b (supplement) your competitive analysis expanded ba...

Lindell’s Lecture Notes CHAPTERS 3 & 4 B (supplement)

YOUR COMPETITIVE ANALYSIS Expanded

Lindell’s Lecture Notes CHAPTERS 3 & 4 B (supplement)

YOUR COMPETITIVE ANALYSIS ExpandedBA 315 Marketing ManagementBA 315 Marketing Management

Market Structure and Competitor Analysis

Performing a market analysis to Performing a market analysis to identify your major competitors.identify your major competitors.

Performing a competitor analysis.Performing a competitor analysis.Alternative sources of information Alternative sources of information

for analyzing competitorsfor analyzing competitors

Analyze Critical Development of Marketing Plan Defining the competition is Defining the competition is

important in determining which important in determining which products are competing.products are competing.

Studying competitors is crucial to Studying competitors is crucial to develop a value proposition.develop a value proposition.

It is beneficial to anticipate It is beneficial to anticipate competitor’s moves and act in a competitor’s moves and act in a preemptory fashion.preemptory fashion.

Market Structure Analysis

A market structure analysis enables A market structure analysis enables the marketing manager to the marketing manager to understand the competition.understand the competition.

Overlooking an important Overlooking an important competitive threat can be competitive threat can be disastrous.disastrous.

Ambiguous definition of the Ambiguous definition of the competition creates uncertainty.competition creates uncertainty.

Different Terms Used in Defining a Market

Industry.Industry.Product class.Product class.Product types.Product types.Product brands.Product brands.

Competition Is Defined by the Customer

Product form competition - includes only products Product form competition - includes only products or services of the same product type.or services of the same product type.

Product category competition - products that have Product category competition - products that have similar features and provide the same basic similar features and provide the same basic function.function.

Generic competition - incorporates the customer’s Generic competition - incorporates the customer’s notions of substitutability.notions of substitutability.

Budget competition - products and services that Budget competition - products and services that are purchased from the same general budget.are purchased from the same general budget.


Product form Product form competition -competition - includes includes only products or services of only products or services of the same product typethe same product type..


Product category Product category competitioncompetition - - products that have products that have similar features and provide the same similar features and provide the same

basic function.basic function. ..


Generic competitionGeneric competition - -

incorporates the customer’s incorporates the customer’s notions of substitutabilitynotions of substitutability


Budget competitionBudget competition - -

products and services that are products and services that are purchased from the same general purchased from the same general

budget.budget.

Critical Differences- Competitor Levels Product form or product category competition Product form or product category competition

are inward oriented.are inward oriented. Generic competition is outward oriented.Generic competition is outward oriented. Product form and product category competitors Product form and product category competitors

are defined by product that look like yours.are defined by product that look like yours. Generic competitors are defined by looking Generic competitors are defined by looking

outside the firm to the customers.outside the firm to the customers.

The Marketing Manager’s Job

Product form level - marketing activities Product form level - marketing activities directly aimed at similar competitors. directly aimed at similar competitors.

Product category level - you must Product category level - you must convince customers that the product convince customers that the product form is the best.form is the best.

Generic competition level - you must Generic competition level - you must convince customers the product convince customers the product category solution is superiorcategory solution is superior

Customer Target Change

Product form competition Product form competition involves battling for exactly the involves battling for exactly the same customers.same customers.

Generic competition can destroy Generic competition can destroy entire product categories when a entire product categories when a major innovation occursmajor innovation occurs

Measurement Issues

Government documents provide Government documents provide valuable information about product valuable information about product form and category competitors.form and category competitors.

Consulting firms, trade Consulting firms, trade associations, and professional associations, and professional publications may supply own publications may supply own product category data.product category data.

Cross-Elasticity of Demand

Indicator of substitutability.Indicator of substitutability.Percentage change in one product’s Percentage change in one product’s

sales due to a percentage change in a sales due to a percentage change in a marketing variable for another product.marketing variable for another product.

Cross-elasticity - price is positive, the Cross-elasticity - price is positive, the two products are considered to be two products are considered to be competitive.competitive.

Competitor Strengths and Weaknesses The ability of the competitor to conceive The ability of the competitor to conceive

and design new products.and design new products. The ability of each competitor to The ability of each competitor to

produce the product.produce the product. The ability to market.The ability to market. The ability to finance.The ability to finance. The ability to manage.The ability to manage.

Competitor Strengths and Weaknesses

The ability of the The ability of the competitor to competitor to conceive and design conceive and design new products.new products.


The ability of each The ability of each competitor to competitor to produce the produce the product.product.


The ability to The ability to market.market.


The ability to The ability to finance.finance.


The ability to The ability to manage.manage.

Competitor Analysis A determination of the competitors’ major A determination of the competitors’ major

objectives.objectives. An assessment of their marketing An assessment of their marketing

strategies.strategies. An assessment of their strengths and An assessment of their strengths and

weaknesses.weaknesses. An internal analysis of your firm’s strengths An internal analysis of your firm’s strengths

and weaknesses relative to competitorsand weaknesses relative to competitors

Competitor Strategies

Marketing managers must monitor:Marketing managers must monitor:– Segments pursued. Segments pursued. – Competitors targets.Competitors targets.– Product features.Product features.– Core strategy.Core strategy.–Supporting marketing mix.Supporting marketing mix.

Customer and Competitor Target

Product sales literature.Product sales literature.Your own sales force.Your own sales force.Trade advertising.Trade advertising.

Core Strategies

Studying their marketing Studying their marketing communications.communications.

How are they differentiating How are they differentiating themselves?themselves?

What is their value What is their value proposition?proposition?

Supporting Marketing Mix

Price - What is the pattern of price change Price - What is the pattern of price change over time?over time?

Communication - What advertising media Communication - What advertising media are being used?are being used?

Distribution - What kinds of selling Distribution - What kinds of selling approaches are being used?approaches are being used?

Product capabilities - a comparison of Product capabilities - a comparison of capabilities is usefulcapabilities is useful..

Expected Future Strategies

Sometimes competitors tell you what Sometimes competitors tell you what their future strategy will be.their future strategy will be.

Identifying a trend in their past actions Identifying a trend in their past actions and extrapolating it into the future.and extrapolating it into the future.

Forecast competitors’ action by Forecast competitors’ action by simulating them.simulating them.

Use scenario planning.Use scenario planning.

SWOT Analysis

Strengths.Strengths.Weaknesses.Weaknesses.Opportunities.Opportunities.ThreatsThreats

Secondary Sources

Internal sources.Internal sources. Annual reports.Annual reports. Patent and trademark filings.Patent and trademark filings. General business and trade publications.General business and trade publications. Consultants.Consultants. Trade associations.Trade associations. Help wanted ads.Help wanted ads. Electronic data services.Electronic data services.

Primary Sources

Sales force and customers.Sales force and customers. Employees.Employees. Suppliers.Suppliers. Reverse engineering or sampling.Reverse engineering or sampling. Competitors’ products.Competitors’ products. Plant tours.Plant tours. Internet newsgroups.Internet newsgroups.

YOUR COMPETITION: Even though you may have done a great job in pinpointing and studying your market segment the job isn't done until you have considered your competition.

• My main competitors in my market area are:

Name of firm (list)

YOUR COMPETITION: Based on my market research of statistical data (such as Sales Management) the amount of buying power per business represented in my area for this kind of business is $‑. If 1 can generate that amount of sales, it: will be sufficient for me to operate successfully.

• Five reasons why customers would buy from me rather than my competitors are:

• Five weaknesses my business will have, in comparison to my competitors, are:

In order to overcome these weaknesses, I will:

STEPS OF COMPETITIVE ANALYSIS 1. DEFINE THE TARGET MARKET 2. DEFINE THE DIRECT COMPETITORS (SERVING THE SAME MARKET

SEGMENT(S) USE...PERCEPTUAL MAPPING A. MULTIDIMENTIONAL SCALING B. FACTOR ANALYSIS 3. ASSESS COMPETITIVE DYNAMICS A. PIONEERING ADVANTAGE B. POTENTIAL FOR TECHNOLOGY DISCONTINUITY C. IDENTIFY FUTURE COMPETITORS (NEW ENTRANTS) D. BARRIERS

STEPS OF COMPETITIVE ANALYSIS4. ASSESS COMPETITIVE INTENSITY-INCLUDE CONDITIONS THAT FOSTERS INTENSE COMPETITION

5.IDENTIFY AVENUES FOR ATTAINING A SUSTAINABLE ADVANTAGE OVER

COMPETITION

6.SOURCES OF COMETITIVE INTELLEGENCE

YOU MAY COMBINE STEPS 3 AND 4 INTO COMPETITIVE MARKET FORCES

Chapter Objectives 1.1. To gain an appreciation of the need To gain an appreciation of the need for performingfor performing

competitive analysis.competitive analysis. 2.2. To understand the fiveTo understand the five step approach step approach to carrying out ato carrying out a

competitive analysis.competitive analysis. 3.3. To become acquainted with perceptual To become acquainted with perceptual mapping and themapping and the

techniques used.techniques used. 4.4. To gain an appreciation and awareness To gain an appreciation and awareness of sources ofof sources of

competitive intelligence

Definition of the target market We establish the We establish the productproduct market market boundaries of boundaries of interest and identify interest and identify any specific target any specific target segments.segments.

identifies direct competitors who are likely to gain or who are likely to gain or lose a substantial lose a substantial customer share over time customer share over time because they serve the because they serve the same customers and offer same customers and offer similar benefits.similar benefits.

perceptual mapping

Perceptual mapping methods are used to position the firm against competitors as seen by the consumer. Product positioning is used to determine the brands that consumers see as being similar.

perceptual mapping Managers rely on some Managers rely on some

perceptual mappingperceptual mapping techniques to portray how techniques to portray how customers perceive the customers perceive the various market competitors. various market competitors. There are two types:There are two types:

Multidimensional scaling relies on similarity judgments of consumers in determining the degree of similarity between pairs of products.

percep tual mapp ing

A factor analysis based approach relies on buyers assessment of determinant attributes to evaluate alternatives

ALMOST HOMETHE BATTLE FOR THE COOKIE MARKET

– In 1982, marketers in the cookie In 1982, marketers in the cookie industry received a industry received a doublebarreled attack with thedoublebarreled attack with the entrance of Procter & Gamble's entrance of Procter & Gamble's Duncan Hines cookies and Frito Duncan Hines cookies and Frito Lay's Grandma's brand. Lay's Grandma's brand. Initially, both lines were Initially, both lines were successfully testsuccessfully test marketed in marketed in Kansas City, and by 1983, FritoKansas City, and by 1983, Frito Lay had begun moving into a Lay had begun moving into a variety of other markets.variety of other markets.

ALMOST HOMETHE BATTLE FOR THE COOKIE MARKET 1.1. Multidimensional scalingMultidimensional scaling relies on relies on

similarity judgments of consumers in similarity judgments of consumers in determining the degree of similarity determining the degree of similarity between pairs of products.between pairs of products.

2. A factor analysis based approach relies on buyers assessment of determinant attributes to evaluate alternatives

perceptual mapping

NOW APPLY YOUR ADVENTURE NOW APPLY YOUR ADVENTURE WITH YOUR SUPERMARKET WITH YOUR SUPERMARKET FROZEN FOODS EXCURSION. FROZEN FOODS EXCURSION.

YOU, THE TARGET RATED 10 TV DINNERS

Assessing competitive dynamics Assessing competitive Assessing competitive

dynamicsdynamics, step 3 of the , step 3 of the competitive analysis, competitive analysis, involves attempting to involves attempting to project what the future project what the future competitive environment competitive environment will look like.will look like.

Pioneering advantage {HOYLE SCHWEITZER invented WINDSURFER(ing)}

is the market advantage that results from a competitor being the innovator in a market. Several factors contribute to this advantage:

1.Pioneer products act as "prototypes" for competitors.2. Initial brands potentially build significant loyalty.3. Late entrants will have difficulty obtaining awareness and trail by distributors and consumers. Pioneering advantagePioneering advantage

If the future competitive structure of a market is to be understood, managers should attempt to determine the potential for technological discontinuity. Note- LPC WINDSURFER EXAMPLE

Steps of competitive analysis (continued)Steps of competitive analysis (continued)

Although the identity of current direct competitors is important, it is equally essential to identify future competitors, i.e., new entrants.Such as…MISTRAL,BIC


Barriers to entry make it difficult to become a significant competitor in a new market. PLEASE REFERENCE OUR HANDOUT ON INDUSTRY ATTRACTIVENESS in your packet


Barriers to entry Economies of scale, initial financial investment, lack of access to sources of production, and limited access to distribution channels are some typical barriers to entry.


Barriers to entry …Tariffs, quotas, customs, and governmental intervention are some international entry barriers.


New entrants can cause considerable competitive concern through improved price performance trade offs, by bringing new skills to the industry,or by virtue of cross subsidizations.


The importance of assessing competitive intensity, step 4, is twofold: to determine the likely cost of meeting competition and to recognize the most important bases and types of competition.


Several basic conditions which foster intense competition are: numerous competitors, slow industry growth, undifferentiated products and services, low switching costs, significant economies of scale, industry overcapacity, and management loyalty


The ultimate purpose of performing a competitive analysis is to identify possible avenues for attaining a sustainable advantage over competitors so as to achieve product or product line objectives.


In assessing competitive advantage, managers must identify the positions and sources of advantage that lead to desired market performance outcomes.

. Steps of competitive analysis (continued)Steps of competitive analysis (continued)

1. Positional advantages depend on the customer's perception of these advantages.

. Steps of competitive analysis (continued)Steps of competitive analysis (continued)

2. Source advantages include: skills of people within the organization, the systems or arrangement developed for market response, and the organization's resources.

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3. Superior resources, intangible and tangible, can enable a firm to either underprice the competition or to offer better or unique performance.

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Sources for obtaining competitive intelligence fall into three basic categories: published material & documents, competitors' employees, suppliers, or customers; and direct observation.

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PLEASE REFERENCE OUR HANDOUT... INDUSTRY ATTRACTIVENESS SUMMARY

AGGREGATE MARKET AGGREGATE MARKET FACTORSFACTORS

INDUSTRY FACTORSINDUSTRY FACTORSENVIRONMENTAL FACTORSENVIRONMENTAL FACTORS

PLEASE , ALSO, PLEASE , ALSO, REFERENCE THE BOOK REFERENCE THE BOOK THE THE ART OF WARART OF WAR

[email protected]@UMSL.EDU

Competitive [email protected]

Don’t forget your handout packet:Don’t forget your handout packet: An exam An exam question: We analyze a competitor on five question: We analyze a competitor on five abilities….. abilities….. The abilitiy to………..The abilitiy to………..

lindell’s lecture notes chapters 3 & 4 b (supplement) your competitive analysis expanded ba...

Documents

f product class

f product types

f product brands

f product category level

customer f generic competition

f generic competition

f generic competitors

competitor analysis