Competitor Analysis

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  • Competitor Analysis

    1. 1. Competitor Analysis
    2. 2. 18- 2 Objectives Learn how to understand competitors asLearn how to understand competitors as well as customers via competitorwell as customers via competitor analysis.analysis. Learn the fundamentals of competitiveLearn the fundamentals of competitive marketing strategies based on creatingmarketing strategies based on creating value for customers.value for customers. Realize the need for balancing customerRealize the need for balancing customer and competitor organizations in order toand competitor organizations in order to become a truly market-centeredbecome a truly market-centered organization.organization.
    3. 3. 18- 3 Has dominated theHas dominated the chip industrychip industry Success is directlySuccess is directly related torelated to Intel’sIntel’s competitivecompetitive strategystrategy Strategy focusesStrategy focuses on superior valueon superior value and productand product leadershipleadership Heavy focus onHeavy focus on product andproduct and advertising innovationadvertising innovation and R&D investmentsand R&D investments Changing marketChanging market needs haveneeds have challenged Intel tochallenged Intel to adaptadapt Intel is capitalizing onIntel is capitalizing on the Internet nowthe Internet now cIntelIntel
    4. 4. 18- 4 Definition CompetitiveCompetitive AdvantageAdvantage  An advantageAn advantage over competitorsover competitors gained by offeringgained by offering consumers greaterconsumers greater value thanvalue than competitors offer.competitors offer.
    5. 5. 18- 5 Definition Competitive AnalysisCompetitive Analysis  The process of identifying keyThe process of identifying key competitors; assessing theircompetitors; assessing their objectives, strategies, strengthsobjectives, strategies, strengths and weaknesses, and reactionand weaknesses, and reaction patterns; and selecting whichpatterns; and selecting which competitors to attack or avoid.competitors to attack or avoid.
    6. 6. 18- 6 Figure 18-1: Steps in Analyzing Competitors
    7. 7. 18- 7 Competitor Analysis Firms face a wideFirms face a wide range of competitionrange of competition Be careful to avoidBe careful to avoid “competitor myopia”“competitor myopia” Methods ofMethods of identifyingidentifying competitors:competitors:  Industry point-of-viewIndustry point-of-view  Market point-of-viewMarket point-of-view  Competitor mapsCompetitor maps can helpcan help IdentifyingIdentifying CompetitorsCompetitors AssessingAssessing CompetitorsCompetitors SelectingSelecting Competitors toCompetitors to Attack or AvoidAttack or Avoid Steps in theSteps in the Process:Process:
    8. 8. 18- 8 230-year-old Encyclopedia Britannica viewed itself as competing with your publishers of printed encyclopedias. Big mistake! Its real competitors were software encyclopedias and the Internet.
    9. 9. 18- 9 Figure 18-2: Competitor Map
    10. 10. 18- 10 Create a competitorCreate a competitor map for one of themap for one of the following:following: • WalMartWalMart • McDonald’sMcDonald’s • NikeNike • StarbucksStarbucks • GoogleGoogle Discussion Question
    11. 11. 18- 11 Competitor Analysis DeterminingDetermining competitors’ objectivescompetitors’ objectives Identifying competitors’Identifying competitors’ strategiesstrategies  Strategic groupsStrategic groups Assessing competitors’Assessing competitors’ strengths andstrengths and weaknessesweaknesses  BenchmarkingBenchmarking Estimating competitors’Estimating competitors’ reactionsreactions IdentifyingIdentifying CompetitorsCompetitors AssessingAssessing CompetitorsCompetitors SelectingSelecting Competitors toCompetitors to Attack or AvoidAttack or Avoid Steps in theSteps in the Process:Process:
    12. 12. 18- 12 Competitor Analysis Strong or weakStrong or weak competitorscompetitors  Customer value analysisCustomer value analysis Close or distantClose or distant competitorscompetitors  Most companies competeMost companies compete against close competitorsagainst close competitors ““Good” or “Bad”Good” or “Bad” competitorscompetitors  The existence ofThe existence of competitors offers severalcompetitors offers several strategic benefitsstrategic benefits IdentifyingIdentifying CompetitorsCompetitors AssessingAssessing CompetitorsCompetitors SelectingSelecting Competitors toCompetitors to Attack or AvoidAttack or Avoid Steps in theSteps in the Process:Process:
    13. 13. 18- 13 Basic Winning CompetitiveBasic Winning Competitive Strategies: PorterStrategies: Porter  Overall cost leadershipOverall cost leadership  Lowest production andLowest production and distribution costsdistribution costs  DifferentiationDifferentiation  Creating a highlyCreating a highly differentiated product linedifferentiated product line and marketing programand marketing program  FocusFocus  Effort is focused on servingEffort is focused on serving a few market segmentsa few market segments Competitive Strategies
    14. 14. 18- 14 Basic Competitive Strategies:Basic Competitive Strategies: Value DisciplinesValue Disciplines  Operational excellenceOperational excellence  Superior value via price and convenienceSuperior value via price and convenience  CustomerCustomer intimacyintimacy  Superior value by means of building strongSuperior value by means of building strong relationships with buyers and satisfyingrelationships with buyers and satisfying needsneeds  ProductProduct leadershipleadership  Superior value via product innovationSuperior value via product innovation Competitive Strategies
    15. 15. 18- 15 Figure 18-3: Hypothetical Market Structure
    16. 16. 18- 16 Competitive Strategy Expanding the totalExpanding the total demanddemand  Finding new usersFinding new users  Discovering andDiscovering and promoting new productpromoting new product usesuses  Encouraging greaterEncouraging greater product usageproduct usage Protecting market shareProtecting market share  ManyMany considerationsconsiderations  Continuous innovationContinuous innovation Expanding market shareExpanding market share  Profitability rises withProfitability rises with market sharemarket share Market LeaderMarket Leader MarketMarket ChallengerChallenger MarketMarket FollowerFollower Market NicherMarket Nicher CompetitiveCompetitive PositionsPositions
    17. 17. 18- 17 Competitive Strategy WD-40 has a knack for developing new uses for its product. What other brands have adopted a similar strategy? WD40
    18. 18. 18- 18 Competitive Strategy Option 1:Option 1: challenge thechallenge the market leadermarket leader  High-risk but high-gainHigh-risk but high-gain  Sustainable competitiveSustainable competitive advantage over the leaderadvantage over the leader is key to successis key to success Option 2:Option 2: challenge firmschallenge firms of the same size, smallerof the same size, smaller size or challengesize or challenge regional or local firmsregional or local firms Full frontal vs. indirectFull frontal vs. indirect attacksattacks Market LeaderMarket Leader MarketMarket ChallengerChallenger MarketMarket FollowerFollower Market NicherMarket Nicher CompetitiveCompetitive PositionsPositions
    19. 19. 18- 19 Pepsi is an example of market challenger that has chosen to use a full frontal attack
    20. 20. 18- 20 Competitive Strategy Follow the marketFollow the market leaderleader  Focus is on improvingFocus is on improving profit instead ofprofit instead of market sharemarket share  Many advantages:Many advantages:  LearnLearn from thefrom the market leader’smarket leader’s experienceexperience  Copy or improve onCopy or improve on the leader’s offeringsthe leader’s offerings  Strong profitabilityStrong profitability Market LeaderMarket Leader MarketMarket ChallengerChallenger MarketMarket FollowerFollower Market NicherMarket Nicher CompetitiveCompetitive PositionsPositions
    21. 21. 18- 21 Dial Corporation successfully uses a market follower strategy
    22. 22. 18- 22 Competitive Strategy Serving marketServing market niches meansniches means targetingtargeting subsegmentssubsegments Good strategy forGood strategy for small firms withsmall firms with limited resourceslimited resources Offers high marginsOffers high margins Specialization is keySpecialization is key  By market, customer,By market, customer, product, or marketingproduct, or marketing mix linesmix lines Market LeaderMarket Leader MarketMarket ChallengerChallenger MarketMarket FollowerFollower Market NicherMarket Nicher CompetitiveCompetitive PositionsPositions
    23. 23. 18- 23 Companies can become soCompanies can become so competitor centered that theycompetitor centered that they lose their customer focus.lose their customer focus. Types of companies:Types of companies:  Competitor-centered companiesCompetitor-centered companies  Customer-centered companiesCustomer-centered companies  Market-centered companiesMarket-centered companies Balancing Customer and Competitor Orientations
    24. 24. 18- 24 Game playing industry a.a. NintendoNintendo a.a. Wii hyperlinkWii hyperlink b.b. MicrosoftMicrosoft a.a. Xbox 360Xbox 360 c.c. SonySony a.a. Play StationPlay Station

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