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How to Anticipate and Mitigate Emerging Competitors from Adjacent Markets and Industries


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How to Anticipate and Mitigate Emerging Competitors from Adjacent Markets and Industries

  1. 1. How to Anticipate and Mitigate Competitors from Adjacent Markets and Industries A Complimentary Webinar from Aurora WDC 12:00 Noon Eastern /// Wednesday 20 February 2013 ~ featuring ~ Phil Britton Michel Bernaiche Powered byThe Intelligence Collaborative #IntelCollab
  2. 2. Questions, Commentary & Content α Use the Questions pane on your GoToWebinar control panel and all questions will be answered in the second half of the hour. α You are welcome to tweet any comments on Twitter where we are monitoring the hashtag #IntelCollab or eavesdrop via α Slides will be available after the webinar for embedding and sharing via α To view the recording and download the PPT file, please register for a trial membership at Powered byThe Intelligence Collaborative #IntelCollab
  3. 3. Agenda  How to spot investments from your competitors that may signal a change in focus or capabilities using Porter’s Model  How to look at a your own company’s growth, and apply that to your competition  Summary, Q&A and Discussion Powered byThe Intelligence Collaborative #IntelCollab
  4. 4. Porter’s Five Forces We’ve all seen it before… But Porter’s Five Forces indicate where to look for threats from adjacent markets Threat of New Entry Threat of Buyer Power: • Time and Cost of Entry • Number of Customers New • Specialist Knowledge • Competitor Differentiation Entries • Economies of Scale • Price Sensitivity • Cost Advantages • Ability/desire to substitute • Technology Protection • Cost of changing • Other Barriers to Entry Current Supplier’s Competitive Buyer’s Power Power Rivalry Supplier’s Power Threat of Substitution • Number of Suppliers • Substitute Performance • Size/Resources of Suppliers • Cost of Change Threat of • Ability to Substitute • Emerging Technologies Substitution • Cost of Changing • Change in regulatory environment • Uniqueness of ServiceMichael E. Porter. "The Five Competitive Forces that Shape Strategy", Harvard Business Review, Powered byThe Intelligence Collaborative #IntelCollab
  5. 5. How Do You Identify Changes in Adjacent Markets? Don’t Play Defense! By exploring Adjacent Markets for your own company, you also identify areas in which your competition make seek to invest Third: Look at how your company can be First: Look at your own business Second: Look to Expansion Opportunities disintermediated • Determine be substituted for your product/service? • What otheryour core expertise andhave similar needs to to it What can industries/applications begin to look adjacent those that your products/services address? • Look for opportunities, map them to your core expertise • What other uses can be identified for your • What other channels to market are there for your products? product/technology? • Opportunistically pursue adjacent markets • What geographies can you expand into? conjunction with • What other products/services are used in your product/service? ORD Guideline: Developing a Roadmap for Identifying and Tracking Adjacent Market Opportunities Powered byThe Intelligence Collaborative #IntelCollab
  6. 6. Knowing When You Competitors May Innovate Against You Blue Ocean Strategy suggests that an organization should create new demand in an uncontested market space, or a "Blue Ocean", rather than compete head-to-head with other suppliers in an existing industry. • Red oceans represent to all the industries in existence today – the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. • Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set.  Kim, W. Chan; Mauborgne, Renée (1 February 2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Harvard Business Press.  Powered byThe Intelligence Collaborative #IntelCollab
  7. 7. Red vs. Blue Oceans Heavily commoditized products and/or a highly fragmented market provide powerful inducements to look in to line extensions and/or new potentials for growth • Assuming Blue Oceans aren’t “fishable” to you, adjacent markets are often explored as a company is faced with the task of growing its business in a commoditized market o May be used to diversify its portfolio o May be used to bolster market share in a sagging industry • To determine if a competitor is going to explore an adjacent market strategy you can observe: o Acquisitions (especially buying someone who found a Blue Ocean) o Investments o New hires o New technologies o Shift in suppliers o You know, follow the money Powered byThe Intelligence Collaborative #IntelCollab
  8. 8. Case Study - Apple In 2001 Apple released its first MP3 player, the iPod. At the same time, it introduced a music service called iTunes. Riding the wave of digital distribution of MP3 music, it helped to upend the music industry • Prior to 2001, Apple was a computer manufacturer who sought to expand its base • It saw the opportunity to get in on the MP3 revolution • Needed a “killer value proposition” that would allow it to gain an advantage for its new device + • Apple developed a “closed ecosystem” where it sold the product, sold the content for that product and managed the connection between the device and the music • Result: o Changed the way people purchased and listened to music o Closure of music store chains o Shift of power within the music industry from record label to iTunes (and others) o Opened the door to other iDevices, such as the iPhone and iPad Powered byThe Intelligence Collaborative #IntelCollab
  9. 9. What could the incumbents have done differently? By understanding Apple’s attempt to get in to an adjacent market, key established players could have mitigated some of the impact of the shifting market and avoided all-out obsolescence • Music Labels: o Could have set up an MP3 site to cut out the iTunes middle man o Should have realized sooner that the customer was embracing the technology • Electronics Stores: o Should have negotiated a revenue sharing deal with Apple based on the amount of music downloaded to devices sold via their channel o Could have exited physical media (shiny discs) earlier • Music Retailers: o Could have more quickly embraced digital distribution, even if changed their revenue model drastically o Branched in to MP3 player and affiliated products Epilogue: Apple has continued to look in to ways expand in to new adjacencies with video, books and applications… None of which existed when iTunes launched Powered byThe Intelligence Collaborative #IntelCollab
  10. 10. Could it happen to your industry? Questions to ask your self and your strategy partners: For every adjacency we found for our company, could a competitor exploit it faster or cheaper? Look at the adjacent products and services to your own business and ask if the key players there could enter in to your business or seek to disrupt the status quo in your business • Do you have a business model/business line with fat margins? It could be ripe for disruption by a lower-cost supplier • Do you have a product line that could be replaced by technology? • Do you have a service model that could be outsourced or replaced with automation? • Do you have a larger non-direct competitor with deeper pockets looking to diversify to drive growth? • Is there an emerging technology that no one has figured out how to monetize? Well, someone is working on that problem right now… • Suspend Disbelief – As to cost, barriers to entry, ask “what if” Powered byThe Intelligence Collaborative #IntelCollab
  11. 11. Recap  Look at a your own company’s growth and opportunities using Porter’s model and apply that to your competition  Look for changes in technology which may alter your company’s landscape  Spot investments from your competitors that may signal a change in focus or capabilities  Suspend disbelief as to barriers to entry Powered byThe Intelligence Collaborative #IntelCollab
  12. 12. Phil Britton is a Sr. Manager of Competitive Intelligence with Best Buy, the world’s largest consumer electronics retailer. Starting 1993 as a store employee, Phil has been involved with Competitive Intelligence within Best Buy nearly since its inception as a department in 2001. Phil has been actively involved in moving the capability from a pure pricing function to a full-blown CI department serving customers from individual retail stores to senior executives on multiple continents. Web: Phil Britton Email: Competitive Intelligence, Best Buy Corp. The Intelligence Collaborative is the online learning and networking community powered by Aurora WDC, our clients, partners and other friends and dedicated to exploring how to apply intelligence methods to solve real- world business problems. Apply for a free 30-day trial membership at or learn more about Aurora at – see you next time! Powered byThe Intelligence Collaborative #IntelCollab