This document discusses competitor analysis and competitive strategies. It defines key terms like competitive advantage and outlines the process for analyzing competitors, including identifying them, assessing their strategies and strengths/weaknesses, and selecting which to attack or avoid. It also covers Porter's basic winning strategies of cost leadership, differentiation, and focus. Finally, it discusses different competitive positions like market leader, challenger, follower, and nicher. The overall purpose is to help understand competitors and develop effective competitive strategies.

1. Competitor Analysis

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. 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. 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. 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. 18- 6
Figure 18-1:
Steps in Analyzing
Competitors

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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:

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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. 18- 9
Figure 18-2:
Competitor Map

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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

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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. 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:

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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

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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. 18- 15
Figure 18-3:
Hypothetical
Market Structure

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

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Competitive Strategy
WD-40 has a knack
for developing new
uses for its product.
What other brands
have adopted a
similar strategy?
WD40

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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

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Pepsi is an
example of
market
challenger
that has
chosen to use
a full frontal
attack

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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

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Dial Corporation
successfully
uses a market
follower strategy

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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

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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

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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