Section-II-Industry Analysis .pptx

Welcome to a
training Market Analysis
Faciliatory:

Climate setting
Self Introduction
Round One
 Nick name
 What you like most

Climate setting…
Self Introduction
Round Two
 Name
 Educational background & qualification
 work experience

Norms /ground rules;
 Don’t hesitate to ask what you think is appropriate,
 Avoid side talking,
 Arrival on time & keep time,
 Mobile phones turned off,
 No certificate if you missed more than one class
 No certificate if you fail to complete an assignment
 No mask no service

Let us do the following!
 Choose a class manager and daily evaluator
 Form an energizer Team
 Forming and naming groups

Principles of adult learning
9/22/2023 8
We learn best:
 From what we do,
 With methods which build upon & make use of our
experience,
With learning experience that are organized around
life problems, rather than subject topics;
When we want to learn,
In an informal environment.

Power point presentations,
Group discussions & presentations,
Individual & group competitions ( as pertinent),
Assignments on practical demonstration of customer
services & relations ,
Inspirational tools & energizers,
Creativity exercises & demonstrations( as pertinent),
Applied methodology-adult learning
9
9/22/2023

Training expectations
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Objectives
The general objective of this training is developing the
trainees’ knowledge, skill and attitude on analyzing markets in
the banking sector and using the information for decision
making.
After completing the training, trainees will be able to:
 Explain business analysis and its benefits
 Apply business analysis tools and techniques
 Define industry analysis and explain the benefits of industry analysis
 Apply the Porter’s industry analysis framework
 Identify and define the competitive set for Commercial Bank of Ethiopia (CBE)
 Evaluate the objectives, strategies, strength, weakness, and reaction patterns of CBE competitors
 Explain the meaning and benefits of customer analysis
 Apply the techniques of customer analysis
 Apply methods of determining market potential

Major training contents:
Section 1: An overview of Business and Market Analysis
Section 2: Industry Analysis
Section 3: Competitor Analysis
Section 4: Customer Analysis
Section 5: Market Potential and Sales Forecasting

SECTION 1
AN OVERVIEW OF BUSINESS AND
MARKET ANALYSIS

 What is BA?
Definition 1
 In terms of major BA activities, It is defined as application of knowledge, skills, tools,
and techniques to:
 Determine problems and identify business needs
 Identify and recommend viable solutions for meeting those needs
 Elicit, document, and manage stakeholder requirements
 Facilitate the successful implementation of product, service, or end result of the program or
project.
Definition 2
BA is defined as the practice of enabling change in an enterprise by defining needs
and recommending solutions that deliver value to stakeholders.

ACTIVITY 1.1
Define Business Analysis in the context of Commercial Bank of
Ethiopia (CBE).

• Solution – the implementation of the requirement or a design; e.g., Changes on the
organization culture or structure
• Requirement: A condition or capability needed by a user to solve a problem or achieve an
objective. Types of requirements include:
 Business requirements
 Stakeholder requirements
 Solution requirements
 Functional requirements
 Non-functional requirements
Transition requirements

 Constraint – a statement of restriction that modifies a requirement or set of
requirements by limiting the range of acceptable solutions.
 Assumption – an influencing factor or condition that is believed to be true at given
moment but has not been confirmed to be accurate.

Business Analysis Principles
 Root causes not symptoms
 Business improvement not IT system change
 Options not solutions
 Feasible, contributing requirements, not meeting all requests
 The entire business change lifecycle not just requirements definition
 Negotiation not avoidance

ACTIVITY 1.2
Evaluate your experience as decision maker or problem solver in CBE with
respect to the BA principles.

 Of the major activities presented in the figure, the organizational level
evaluation activities and techniques are relevant for market analysis
training.
 Hence, issues related to internal and external analysis are discussed as
follows:

A. Strategy Definition
 It involves:
 Analysis of the current situation
 Establishing business needs including stakeholders expectations and
demands
 Analysis of the vision, mission and goals and establishing means to attain
the stated objectives
 Defining the strategy for change

B. Business Process Analysis
 It focuses on how the work is done within an organization, the way of
organizing work, activities, relationships, and the dependencies between
them.
 A business process must have the following characteristics:
 Has a goal
 Has specific inputs
 Has specific outputs
 Uses resources
 Has a number of activities that are performed in some order
 Affects at least one organizational unit
 Creates value for the customer (both internal and external)

C. Business Need Definition
 Describe the business problem or opportunity
 Typically, business needs address new market or technical opportunities,
collected feedback from users/customers, including complaints, or
business stakeholders’ insights.

D. Gap Analysis (GA)
 Comparing the current state (AS-IS) and desired future state (TO-BE)
of organization, process etc.
 AS-IS- including understanding the business, vision, mission and
goals, business processes, business, technology and cultural
conditions that determine and shape the operations of the
organization.
 TO-BE- decide on the desired goals and evaluate the current
capabilities against the desired the goals

 Example of GA
Area under consideration:
We are investigating the customer satisfaction when returning faulty goods within warranty.
We are not considering customer satisfaction outside of warranty, nor the satisfaction of
customers at the point of sale.
Desired State Current State Action Steps
1. Customer satisfaction
rate = 99%
2. Repair time = 12 days
1. Customer satisfaction
rate = unknown
2. Repair time = 26 days
1. Benchmark current
customer satisfaction
2. Review findings
3. Implement new
repair system
4. Train staff to use new
system

ACTIVITY 1.3
Consider a problem area similar to the example mentioned in the chart; describe
the gap by comparing the current with desired situation and recommend action
steps.

A. Market Research Analysis
 Market Research is a structured activity with the purpose of gathering
information about markets or customers.
 Common techniques for Market Research include:
 Qualitative and quantitative research
 Mail questionnaires
 Telephone or personal interview surveys
 Observation
 Using technical solutions for collecting data (e.g., Google Analytics)

B. User Need Identification
 Identification includes not only those articulated directly, but also the
hidden expectations of which the customer may not be aware.
 Common techniques for user research are:
 Collecting user/customer feedback
 Qualitative and/or quantitative research
 Personas – targeting users
 Interviews
 Observation of user behavior, including User Journey
 Surveys
 Other techniques used for Market Research

ACTIVITY 1.4
1. Evaluate the market research practices of CBE.
2. Describe the roles of market research in the context of CBE.

C. Stakeholder Identification
 A stakeholder is any person or organization actively involved in the
change or development work, or those whose interests may be affected
as a result of the execution or completion or the work.
 Different stakeholders may have different needs and expectations
regarding the planned solution
 Identify all key stakeholders and their needs, and find a common
understanding of the purpose of a solution.

Stakeholders can be identified using the following techniques:
 Investigating the business domain
 Identifying owners of the business processes
 Analyzing the structure of the customer’s organization
 Exploring the target market of the customer’s organization
 Analyzing relationships with external organizations (suppliers, etc.)

Sample questions for stakeholders identification
 Who instigated or requested the project/initiative?
 Who is supplying funding for the project/initiative?
 Who will lose money or other resources if the project/initiative is not
completed on time – or at all?
 Who will profit in the marketplace from successful project/initiative
completion?
 Who will be responsible for ensuring quality in the project/initiative?
 Who will be responsible for ensuring compliance and risk management in
the project/initiative?
 Which organizations or entities are providing software/hardware
resources for the project/initiative?
 Who will be held responsible if the project/initiative objectives are not
met?
 Who has the practical ability to stop the project/initiative through action or
inaction?

ACTIVITY 1.5
1. Develop questions relevant to identify stakeholders of a project in
CBE.
2. Identify and group stakeholders using Power-Interest Matrix

B. Business Case
It is a document that captures the reasoning for initiating a project or task.
Major advantages:
To analyze the value, risk and priority of an initiative proposal
Justify the value of the proposals to the organization
Evaluate whether the proposal is achievable in comparison to alternative
proposals
Track and measure the progress of the solution’s development
Ensure that initiatives with inter-dependencies are undertaken in the
proper order

A Business Case may cover the following topics:
 Information about the opportunity (market trends, competitors)
 Qualitative and quantitative benefits
 Estimates of cost
 Profit expectations
 Follow-on opportunities
 Cash flow consequences of the action, over time, and the methods used
for quantifying benefits and costs
 The impact of the proposed initiative on the business operations or
business process
 The impact of the proposed initiative on the technology infrastructure
 Constraints associated with the proposed change or development work
 Risks related with the proposed change or development work
 Alignment with priorities established by the business

Project Name: Sales Team IVR Telephone system
Project Sponsor Head of Sales Project manager <name>
Date of project
approval
3rd March Last revision date 3rd March
Contribution to
business
strategy
Our strategy is to project best in industry customer service, and the current situation does not reflect this. The new IVR system
will ensure all calls are answered in a timely manner. It will also ensure that calls are dealt with efficiency. These two factors align
this project to the company strategy.
Options
considered
Options considered included:
1. Adding additional staff to sales team
2. Having a dedicated team for our best customers
3. An IVR system (selected)
Benefits 1. Increased sales – currently estimated we lose 4% of all sales calls due to current issues
2. Happier customers - we estimate new customer satisfaction will increase by 10%
3. Improved LTV - lifetime value of customers will increase by 5% due to the two points above
Timescales Initial analysis shows that the system will take approximately 3-4 months to implement.
Costs IVR software = $35,000
Project management = $30,000
Software team of 3 for 3 months - $90,000
Total estimated cost = $155,000
Expected return
on investment
Year 1 = $0
Year 2 = $120,000
Year 3 = $180,000 as LTV begins to be felt
Risks Right now the project looks pretty straightforward but there are still some unknowns surrounding implementation. There is also

ACTIVITY 1.6
Consider a solution proposal to a business problem in CBE.
Prepare a business case and justify how the proposed solution is
appropriate.

 There are many proven BA techniques. The module covers the following
major techniques:
1. Accelerated SWOT Analysis
2. Business Diagnostic Findings
3. Capability Gap Assessment
4. Cost Benefit Assessment Framework
5. Customer Experience Design Framework
6. Failure Mode Effects Analysis
7. Five Whys Template
8. Pain Point Analysis
9. Root Cause Analysis

Accelerated SWOT Analysis
 It is a simple approach that matches corporate capabilities against market
conditions to develop strategic choices.
 It helps to solve a variety of problems:
 Lack of clarity on key strategic imperatives;
 Lack of confidence that current strategic imperatives take into account
current corporate strengths, weaknesses and market conditions;
 Lack of strategic alignment across the leadership team;
 Lack of creative thinking around strategic choices that are available to the
organization.

ACTIVITY 1.7
 Identify some strategic objectives of CBE and conduct SWOT analysis in order
to check strategic alignment. Use the template.

Business Diagnostic Findings
 Used presenting the essential findings and observations from a business
diagnostic phase.
 These templates should be used at the conclusion of a business analysis or
diagnostic exercise when the key findings and observations need to be
socialized with a stakeholder group.

ACTIVITY 1.8
 Recall your past business diagnostic exercise and report essential findings and
observations using one of the templates.

Capacity Gap Assessment
 It is a structured framework for analyzing the capabilities that exist
within an organization and presenting this assessment in a clear and
simple form.
 It allows a business analyst to capture multiple organizational
dimensions, assess current capabilities and then outline potential
improvement strategies to address apparent capability gaps.

ACTIVITY 1.9
Identify a dimension or an organizational aspect in CBE and conduct capability
gap assessment.

Cost Benefit Assessment Framework
 The Cost-Benefit Assessment Framework should be used to objectively
evaluate business improvement initiatives and socialize them with
executive stakeholders for selection and endorsement.
 It is a concise and structured mechanism for outlining potential
improvement initiatives and prioritizing them based on pre-defined
objective criteria – such as cost, financial return, strategic alignment,
customer advocacy impact and benefit accomplishment risk.

ACTIVITY 1.10
 Identify potential business improvement initiatives in CBE and evaluate the
costs and benefits of each using the template.

 Effective framework at structuring analysis and design of customer
experience improvement.
 It uses three components to drive analysis, “visioning” and discussion:
1. The aspirational customer experience;
2. The current customer experience; and
3. The experience delivered by competitors.

ACTIVITY 1.11
Consider the low-level business process in marketing. Using the customer
experience design framework, identify process areas requiring the greatest
improvement based on the difference between the current experience,
competitor’s experience and the aspirational experience.

Failure Mode Effects Analysis
 It is a proven analysis method for identifying and preventing business
process failures and errors.
 Failure modes are errors or defects in a process, design, or item,
especially those that affect the customer, and can be potential or actual.

ACTIVITY 1.12
Consider some examples of processes in CBE and analyze the potential “break
points” of a process using FMEA framework.

Five Whys Template
 The Five Whys Method is a disciplined, powerful
technique for questioning a business performance
situation in order to understand “why things are the way
they are” to arrive at a true, underlying root cause – not a
symptom.

Pain Point Analysis
 Pain Point Analysis is a method for assessing the issues impacting
the performance of a business process by considering the relative
weighting of process issues across two dimensions.
 The analyst can choose the most relevant dimensions

ACTIVITY 1.13
Consider a business process in CBE. Identify issues impacting the process and
suggest solutions that can reduce process pain.

Root Cause Analysis
 The fishbone method and tool is ideally suited to situations where
brainstorming among a group of individuals is necessary to explore
symptoms, possible root causes with the aim of prioritizing areas
requiring further analysis, investigation, quantification and solution
development.

ACTIVITY 1.14
 Consider a business problem in CBE. Identify and define the root cause of the
problem using the fishbone technique.

Introduction
 The purpose of a market study is to clarify the nature of the product and
who may be willing and able to buy it.
 This process involves the interplay between the product characteristics
and the desire or need for its acquisition by segments of the population.

 Evaluate your market analysis practices using the elements in the
above procedure.

ACTIVITY 1.16
 Discuss how the 8 external factors discussed above influence the bank industry
in general and the operations of CBE in particular.

 Internal or "controllable" variables include the four P’s of marketing
[Product, Promotion, Price, Place (Distribution)].

ACTIVITY 1.17
 Discuss, by citing examples from CBE, changes in the external factors influence
CBE’s marketing program.
 Consider a product in CBE. Describe the life of the product using the PLC
framework. At which stage is the product in its life cycle?

Demand Analysis
 Demand can be defined as the total volume of a product
(good or service) likely to be consumed - by a defined
group of consumers, in a defined geographical area,
during a defined time period, in a defined market
environment, under a particular marketing approach.

ACTIVITY 1.18
1. Define demand in the context of CBE.
2. Give examples of apparent, effective, latent, unsatisfied, and potential
demand in the Ethiopian banking industry.

Determinants of Demand
 Population
 Macro environment
 Physical environment
 State of linked industries
 Marketing strategy
 Competitiveness
 International factors
 Product life cycle

ACTIVITY 1.19
Explain how the factors mentioned above influence the demand for CBE
products.

Section -II-Industry Analysis -AAU-SOC 80
SECTION 2
INDUSTRY ANALYSIS

Learning Objective
After completing this section the trainee will be able to :-
 Define Industry Analysis
 Examine Industry Market Structure
 Explore Aggregate Market Factors
 Assess Category Factors …..Related to Major Participants
 Undertake Environmental Analysis
 Examine Industry Growth Rate.
 Evaluate the Industry ---------based on Industry Direction Checklist.

Industry Analysis Defined
What is Industry Analysis ?
 Industry analysis is a market assemennt tool used by business and analysts to understand
the competitive dynamics of an industry.
 Industry analysis helps business organizations to get a sense of what is happening in
industry for example
 Supply -demand statistics,
 Degree of competition of industry with other emerging industries ,
 Future prospects of the industry taking into account technological changes
 Credit system within the industry and
 The influence of external factors on the industry.

Industry Market Structure
Activity-1: What is the market structure of the banking industry in Ethiopia?
Support your answers by data or by set o criteria?
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An industry can be classified in one of four market types:
1) Pure Competition.
 One of the earliest types of competition identified by economists is called pure competition
 Pure Competition is a market structure in which there are many competing firms selling identical
products or services.
 Very few, if any, industries in the real world are purely competitive, because it is believed that each
company is unique and has at least a very small amount of monopoly power.
 Economists still find it useful to analyze this market structure, because it allows us to better
understand the other three more-realistic market structures

Pure Competition characterized by the following:
a) Many Sellers.:- There are many sellers and many buyers. Companies are small, and
hundreds of companies compete.
b) Easy Entrance:- It does not require much know-how and capital to start a purely
competitive business.
c) Identical Products:- One firm’s product is identical to a competitor’s product
(homogeneity). Gasoline sold by gas station A is identical to gasoline sold by gas station B
d) Perfect Information:- Buyers have complete knowledge of the price, the quality, and the
nature of the product.

2) Monopoly
 A Monopoly is an industry with Only One Seller.
 The product that the firm sells has no close substitutes.
 Monopolies can be firms that are granted exclusive production rights by a
government.
 They can also be firms that have attained monopoly powers through efficient free
market production methods and economies of scale.

Monopoly…..
 Legal Restrictions are place on entry if it is considered a natural monopoly (telephone
company, electric utility company, etc.).
 Natural monopolies are regulated by government in terms of prices and distribution, and
 Non-natural Monopolies, if successful, usually attract other competitors who are willing to
overcome barriers to entry because of a potentially large return.
 Therefore, non-natural monopolies are usually short-lived.

3) Monopolistic Competition.
 Monopolistic Competition is a market structure in which there are many small
firms selling slightly differentiated products or services.
 Monopolistic competition is different from monopoly.
 The emphasis in monopolistic competition is on “competition.”
 In a monopoly industry, there exists no or very little competition.
 In a monopolistically competitive industry, there are many competing firms.

Monopolistic Competition……….
 In the market characterized by monopolistic competition, the individual images of the various firms begin to emerge in terms of
more clearly differentiated strategies.
 Although there may still be many competitors and relative ease of entry, each firm has attempted to differentiate
itself in some way from its competitors.
 Monopolistic Competition may be a market with much diversity of price, distribution, products and services,
and promotional activities, OR
 Monopolistic Competition can also be characterized by similarities among two or three variables in the
marketing mix and variety in the other—promotion, for example.
 In Monopolistic Competition environment each competitor has more control over the marketing mix variables,
and therefore a diversity of strategies is possible.

4) Oligopoly.
 In an Oligopoly Industry, a small number of firms is responsible for the majority of the
sales.
 Because firms in this industry are usually big, actions of one firm (for example, a price
cut or an aggressive advertising campaign) significantly affect actions of rival firms.
 Sometimes oligopoly firms collude (work together) in order to make larger profits.

Oligopoly………….
 In A Competitive Environment Described as Oligopolistic, the number of competitors and ease of
entry are both decreased,
 A few relatively large competitors are present, and perhaps a few smaller ones too.
 The actions of one competitor are clearly recognized in both nature and impact by other competitors,
and their retaliation to competitive moves is anticipated.
 Strategies in this type of environment are diverse, but it is most likely of the NON-PRICE VARIETY;
price competition is not easily copied and must be responded to if customers readily substituted one
firm’s products for another.
 Price leadership may develop as one firm is allowed to set the price for others.

Main Areas of Industry Analysis
There are three main areas of inquiry in an industry analysis
including
 Basic Aggregate Factors.
 Category factors related to the major participants
 Environmental Factors

Table 2-1: Category Attractiveness Summary

Aggregate Market Factors
Activity -2: There are three main areas of inquiry in an industry analysis including basic
aggregate factors. Make a banking industry analysis using aggregate category factors.
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1) Aggregate Market factors:
There Six major market factors impact market attractiveness.
1.1) Category Size: -
 Category Size (Measured in both Units and Monetary Value) is an important piece of
data about any market.
 larger markets are better than smaller ones.
 Large Categories/Larger Markets usually offer more opportunities for segmentation
than small ones.
 Large markets, however, tend to draw competitors with considerable resources, thus
making them unattractive for small firms

1.2) Category Growth:-
 Market growth is a key market factor advocated by various planning
models.
 Fast-growing categories are almost universally desired due to their
abilities to support high margins and sustain profits in future years.
 Fast-growing ones also attract competitors.

1.3) Stage In Product Life Cycle: -
 Category Size and Category Growth are often portrayed simultaneously in the
form of the product life cycle .
 Usually presumed to be S-shaped, this curve breaks down product sales into four
segments:
 Introduction,
 Growth,
 Maturity, and
 Decline.

Figure 2.2: Product Life Cycle

 In the Introductory Phase, both the growth rate and the size of the Market are Low, thus
making
 Unattractive For Most Prospective Participants, who
would rather wait on the sidelines for a period of time.
 When Market Growth and Sales start to take off, the market becomes More Attractive.
 In The Maturity Phase, the assessment is unclear; while the growth rate is low, the market
size could be at its peak.

1.4) Sales Cyclicity: -
 Many Categories Experience substantial inter year variation in demand.
 Highly capital-intensive businesses such as automobiles, steel, and machine tools are often tied to
general business conditions and therefore suffer through peaks and valleys of sales as gross
domestic product (GDP) varies.
 Businesses tied to interest rates, such as real estate and other financial services, are susceptible to
cycles.
 Products based on agricultural commodities are affected by yearly climatic conditions.
 Sales Swings Affect profits, employment levels, and cash available for new product development

1.5) Seasonality: -
 Seasonality—intrayear cycles in sales—is generally not viewed
positively.
 For Example, the toy industry relies on the Christmas period
to generate most of its sales.
 Such seasonal business tends to generate price wars because
there may be few other opportunities to make substantial
sales.

1.6) Profits
 While Profits Vary Across Products Or Brands in a category, large interindustry differences also
exist.
 Differences in profitability across industries can be driven by a variety of underlying
causes.
 These differences may be due to :-
 Factors of production - labor versus capital intensity, raw materials;
 Manufacturing technology, and
 Competitive rivalry, to name a few.

Category Factors …..Related to The Major Participants
Activity – 3: Evaluate The Banking Industry Using the check list listed down :
1. Rivalry among existing Competitors: -
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2. Threat of new entrants:-
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3. Bargaining Power of buyers: -
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4. Bargaining Power of Suppliers: -
_____________________________________________________________________________.
5. Threat of substitute products:-
___________________________________________________________________________.

Category Factors Related to The Major Participants
2) Category Factors Related to The Major Participants
A Classic Model Developed by Porter (1980) considers five factors in assessing the structure of
industries:-
1. The Threat of New Entrants.
2. The bargaining power of buyers.
3. The bargaining power of suppliers.
4. The amount of intracategory rivalry.
5. The threat of substitute products or services.

1) The Threat of New Entrants.
 Threat of new entrants refers to the threat new competitors pose to existing
competitors in an industry.
 Therefore, a profitable industry will attract more competitors looking to achieve
profits.
 If the threat of new entrants into the product category is high, the attractiveness of
the category is diminished

Some of The Potential Barriers To Entry Follow.
1.1 ) Economies of Scale:
 When manufacturing or selling at a large scale, companies are able to avail cost advantages
because per unit costs of the product fall.
 So the more the company produces in quantity the more the benefit.
 When existing companies have this advantage, it can act as a barrier to entry because a new
entrant will have to try to match the scale to achieve the same cost advantage as the existing
company.
 For Example, In the hospital supply business, profit margins are better on larger orders
because the costs of taking and fulfilling an order are largely fixed

1.2) Product Differentiation:
 Product differentiation is a marketing process in which a product is differentiated from others.
 Well-established brand names or company reputations can make it difficult for new competitors to enter.
 For Example, In The Ready-to-eat Breakfast Cereal Industry, The Big Four—Kellogg, Kraft/General
Foods. General Mills, and Quaker Oats—have such long-established reputations that a new branded
competitor would find it difficult to establish a brand franchise.
 For Example, Tesla differentiates itself from other auto brands because their cars are innovative, high-end,
and battery-operated.
 Product Differentiation Include Horizontal Differentiation, Vertical Differentiation, And Mixed
Differentiation

1.3) Capital Requirements: -
 Large amounts of capital may be necessary to establish manufacturing facilities,
chain store locations, or marketing programs.
 For Example , Capital-intensive industries, such as chemicals and aircraft, which
require enormous amounts of money to set up plants.
 However, many categories are much more marketing intensive, through either
advertising or distribution.

1. 4) Switching Costs: -
 Switching Costs are the costs of switching from one supplier to another.
 Supplier can be interpreted in a business-to-business sense or in an end-customer context.
 If switching costs are high, as they are in the mainframe computer and computer software
businesses, it is difficult to convert a competitor’s existing customers.
 Federal Express gave its business customers software that enabled them to monitor the status of
their own packages in the FedEx system.
 This created a barrier to potential new entrants to get FedEx customers to switch package
delivery firms until the competitors like UPS developed their own software.

Category Factors --------------Related to The Major Participants
1. 5) Distribution
 New Products can find it difficult to obtain shelf space.
 Coca- Cola and PepsiCo have created so many varieties of their basic colas
 Branded rivals such as 7Up have found it more difficult to gain shelf space,
particularly since private labels have made significant inroads into the soft-
drink category.
 Supermarkets, drugstores, and other chain retailers often charge
slotting allowances, payments from manufacturers for placing their
goods on shelves.

Category Factors -------Related to The Major Participants
2) The Bargaining Power of Buyers.
 Buyers are people or organizations that receive finished goods or services from the organizations in the
category being analyzed.
 Some conditions that occur when buyer bargaining power is high include the following:-
2.1 ) When the product bought is a large percentage of the buyer’s costs.
 Historically, the automobile industry (the buyer) had little buying power over the steel
industry (the industry of concern) because steel has been so important to car
manufacturing.

Category Factors ……….Related to The Major Participants
2.2) When the product bought is undifferentiated.
 If the selling firms in a category of concern view what they sell as a commodity, buyers
will have a great deal of power.
 For Example, the leverage held by customers of commodity chemicals or bulk
semiconductors.
2.3) When the buyers earn low profits.
 For Example, Ailing industries such as farm equipment can generally extract better terms
from supplier industries than can healthy industries.

2.4) When the buyer threatens to backward integrate.
 Among other pressures felt by semiconductor manufacturers is the constant threat by
computer companies to make their own chips.
 For Example, IBM’s purchase of part of Intel .
2.5) When the buyer has full information.
 Consumers can exert more power in retail stores if they are fully aware of competitive
offerings.
 For Example, car dealers are more willing to negotiate on price when a buyer demonstrates he
or she has collected dealer cost information.
2.6) When substitutes exist for the seller’s product or service.
 Although this is a separate category factor, described below, it also clearly affects buyer power.

Category Factors ………..Related to The Major Participants
3) Bargaining Power of Suppliers
 Bargaining Power of Suppliers assessment is really the mirror image of the buyer
power analysis.
 High supplier power is clearly not an attractive situation because it allows suppliers to
dictate price and other terms, such as delivery dates, to the buying category.
 Supplier bargaining power is generally higher under the following circumstances:

3.1) Suppliers are Highly Concentrated, that is, dominated by a few firms.
 Microsoft clearly dominates the market for office productivity software such as spreadsheets
(Excel) and word processing (Word).
3.2) There is No Substitute For The Product Supplied.
 The supercomputer falls in this category, although this power is diminishing with the increased
computing speed offered by workstations.
 The power of the Organization of Petroleum Exporting Countries (OPEC) diminished as
many industries converted plants to use oil and coal, and recently increased as demand has grown.

3.3) The supplier has differentiated its product or built in switching costs.
 A steel manufacturing company like AK Steel Inc. increased its power with the automobile industry by offering General
Motors
 A Delayed Payment Plan,
 A guarantee of no work stoppages, a demonstration of how cheaper steel could be substituted in certain
areas, and
 Extra service such as supplying steel already prepared with adhesives for some applications.
3.4 ) Supply is limited.
 Clearly when capacity and output are limited, buyers have little opportunity to extract special
terms.

5) Category Rivalry
 Product Categories characterized by intense competition among the major
participants are not as attractive as those in which the rivalry is more sedate.
 A high degree of rivalry can result in escalated marketing expenditures, price wars,
employee raids, and related activities.
 Such actions can exceed what is considered “Normal” market competition and can
result in decreased welfare for both consumers and competitors.

Category Factors …….Related to The Major Participants
The major characteristics of categories exhibiting intensive rivalries:
5.1 ) Many Or Balanced Competitors.
 The Fast-food, Automobile, and Personal Computer Industries each have
several large, well-endowed competitors.
 At One Time, The Commercial Aircraft Manufacturing Industry had one
strong company, Boeing, and two weaker companies, McDonnell Douglas
and Airbus.
 With Boeing’s acquisition of McDonnell Douglas and Airbus’s string of successes in
landing customers, the two are now quite even and bitter competitors.

5.2) Slow Growth.
 The relevant issue here, of course, is that in mature markets, growth can come only
from a competitor.
5.3) High Fixed Costs.
 In such categories, there is intense pressure to keep operations running at full
capacity to lower average unit costs.
 Capital-intensive industries such as paper and chemicals are highly competitive.

5.4) Lack of Product Differentiation.
 When little differentiation exists, products and services look like commodities to
customers and price warfare erupts.
5.5) Personal Rivalries.
 In some industries, personal rivalries develop around strong personalities who exhibit
strong competitive instincts.
 Sun’s Scott McNealey and Microsoft’s Bill Gates frequently snipe at each other in
speeches and articles.

5.6) Pressure from Substitutes
 Categories making products or delivering services for which there are a large number of
substitutes are less attractive than those that deliver a relatively proprietary product, one that
uniquely fills a customer need or solves a problem.
 Thus, the strength of competitive pressures from substitute products depends on three factors:
 Whether:
a) Substitute products are attractively priced and available;
b) Buyers view the substitutes as comparable when analyzing price, quality,
performance and other attributes; and
c) Buyers can easily switch to .

5.7) Capacity
 Chronic Overcapacity is not a positive sign for long-term profitability.
 When a category is operating at capacity, its costs stay low and its bargaining
power with buyers is normally high.
 Thus, a key indicator of the health of a category is whether there is a consistent
tendency toward operating at or under capacity.
 For Example, during recessions, consumer spending on travel services is low,
resulting in overcapacity at many worldwide resorts.

Environmental Factors
6) Environmental Factors
 The Environment Encompasses those factors outside the control of both the firm and its industry,
or, stated another way, the external factors unrelated to the product’s customers and competitors
that affect marketing strategies.
 The vulnerability of a product category to changes in the environment is an unattractive
characteristic, but virtually all product managers must deal with it.
 Alternatively, Categories that are Well Positioned To Take Advantage Of Environmental changes
may prosper, as can managers who view these changes as opportunities to gain
competitive advantage.

Activity -4: There are three main areas of inquiry in an industry analysis including basic
aggregate factors. Make a banking industry analysis using Environmental factors.
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 Environmental Factors / Broader Factors Commonly called the PEST analysis stands
for political, economic, social and technological.
 PEST analysis is useful framework for analyzing the external environment.
 PEST Analysis is a measurement tool which is used to assess markets for a particular
product or a business at a given time frame.
 PEST stands for Political, Economic, Social, and Technological factors.
 Once these factors are analyses organizations can take better business decisions.

How to do a PESTLE Analysis?
Conducting a PESTLE Analysis Involves Some Steps Summarized Below:
 Identify the scope of the research. It should cover the present and the future scenarios. It should apply to
the areas of the business world where the particular organization operates.
 Form a good team and assign responsibilities accordingly. Involving diverse people helps in collecting
content-rich data.
 Identify appropriate sources of information. These may include people seeking professional help
regarding an issue or a change/update in current policy.
 Gather and assemble the information. Better create a template as the basis for recording the information.

How to do a PESTLE Analysis?
 Analyzing the Collected Information is a significant step.
 Create an order of the issues to be addressed. Try to resolve the issue, that can create a big impact,
at the earliest.
 Identify The Business-specific Options to address the issues.
 Create a well-informing document for all the stakeholders
 Disseminate and discuss the findings with stakeholders and decision-makers
 Decide on the actions to be taken and trends that need to be monitored on an ongoing basis

6.1 )Technological Factors
 Technological change (TC) or technological development is the overall process of invention,
innovation and diffusion of technology or processes.
 Technological factors include production techniques, information and communication resources,
production, logistics, marketing, and e-commerce technologies.
 These affect how an organization operates, sells its products, interacts with, and gathers
intelligence on customers, suppliers, and competitors.
 Attractive product categories are strong in invention, innovation, or diffusion of new products or
services.
 Most technology based companies must continually innovate because the life cycles for their
products are extremely short

6.2) Political Factors
 Political Factors relate to how the government intervenes in the economy.
 Specifically, political factors have areas including tax policy, labour law,
environmental law, trade restrictions, tariffs, and political stability.
 The list of political factors affecting business: Bureaucracy; Corruption level.;
Freedom of the press; Tariffs; Trade control; Education Law.; Anti-trust law.
Employment law. Taxation policies and economics.; Political stability., Foreign Trade
Regulations.

6.3) Economic Factors
 Almost all capital goods industries (machine tools, farm equipment, and mainframe computers) are
sensitive to interest rate fluctuations, since their high costs to buyers are often financed at short-term
interest rates.
 Consumer durables such as homes, cars, and stereos are also sensitive to interest rates; although
consumer credit card rates do not react as much to changes in the prime lending rate as do commercial
rates.
 Inflation rates, of course, are tied to interest rate fluctuations.
 The financial impact of having foreign markets or producing in other countries can vary widely over
time depending on currency exchange rates.

6.4) Regulatory Factors
 Government and Other Agencies have an impact on category attractiveness through
regulations.
 Some product categories have become less attractive over time because of recent laws
that restrict managers’ abilities to market or that raise the overall cost of doing business.
 Government regulations, for example, restrict the media the tobacco industry can use
for advertising.
 Pharmaceutical companies and many companies that make medical products are subject
to stringent testing requirements that can change over time.
 Alternatively, government intervention can help some product categories.

6.6) Social Factors
 Trends in Demographics, Lifestyles, Attitudes, and Personal Values among
the general population are of particular concern for consumer product
manufacturers and services.
 First, New Products Have Been Developed To Fit Into Today’s Lifestyles.
 The growth of the size of the section in many supermarkets devoted to freshly
prepared entrees is a direct result of the increase in dual-career and busy
households with a need for convenience and easy preparation.

 Second, new features have been added to existing products.
 Consumers can have global positioning system (GPS) mapping systems in their
cars and telephones with which they can surf the Web and snap digital pictures.
 Finally, Promotion has Changed.
 The aging “baby boomer” (reportedly similar in age to the clearly youthful authors) is
commonplace today in television ads, as is the mysterious “Generation X” (young
adults) consumer and “Gen Y” youths.

Analysis of Industry Structure
Activity-5: Evaluate Banking Industry using using The Industry Direction Checklist.
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Industry Direction Checklist

 The analysis of the industry structure involves
 Determining the number of competitors,
 Establishing their size relative to the total market,
 Profiling the market leaders,
 Analyzing distribution channels,
 Developing consumer profiles, and
 Evaluating ease of entry and exit as well as other characteristics.

 Most industries go through an industry life cycle consisting of the development stage, the
growth stage, the maturity stage, and the decline stage.
 However, this model of understanding and predicting industry direction is not always
accurate.
 Some industries go through several cycles.
 Various industries will have different forces that help determine the direction of the industry and the
forces will have different magnitudes of importance from one industry to another.
 The checklist in Industry Direction Checklist which includes many of the considerations
required to answer the question of where the industry is going and what is driving it that
way.

Section -III- Competitor Analysis -AAU-SOC 141
SECTION 3
COMPETITOR ANALYSIS
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Learning Objective
After Completing this Section the trainee will be able to:-
 Define Competitor analysis
 Explain the need for competitor analysis
 Examine the competitive analysis process
 Explore the competitive set
 Explore the sources of information for competitor analysis
 Apply Managerial Judgment and Customer-based Evaluation of Competitors
 Examine Differential Advantage Analysis
Undertake a marketing audit using the competitive market-mix audit
 Examine a firm using a Competitor Capabilities Matrix
 Investigate how to Position company products
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Competitor Analysis Definition
Activity-1: What is competitor analysis and define it suing your
own words
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Competitor Analysis Definition
3.1 . Competitor Analysis Definition
 Competitor Analysis is the process of identifying, assessing, and
selecting key competitors.
 Key Characteristics of The Competition Must be Identified:
 Strategies; Objectives;
 Strengths and weaknesses and
 A firm’s competitive position in the target market and reaction
patterns
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Benefits of Conducting Competitive Analyses
Activity-2: Identify Benefits of Conducting Competitive Analyses
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3.2 Benefits of Conducting Competitive Analyses
Undertaking a Competitor analysis will have the following benefits :
1. Helps you identify your product's unique value proposition and what makes
your product different from competitors', which can inform future marketing
efforts.
2. Enables you to identify what your competitor is doing right.
 This information is critical for staying relevant and ensuring both your
product and your marketing campaigns are outperforming industry
standard
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3. Tells you where your competitors are falling short — which helps you
identify areas of opportunities in the marketplace, and test out new, unique
marketing strategies they haven't taken advantage of.
4. Learn through customer reviews what's missing in a competitor's product,
and consider how you might add features to your own product to meet
those needs.
5. Provides you with a benchmark against which you can measure your own
growth.
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The Competitive Analysis Process
Activity-3: A competitive analysis is the process of identifying your
competitors and evaluating their strategies to determine their strengths and
weaknesses relative to your own business, product, and service. What are
the various steps you are applying to undertake a competitor analysis?
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3.3 The competitive analysis process
It is Straightforward to Collect, store and distribute competitor
information
Competitor intelligence without analysis is almost worthless.
The competitor analysis team needs to add value by translating
raw data and information into real knowledge that can be used.
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1) The base:
 With competitive analysis you are trying to analyse existing and potential
competitors.
 Competitive analysis is not an academic exercise,
 Competitive analysis is not an end in itself but a means to become more competitive
 Information should be analyzed to give the company ideas on strategy and tactics;
 The information must always be put in a market context and it must relate to your
own company.
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2) Ad Hoc Exercises:
 The analyst needs to ensure that the people who wanted the exercise understand any limitations
on time and results.
 Before beginning an ad hoc project, ask yourself the following questions:
 Who wants the information;
 on which competitors.
 Why; by when; how can it be obtained?
 What action or possible actions is the information likely to affect.
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3) Continuous Assessment
 Continuous Assessment of competitors over several years is not as easy
as it looks and can be extremely tricky.
 Continuous research Breaks down into Sub-areas.
 One is the underlying background information on competitors that is
used as a base for all projects.
 For example , reports and accounts, and product launch information.
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4) Monitoring Results
 There are two areas to watch for.
 The first is to compare the data against previous similar exercises.
 The second area is something that many experienced research and
marketing people know they should do but often forget owing to
time and resource limitations.
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5) Interpretation
 The analyst's role is to interpret the mass of information collected.
 The competitor analyst needs to be able to spot the key facts and look beyond them to anticipate what the
competitor is actually seeking to do.
 It is important to be a logical and creative thinker.
 For Example.
 Insurer D moves from household insurance into motor insurance.
 Next year it offers travel insurance and home loans.
 The year after the company offers life, pension and pet cover.
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6) Red herrings
 It is essential for analysts to be able to differentiate between
information that is accurate and useful and information that is ill
informed and inaccurate.
 Some companies deliberately circulate false information about
themselves or competitors, so watch out for what angle any
information provider may have.
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7) Past, Present and Future
 It is often said that we never learn from the past.
 A good Piece of Information or Complete Picture of the Present is NOT ,
ENOUGH without looking at past actions and future Plans Too.
 All companies realize that the only way to survive is to go forward;
 You have to run very hard to stand still in comparison with your competitors
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8) Adding Value
 The role of the competitor analysis team is to sort, interpret and Present
information.
 If the team is doing its job properly then, to use a jargon phrase, it will be
adding value.
 Unless the analysis team converts information into knowledge, it is a waste
of time and resources.
 It should make suggestions as to what the company should do.
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Competitor Capabilities Matrix Firm
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Defining the Competitive Set
Activity -4: A competitive analysis helps to identify the main market players, determine
what strategies they use to succeed and identify resources your company could use to
dominate the market. How do you define Competitive Set from experience.
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Defining The Competitive Set
3.4: Defining the Competitive Set
 The degree of competition is a continuum, not a discrete yes or no.
 Defining competition therefore requires a balance between:-
 Identifying too many competitors (and therefore complicating instead of simplifying
decision making) and
 Identifying too few (and thus overlooking a key competitor).
 Competition can exist for customers in terms of their budgets (disposable income: vacations versus
financial products), when they use a product (evenings: a basketball game versus a movie), and
benefits sought (cancer treatments: bioengineered drugs versus chemotherapy).
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Bases of Competition
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 Misidentification of The Competitive Set can have a serious impact on the success of a
marketing plan, especially in the long run.
 Overlooking an important competitive threat can be disastrous.
 For Example,
 For many years the Swiss controlled the market for premium watches and Timex
dominated the market for inexpensive watches.
 When Japanese firms such as Casio developed electronic watches in the 1970s, they
were not viewed as a threat or serious competition in either business.
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Levels of Market Competition
Activity-5: One way to delineate the set of competitors facing a brand is to consider the proximity
of other products to the physical attributes of the product in question. Discuss how you delineate
competitors in relation to the banking sector from the following four level of competition (Product
form, product category, generic competition & Budget level completion.)
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3-5) Levels of Market Competition
1) Product Form
 The first and the narrowest perspective one can take of competition is called product form.
 These products typically pursue the same market segment, and their features therefore have
similar values.
 Product form competition Diet colas includes Diet Colas, Such As Diet-rite And Diet
Pepsi.
 Similarly, Hewlett-Packard, Dell, Sony, and others compete in the Windows-based
notebook/laptop computer category
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2) Product Category
 The Second Level of Competition is based on those products or services with similar
features.
 This Type of Competition, called product category, is what product managers naturally
think of as the industry.
 Product Category Competition Soft Drinks: Lemon limes , fruit flavored colas, regular
colas, diet lemon limes .
 While somewhat broader than product form competition, this product category
definition of competition still takes a short-run view of market definition.
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3) Generic Competition
 The third level of competition is longer term and focuses on substitutable product categories.
 At this level, termed generic competition, competition, and therefore the market, is defined as
consisting of those products and services fulfilling the same customer need.
 For Example Generic competition beverages : coffee, Tea , bottled water, wine, Juice , beer
etc.
 Railroads viewed themselves as providing rail-based rather than general transportation
services and lost much of their business to trucks and airlines. Steel companies thought they
were providing steel rather than general structural material.
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4) Budget Competition.
 The fourth level of competition is even a much more general level of competition is and is known as
budget competition.
 This is the broadest view of competition: It considers all products and services competing for the same
customer dollar as forming a market.
 Budget competition food and entertainment: Fast Food , Ice cream
 For Example,
 A consumer who has $500 in discretionary disposable income could spend it on a vacation, a
ring, a money market instrument, or a variety of other things.
 A purchasing manager may have a fixed budget for office equipment that includes copy
machines, word processing software upgrades, or a new water cooler service.
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Example-level of Competition
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 The four-level model of competition just described has significant
implications for developing product strategy and for a product manager’s
marketing problems.
 A different set of tasks must be accomplished at each level of competition for
a product to be successful in the market.
 Product Form Or Product Category Competition is that the former is outward
oriented while the generic an budget competition two are inward.
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Levels of Competition: Implications for Product Strategy

Managerial Judgment and Customer-based Evaluation of Competitors.
Managerial Judgment and Customer-based Evaluation of Competitors.
 Two alternative approaches to assessing the set of competitors includes: managerial judgment and customer-based
evaluation.
a) Managerial Judgment
 Through experience, salesperson call reports, distributors, or other company sources, Managers can
often develop judgments about the sources of present and future competition.
 One way to structure the thought process is to use a tabular structure such as that shown in Figure
below(a variant of Ansoff’s [1965] well-known growth matrix).
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Managerial Judgment and Customer-based Evaluation of Competitors
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Managerial Judgment of Competition

 Box A/Cell A Competitors: - represents product form competition, that is, those products or
services that are basically the same and are pursuing the same customers.
 Box C /Cell C Competitors: - Represents product form competitors that target other customers.
 Box B/Cell B Competitors: - represents potential future competitors that already have a franchise
with our customers but do not offer the same product or service. In this case, a marketing
manager might try to forecast which firms in B are likely to become more direct competitors.
 BOX D/ Cell D Competitors: are the most difficult to predict, as they currently sell different
products to different customers.
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b) Customer-Based Measures
 Two Types of Customer Data are Commonly Used to Assess Market Structures: Actual Purchase Or
Usage Data And Judgments (Day, Shocker, and Srivastava, 1979).
 Actual purchase or usage data are particularly useful for understanding Product Form And Category
Competition; because it is difficult to understand what alternatives were considered when purchases were
actually made, the usual assumption is that purchases are made within a narrow definition of competition.
 However, what customers have actually done does not necessarily indicate what they would have
preferred to do in the past or are likely to do in the future.
 Judgmental data are needed to understand broader definitions of competition as well as to estimate how a
new product affects the structure of competition.
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 The figure below summarizes the methods for determining competition along
two dimensions:-
 The usefulness of each method for determining competition at a
certain level and
 The kind of research data typically used to implement the method
 With respect to Research data, information is divided into
 Primary sources (data collected specifically to determine competitors) and
 Secondary sources (data collected for some purpose other than to determine the
structure of the market).
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Methods Versus Competition Levels and Information Required
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Methods Versus Competition Levels and Information Required
Competitor Selection
 Examining competition at four levels makes intuitive sense, and the practical implications for a product manager are
substantial.
 The Marketing Strategy must be developed with an eye toward four different problems:
a. Convincing Customers in your market segment that your brand is best (product form competition);
b. Convincing Buyers that your product form is best (product category competition);
c. Convincing Buyers that your product category is best (generic competition); and, occasionally,
d. Convincing Buyers that the basic need your product fulfills is an important one.
 A marketing manager must decide what percentage of his or her budget to spend on each
problem.
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The Competitor Analysis System
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Sources of Information For Competitor Analysis
Secondary Sources of Information
 Product Managers should always begin a competitor analysis with a
search of secondary sources of information.
 Secondary Sources are generally less expensive and easier to obtain
than primary data and often cover most of the important questions we
need to ask about competitors
 The Most Important Sources of secondary data are addressed in the
figure below:
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Secondary Sources of Information

Primary Sources of Information
 The Primary Source Includes: Sales Force/Customers; Employees; Suppliers;
Consultants/Specialized Firms; Investment Bankers.
 The most important primary sources of information about competitors is
addressed in figure below:
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Primary Sources of Information

Differential Advantage Analysis
Activity-7: Do you have a well-developed competitor information format to collect data with respect
to the ability to conceive design, ability to produce, ability to market and distribution network?
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 Several Frameworks have been Proposed to indicate what information to
collect about competitors.
 A useful way to examine competitors’ capabilities is to divide the
necessary information into five categories that include the competitors’
abilities to conceive and design, to produce, to market, to finance, and to
manage Figure below :
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Competitor Information to Collect

 Ability to Conceive and Design: - This category measures the quality of competitors’ new-product
development efforts.
 Ability to Produce:-This category concerns the production capabilities of the firm.
 For a service firm, it is the ability to deliver the service.
 Ability to Market - How aggressive, inventive, and so on are the firms in marketing their products?
 Do they have access to distribution channels?
 Ability to Finance:-Limited financial resources hamper effective competition. Companies with highly
publicized financial problems and companies or divisions for sale (which have limited marketing
expenditures) become vulnerable to competitors in their product lines.
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 Ability to Manage: - Certain attributes or abilities that an executive should
possess in order to fulfill specific tasks in an organization.
 They include the capacity to perform executive duties in an
organization.
 What to do with the Information: - This is the stage at which many
competitor analysis efforts fall flat.
 What do we do with all the information we collected?
 We need a useful format for synthesizing this information.
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Activity-8: A useful way to examine competitors’ capabilities is to divide the necessary
information into five categories that include the competitors’ abilities to conceive and design, to
produce, to market, to finance, and to manage. What are the set of criteria’s used to examine
competitor’s capabilities?
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What to Do with the Information?
 This is the stage at which many competitor analysis efforts fall flat. What do
we do with all the information we collected?
 We need a useful format for synthesizing this information.
 A first step toward making sense out of the data is to construct a table
patterned after the figure below .
 This forces the product manager to boil down the information to its essential
parts and provides a quick summary of a large amount of data.
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A critical part of the analysis is including the product for which
the plan is written.
 This would be done in the column of Figure below
labeled “Our Product.”
Detecting the strengths and weaknesses of the company’s
product is sometimes referred to as an internal or resource
analysis.
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Competitor Capabilities Matrix

 One Outcome of Competitor Capabilities Matrix Analysis could be a
structured comparison of the competing firms and products on a small set of
factors (5 to 10) that are critical to success in the relevant product category.
 Such a comparison could be structured along the lines of Figure below
 In this figure, the entries in the cells of the table can be rated from, say, 1 to
10 to evaluate each firm or product on the critical success factor.
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Differential Competitor Advantage Analysis

Activity-9: The competitive market-mix audit is one of the best ways of evaluating the marketing
performance of a company and its competitors. Do you have a well designed and developed
competitive market-mix audit form to make a periodic and independent audit to evaluate the
marketing Performance of the bank and its competitor?
_____________________________________________________________________________________________________
___________________________________________________________________________________________
___________________________________________________________________________________________
___________________________________________________________________________________________
___________________________________________________________________________________________
________________________________________________________________________
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The Competitive Market-Mix Audit
 The competitive market-mix audit is one of the best ways of evaluating the
marketing performance of a company and its competitors.
 An audit of this nature should be comprehensive, independent, and periodic.
 The audit should be based on specific objectives.
 Once the objectives and scope of the audit are established, a data-gathering
effort should be initiated.
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Competitive Market-Mix Audit Form.

 The First, A Minus Sign, indicates that the business being evaluated ranks below the competitor on the specific factor;
 The Second, A Question Mark, indicates that the relative standing is unknown;
 The Third, A Zero, indicates equal competitive standing; and
 The Fourth, A Plus Sign, indicates that the business being evaluated ranks above the competition on the specific factor.
 Finally, Develop a System To “Grade” Your Own Company’s Effort and Competitors On Each Aspect of The Audit.
 For new firms anticipating entry into a market, competitors are compared with each other. The ranking
system previously described is one possibility.
 In this system, each competitor is ranked as to whether it is perceived “higher,” “lower,” “equal to,” or
“don’t know” on each part of the audit.
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Positioning Company Products
Activity-9: Once you have adequately analyzed and assessed the competition, it is time to
formulate the strategy to position your product, company, or SBU based on the competitive
analysis. Is your bank a market leader, a market challenger, a market follower, or a market
Nicher?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
________________________________________
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Competitive Positioning is a marketing strategy that refers to how a marketing
team can differentiate a company from its competitors.
1) Market Leaders
 Market leaders occupy first place by way of market share for a
particular product or product line.
 They establish strategy to maintain their number one position.
 Their objectives usually are to expand total market usage of the product,
to protect their current market share.
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2) Market Challengers
 Market leaders occupy the second, third, or fourth place in market share (depending on the size of the market and the
number of competitors).
 Although not as large as market leaders, these firms are usually quite large in their own right. Market challengers also
seek to gain market share.
 They attempt to accomplish this by frontal assaults or flanking movements specifically against the market leaders.
 The flanking strategies are generally preferred because they represent a concentration of effort against an identified area
of weakness in the leader.
 Market challengers can also meet their objectives by attacking smaller competitors rather than the market leader. This is
sometimes referred to as a “guppy strategy.”
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3) Market followers
 Market followers seldom choose to make frontal or head-on attacks on market leaders.
 Because of their smaller size and their less aggressive philosophy, market followers usually employ flanking or
guppy strategies in the competitive arena.
4) Market Nichers
 Market Nichers are smaller companies which appeal to a particular segment of the market based on
their unique strengths.
 Their strategies usually do not include head-on clashes with market leaders or market challengers for
that matter.
 The market Nichers usually capitalize on an area of specialization or specific market segment which
large companies tend to overlook or ignore.
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9/22/2023
Product Position : Volume Vs. Profit

Section-II-Industry Analysis .pptx

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