Capturing Insights

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Topic 4
Marketing Management (MAR4803) By Kanghyun Yoon

• Capturing Insights
• About Competitive Situations

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Issues To Be Discussed

• What do companies need to know about their
  competitors? Lets consider the following issues
  to understand how to capture the marketing
  insights about the competitive situations.
• Issue 1 What is competition analysis?
• Issue 2 How to identify our competitors?
• Issue 3 How to analyze competitors?
• Their strategies, objectives, and their strengths
  and weaknesses
• Issue 4 What are the appropriate marketing
  strategies for the firms that have different
  position in the market?

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Issue 1 What is Competitor Analysis?
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A Framework for Competitor Analysis

• Competitor analysis is a critical part of the
  situation analysis of the marketing plan
• One of the hottest areas of executive education.
• It is estimated that over 2 billion is spend per
  year worldwide on competitive intelligence
  activities.
• A framework for competitor analysis
• Its bottom line is .
• Four main parts of a competitor analysis
• Determination of the competitors major
  objectives
• Assessment of their current marketing strategies
• Assessment of their strengths and weaknesses
• Internal analysis of your firms strengths and
  weaknesses relative to the competitors

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Issue 2 Who are Our Competitors?
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Identifying Competitors

• Examples of identifying our competitors
• PepsiCo vs. Coca-Cola Dasani vs. Aquafina
  Citigroup vs. Bank of America PetSmart vs.
  Petco.com
• How to identify our competitors?
• It depends on the definition of market boundary.
• Two approaches to define the market boundary
• Supply-based approach (i.e., industry concept of
  competition)
• Demand-based approach (i.e., market concept of
  competition)
• Which approach is better in identifying a
  companys actual and potential competitors?
• Product-industry hierarchy vs. Levels of
  demand-based competition
• Remember close substitutes to our
  product/consumption situation?
• Understand consumers substitution patterns, when
  they attempt to satisfy their needs.
• Competitor Map (Rayport and Bernard 2001).

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Issue 3 How to Analyze Our Competitors?
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Analyzing Competitors Objectives

• Importance of identifying company objectives
• It is the indicator of overall direction of the
  companys future strategy.
• Key sources of information to identify
• Two types of objectives
• Company objectives
• Three competitive advantages Cost leadership,
  differentiation, and focus (Porter 1985)
• Competitors expansion plans (Figure 11.4) or
  Product/Market Battle Map (Cohen 1986)
• Marketing objectives
• Profit maximization, market share leadership,
  product quality leadership, survival
• Two directions of competitors objectives
• Pursuing a market share objective at the expense
  of short-term profit.
• Pursuing a profit objective at the expense of
  some share loss.

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Analyzing Competitors Strategies

• Identification of strategic group
• A strategic group is a group of firms following
  the same or a similar strategy along key
  dimensions in a given target market.
• An example
• Strategic groups in the major appliance industry
  (Figure 11.3).
• Analyzing competitors strategies
• Determining target markets that our company and
  competitors chase
• For industrial product product sales literature,
  sales force, and trade ad.
• For consumer products Track media advertising,
  the copy of the ads.
• Reviewing product features
• Product feature matrix.
• Assessing competitors core strategies
• Value proposition with studying their marketing
  communications.
• Reviewing their supporting marketing mix
• Comparison chart with price, communications,
  distribution, product/service capabilities.

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Analyzing Strengths Weaknesses

• Five categories for assessing competitors SW
• The ability of the competitor to design new
  product The ability of each competitor to
  produce and deliver the product The ability to
  market The ability to finance The ability to
  manage (Winer 2007).
• Gathering competitive information from customers
• Use image analysis (Table 11.1) Snake plot or
  image plot.
• Survey customers to get their ratings on four to
  six key success factors.
• An important share analysis (Table 11.2)
• Share of mind (Customer awareness)
• Response to the question Name the first
  company that comes to mind in this industry.
• Share of heart (Customer preference)
• Response to the question Name the company from
  which you would refer to buy the product.
• Share of market Actual share in the target
  market.

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Issue 4 What are the appropriate Marketing
Strategies?
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Four Types of Players in the Market

• We can classify firms by their roles that they
  play in the target market
• Market Leader (40)
• Lead the other firms in price changes, new
  product introduction, distribution coverage, and
  so on.
• Market challenger (30)
• Consider attacking the leader and other
  competitors for further market share
  aggressively.
• Market follower (20)
• Consider not rocking the boat and just play the
  ball.
• Market nichers (10)
• Consider to be a leader in a small market or
  niche.

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Strategies for Market Leader

• To expand the total market (i.e., primary market)
• Identify new customers
• Increase usage rate
• To defend market share
• Six defense strategies
• Position defense
• Flank defense
• Preemptive defense
• Counteroffensive defense
• Mobile defense
• Contraction defense
• To expand market share
• Relationship between market share and
  profitability
• Examples worth in coffee and in soft drink
  market.
• Concept of optimal market share

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Strategies for Market Challenger

• Goal of market challenger
• To gain more ground or overtake the leader.
• By attacking market leader, firms of its own
  size, or small local firms.
• Types of general attack strategy
• Frontal attack
• Flank attack
• Encirclement attack
• Bypass attack
• Guerrilla warfare
• Tools for attack strategy
• Price discount, value-priced goods and services,
  prestige goods, product innovation, distribution
  innovation, manufacturing-cost reduction, and so
  on.

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Strategies for Market Follower

• A key goal of market follower
• To enjoy current market share and its status quo.
• To achieve high profit.
• Types of strategy
• Counterfeit
• Cloner
• Imitator
• Adapter
• Tools for attack strategy
• Copy cat activities.

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Strategies for Market Nicher

• Goal of market nicher
• To be a market leader in a small market.
• By defining a small target market that has high
  entry barrier.
• Key examples
• Logitech International
• ITW
• New Balance
• Tools for attack strategy
• Marketing activities to achieve high market,
  instead of high volume.

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Reference

• Lilien, Gary L and Arvind Rangaswamy (2007),
  Marketing Engineering Computer-Assisted
  Marekting Analysis and Planning, 2nd ed.,
  Institute for the Study of Business Markets.
• Kotler, Philip and Kevin Lane Keller (2007),
  Marketing Management, 12th ed., Pearson
  Prentice-Hall, New Jersey.
• Kotler, Philip and Gary Armstrong (2004),
  Principles of Marketing, 10th ed., Prentice Hall.
• Lehmann, Donald R. and Russell S. Winer (2005),
  Analysis for Marketing Planning, 6th ed.,
  McGraw-Hill.
• Winer, Russell S. (2007), Marketing Management,
  3rd ed., Pearson Prentice-Hall, New Jersey.
• Zikmund, William G. (2003), Essentials of
  Marketing Research , 2nd ed., Thomson
  South-Western.