Dealing with the Competition 1 Competitor Analysis

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Dealing with the Competition(1) Competitor
Analysis
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Competitor Analysis

• Knowing the competitors is critical to effective
  marketing planning
• A company must constantly compare its products,
  prices, channels, and promotion with those of its
  competitors
• In this way, it can identify areas of competitive
  advantage and disadvantage
• The company can launch more precise attacks on
  its competitors as well as prepare stronger
  defenses against attacks

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Knowing about Competitors
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Identifying Competitors

• In a film business, Kodak has been worrying about
  the growing competition from Fuji, the Japanese
  film maker.
• But Kodak faces a much greater long-term threat
  from a recent invention of the filmless camera.
• This camera, sold by Canon and Sony, takes video
  still pictures that can be shown on a TV, turned
  into hard copy, and even erased.
• What greater threat is there to a film business
  than a filmless camera?

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Levels of Competition
Other companies offering a similar product and
services to the same customer at similar prices
Brand Competition
All companies making the same product or class of
products
Industry Competition
All companies manufacturing products that supply
the same service
Form Competition
All companies competing for the same consumer
dollars
Generic Competition
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Industry Concept of Competition

• A group of firms that offer a product or class of
  products that are close substitutes for each
  other
• Porters Five Forces Model

Determination of the intrinsic long-run
profit attractiveness of a market or market
segment
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Forces Model
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Types of Industry Structure
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Market Concept of Competition

• The market concept of competition opens the
  companys eyes to a broader set of actual and
  potential competitors and stimulates more
  long-run strategic marketing planning

Industry approach
Looking at companies that make the same product
Market approach
Looking at companies that satisfy the same
customer need
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Assessing Competitors

• Gather recent information on each competitors
  business, including data on sales, market share,
  profit margin, return on investment, cash flow,
  new investment, and capacity utilization
• Augment knowledge about competitors by conducting
  primary marketing research with customers,
  suppliers, and dealers

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ExampleCustomers Ratings on Key Success Factors

• Identify strengths and weaknesses of each
  competitor
• Decide whom to attack

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Keys Variables in Analyzing Competitors
Share of Market
The competitors share of the target market
The percentage of customers who named
the competitor in responding to the
statement Name the first company that comes to
mind in this industry
Share of Mind
The percentage of customers who named
the competitor in responding to the
statement Name the company from whom you
would prefer to buy the product
Share of Heart
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Balancing Customer andCompetitor Orientations
Competitor-centered company
Customer-centered company

• It develops a fighter orientation being on
  constant alert, watching for weaknesses in its
  competitors and its own position
• It determines its moves based on its
  competitors moves does not move towards its
  own goal

• It is in a better position to identify new
  opportunities and set a strategy course that
  makes long-run sense
• It can decide which customer groups and
  emerging needs are the most important to
  serve, given its resources and objectives

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Dealing with the Competition(2) Competitive
Strategies
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Roles in the Competitive Arena
Market Leader
The firm with the largest market share
A runner-up firm that is fighting hard for
increased market share
Market Challenger
Another runner-up firm that is willing to
maintain its market share and not rock the boat
Market Follower
The remaining firms that serve small market
segments not being served by larger firms
Market Nichers
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A. Strategies for Market Leader

• The firm must find ways to expand total market
  demand
• The firm must defend its current market share
  through good defensive and offensive actions
• The firm can try to increase its market share
  further, even if market size remains constant

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A-1. Expanding the Total Market
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A-2. Defending Market Share
Defender (Leader)
Attacker
1. Position defense
4. Counter- offensive defense
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A-3. Expanding Market Share

• Develop and add more new products to the line
• Increase the product quality relative to
  competitors
• Increase the marketing expenditures faster the
  rate of market growth to achieve share gains
• Avoid price cut, but offer other values to the
  customers

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B. Strategies for Market Challenger

• Defining the strategic objective and opponent(s)
• Attack the market leader
• Attack firms of its own size that are not doing
  the job and are underfinanced
• Attack small firms that are not doing the job and
  are under financed
• Choosing a general attack strategy

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B. Strategies for Market Challenger
Attacker (Challenger)
Defender
5. Guerrilla attack
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C. Strategies for Market Follower

• A market follower must know how to hold current
  customers and win a fair share of new customers
• Followership strategies
• Counterfeiter
• Cloner
• Imitator
• Adapter

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D. Strategies for Market Nicher

• The firms with low shares of the total market can
  be highly profitable through smart niching
• Three tasks of nichers
• Creating niches
• Expanding niches
• Protecting niches
• The key is specialization
• Single niching v.s. multiple niching

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