Competitor Analysis

1. Competitor Analysis

2. 18- 2
Objectives
Learn how to understand competitors as Learn how to understand competitors as
well as customers via competitor well as customers via competitor
analysis.analysis.
Learn the fundamentals of competitive Learn the fundamentals of competitive
marketing strategies based on creating marketing strategies based on creating
value for customers.value for customers.
Realize the need for balancing customer Realize the need for balancing customer
and competitor organizations in order to and competitor organizations in order to
become a truly market-centered become a truly market-centered
organization.organization.

3. 18- 3
Has dominated the Has dominated the
chip industrychip industry
Success is directly Success is directly
related to related to Intel’sIntel’s
competitive competitive
strategystrategy
Strategy focuses Strategy focuses
on superior value on superior value
and product and product
leadershipleadership
Heavy focus on Heavy focus on
product and product and
advertising innovation advertising innovation
and R&D investmentsand R&D investments
Changing market Changing market
needs have needs have
challenged Intel to challenged Intel to
adaptadapt
Intel is capitalizing on Intel is capitalizing on
the Internet nowthe Internet now
cIntelIntel

4. 18- 4
Definition
CompetitiveCompetitive AdvantageAdvantage
An advantage An advantage
over competitors over competitors
gained by offering gained by offering
consumers greater consumers greater
value than value than
competitors offer.competitors offer.

5. 18- 5
Definition
Competitive AnalysisCompetitive Analysis
The process of identifying key The process of identifying key
competitors; assessing their competitors; assessing their
objectives, strategies, strengths objectives, strategies, strengths
and weaknesses, and reaction and weaknesses, and reaction
patterns; and selecting which patterns; and selecting which
competitors to attack or avoid.competitors to attack or avoid.

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

7. 18- 7
Competitor Analysis
Firms face a wide Firms face a wide
range of competitionrange of competition
Be careful to avoid Be careful to avoid
“competitor myopia”“competitor myopia”
Methods of Methods of
identifying identifying
competitors:competitors:
Industry point-of-viewIndustry point-of-view
Market point-of-viewMarket point-of-view
Competitor maps Competitor maps
can helpcan help
Identifying Identifying
CompetitorsCompetitors
Assessing Assessing
CompetitorsCompetitors
Selecting Selecting
Competitors to Competitors to
Attack or AvoidAttack or Avoid
Steps in the Steps in the
Process:Process:

8. 18- 8
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

10. 18- 10
Create a competitor Create a competitor
map for one of the map for one of the
following: following:
• WalMartWalMart
• McDonald’sMcDonald’s
• NikeNike
• StarbucksStarbucks
• GoogleGoogle

Discussion Question

11. 18- 11
Competitor Analysis
Determining Determining
competitors’ objectivescompetitors’ objectives
Identifying competitors’ Identifying competitors’
strategiesstrategies
Strategic groupsStrategic groups
Assessing competitors’ Assessing competitors’
strengths and strengths and
weaknessesweaknesses
BenchmarkingBenchmarking
Estimating competitors’ Estimating competitors’
reactionsreactions
Identifying Identifying
CompetitorsCompetitors
Assessing Assessing
CompetitorsCompetitors
Selecting Selecting
Competitors to Competitors to
Attack or AvoidAttack or Avoid
Steps in the Steps in the
Process:Process:

12. 18- 12
Competitor Analysis
Strong or weak Strong or weak
competitorscompetitors
Customer value analysisCustomer value analysis
Close or distant Close or distant
competitorscompetitors
Most companies compete Most companies compete
against close competitorsagainst close competitors
““Good” or “Bad” Good” or “Bad”
competitorscompetitors
The existence of The existence of
competitors offers several competitors offers several
strategic benefitsstrategic benefits
Identifying Identifying
CompetitorsCompetitors
Assessing Assessing
CompetitorsCompetitors
Selecting Selecting
Competitors to Competitors to
Attack or AvoidAttack or Avoid
Steps in the Steps in the
Process:Process:

13. 18- 13
Basic Winning Competitive Basic Winning Competitive
Strategies: PorterStrategies: Porter
Overall cost leadershipOverall cost leadership
 Lowest production and Lowest production and
distribution costs distribution costs
DifferentiationDifferentiation
 Creating a highly Creating a highly
differentiated product line differentiated product line
and marketing program and marketing program
FocusFocus
 Effort is focused on serving Effort is focused on serving
a few market segments a few market segments
Competitive Strategies

14. 18- 14
Basic Competitive Strategies: Basic Competitive Strategies:
Value DisciplinesValue Disciplines
Operational excellenceOperational excellence
 Superior value via price and convenienceSuperior value via price and convenience
Customer Customer intimacyintimacy
 Superior value by means of building strong Superior value by means of building strong
relationships with buyers and satisfying relationships with buyers and satisfying
needs needs
Product Product 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 total Expanding the total
demanddemand
Finding new usersFinding new users
Discovering and Discovering and
promoting new product promoting new product
usesuses
Encouraging greater Encouraging greater
product usageproduct usage
Protecting market shareProtecting market share
ManyMany considerationsconsiderations
Continuous innovationContinuous innovation
Expanding market shareExpanding market share
Profitability rises with Profitability rises with
market sharemarket share
Market LeaderMarket Leader
Market Market
ChallengerChallenger
Market Market
FollowerFollower
Market NicherMarket Nicher
Competitive Competitive
PositionsPositions

17. 18- 17
Competitive Strategy
WD-40 has a knack
for developing new
uses for its product.
What other brands
have adopted a
similar strategy?
WD40

18. 18- 18
Competitive Strategy
Option 1:Option 1: challenge the challenge the
market leadermarket leader
High-risk but high-gainHigh-risk but high-gain
Sustainable competitive Sustainable competitive
advantage over the leader advantage over the leader
is key to successis key to success
Option 2:Option 2: challenge firms challenge firms
of the same size, smaller of the same size, smaller
size or challenge size or challenge
regional or local firmsregional or local firms
Full frontal vs. indirect Full frontal vs. indirect
attacksattacks
Market LeaderMarket Leader
Market Market
ChallengerChallenger
Market Market
FollowerFollower
Market NicherMarket Nicher
Competitive Competitive
PositionsPositions

19. 18- 19
Pepsi is an
example of
market
challenger
that has
chosen to use
a full frontal
attack

20. 18- 20
Competitive Strategy
Follow the market Follow the market
leaderleader
Focus is on improving Focus is on improving
profit instead of profit instead of
market sharemarket share
Many advantages:Many advantages:
LearnLearn from the from the
market leader’s market leader’s
experienceexperience
Copy or improve on Copy or improve on
the leader’s offeringsthe leader’s offerings
Strong profitabilityStrong profitability
Market LeaderMarket Leader
Market Market
ChallengerChallenger
Market Market
FollowerFollower
Market NicherMarket Nicher
Competitive Competitive
PositionsPositions

21. 18- 21
Dial Corporation
successfully
uses a market
follower strategy

22. 18- 22
Competitive Strategy
Serving market Serving market
niches means niches means
targeting targeting
subsegmentssubsegments
Good strategy for Good strategy for
small firms with small firms with
limited resourceslimited resources
Offers high marginsOffers high margins
Specialization is keySpecialization is key
By market, customer, By market, customer,
product, or marketing product, or marketing
mix linesmix lines
Market LeaderMarket Leader
Market Market
ChallengerChallenger
Market Market
FollowerFollower
Market NicherMarket Nicher
Competitive Competitive
PositionsPositions

23. 18- 23
Companies can become so Companies can become so
competitor centered that they competitor 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

24. 18- 24
Game playing industry
a.a.NintendoNintendo
a.a.Wii hyperlink Wii hyperlink
b.b.MicrosoftMicrosoft
a.a.Xbox 360Xbox 360
c.c.SonySony
a.a.Play StationPlay Station