Competitor insights (Class version).pptx

Competitor insights (Class version)
Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)Competitor insights (Class version)

1. Competitor Insights

2. Value Creation, Value Delivery, alue Communication, & Value Extraction Prog r am Design Str a t e gic Market Planning Model C o mpany Insights C us t omer Insights Comp eti t or Insights Segmentation Insights Opportunity Assessment & Targeting Objectives & Strategic Focus Positioning E x ecution Budgeting Market Insight Strategy Development Macro-Analysis Micro-Analysis

3. 3 It Begins With Knowledge “Knowing the other and knowing oneself, In one hundred battles no danger. Not knowing the other and knowing oneself, One victory for one loss. Not knowing the other and not knowing oneself, In every battle certain defeat.” Sun Tzu 300 BC

4. “In business, the competition will bite you if you keep running, if you stand still, they will swallow you.” - William Knudsen

5. Competitive Analysis Process Com p etiti v e predictions Competitive set definition Intelligence Gathering Intelligence analysis Competitive actions / r eac t ions Hyper competitive environments means that organisations shouldn’t be complacent about competition. Need to identify threats, opportunities & strategic uncertainties relating to observed and potential competitors.

6. Competitive Analysis Process Com p etiti v e predictions Competitive set definition I ntell i gence Gathering I ntell i gence analysis Competitive actions/reactions

7. Who are the competitors? Brand competitors market products with similar features and benefits to the same customers at similar prices. Product competitors compete in the same product class, but their products have different features, benefits, and prices. Generic competitors provide very different products that solve the same problem or satisfy the same basic customer need.

8. Brand competition Premium market: Budweiser, Corona Carlsberg, Tiger, Heineken, San Miguel Mainstream market: Saigon, 333, Hanoi Product competition All beer manufacturers including low-end markets Other alcohol products like wine Non-alcohol products: Soft- drinks and tea Generic and total budget competition Other indulgences like tap water, food, clothes, footwear, etc. which represent share of wallet competition. Specific marke t - l evel competition Generic i n dustr y - l evel competition Competitive intensity decreases as competition becomes less direct

9. Identify Competitive Set  Judgment-based identification: More subjective, but inexpensive and future oriented  Data-based identification: More objective, but present-oriented and potentially expensive  Form strategic groups based on similar characteristics, similar assets/skills, and similar competitive strategies (E.g. High, mid, low-end)  Focus on those who-based on importance of market to you and importance of market to them-pose greatest threat, now or in foreseeable future

10. Competitor analysis: Identification  Direct competitors  Same good/service; are products competing for the dollars? sa m e  Latent competition  Product superseded from an unexpected source  Industry approach  Understand the competitive patterns - they also undergo constant change  Five (Competitive) forces model (Porter, 1980,1985)

11. Competitor analysis: Identification (Cont.)  Industry structure is significant in international competition  Differing requirements for success  Structural change creates opportunities  Strategic moves; influence balance of forces; strengthen position; reposition; best use of capabilities  Identify competitors from a market point of view  Serving the same group of customers; broad set of actual and potential competitors - latent demand

12. The targets of competitor analysis

13. Broad PRODUCT RANGE Narrow Na t i o n a l GEOGRAPHICAL SCOPE Global NATIONALLY - FOCUSED, SMALL, SPECIALIST PRODUCERS e.g., Bristol (U.K.), Classic Roadsters (U.S.), Morgan (U.K.) NATIONALLY FOCUSED, INTERMEDIATE LINE PRODUCERS e.g. Tofas, Kia, VAZ, Maruti REGIONALLY FOCUSED BROAD-LINE PRODUCERS e.g. Fiat, PSA, Renault, Rover, Chrysler PERFORMANCE CAR PRODUCERS e.g., Porsche, Maserati, Lotus LUXURY CAR MANUFACTURERS e.g., Jaguar, Rolls Royce, Daimler-Benz, BMW GLOBAL SUPPLIERS OF NARROW MODEL RANGE e.g., Volvo, Subaru, Isuzu, Suzuki, Saab, Hyundai GLOBAL, BROAD-LINE PRODUCERS e.g., GM, Ford, Toyota, Nissan, Honda, VW Example: Strategic Groups in the World Automobile Industry

14. Industry Structure and Competitive Forces

15. Michael Porter’s Five Factor Model Tool for evaluating the investment value of an industry or market. Can be applied to an industry, market or sub-market

16. Porter and Millar’s Five Forces Rivalry among existing competitors Competition among existing competitors Threat of new entrants New comers entering into the current market Threat of substitute products or service Firm offering alterative products/service to the current market Bargaining power of buyers Buyer’s ability to influence your products/service through their power to make decision on the transaction (E.g. price negotiation) Bargaining power of suppliers Supplier’s ability to provide their products/services

17. Competitive forces of Vietnam Post Rivalry among existing competitors Threat of new entrants Alternative methods of message delivery - need to anticipate Threat of substitute products or service SMS, email, facsimilie, telex, mesenger apps, etc. Bargaining power of buyers Users may use couriers (pay more to be able to track letter), a substitute product, or don’t send messages at all. Bargaining power of suppliers Other mail systems outside Vietnam that supply letters for VP to deliver.

18. Strategic Implications Competitive environment is unattractive from the standpoint of earning good profits when Rivalry is vigorous Entry barriers are low and entry is likely Competition from substitutes is strong Suppliers and customers have considerable bargaining power

19. Strategic Implications Competitive environment is ideal from a profit- making standpoint when Rivalry is moderate Entry barriers are high and no firm is likely to enter Good substitutes do not exist Suppliers and customers are in a weak bargaining position Example: Petrochemicals industry

20. Five Forces - Restaurant VERY HIGH VERY HIGH Threat New Entry Small capital (~$50,000) Can be run by a family Supplier Power Real Estate controls all Buyer Power Do you always go to the exact same restaurant? VERY HIGH Substitutes How often does the average family eat out? VERY HIGH Rivalry Why work together? Fierce competition VERY HIGH Profits??? Ouch! Not so good, Many don’t survive

21. The components of competitor analysis

22. Competitor analysis: Objectives Determining competitors’ objectives Identify what they seek Their focus; mix of goals Generic strategy 23 (e.g. Investing in building new factory; shareholder values, etc. )

23. Competitor analysis: Strategies Identifying competitors’ strategies Similar strategies; degree of competitiveness; strategic groups Enter or avoid strategic groups? Develop competitive strategic advantage? 24

24. Competitor analysis: Resource profile Assessing competitors’ strengths & weaknesses Assets & Capabilities Historical performance Secondary data, personal network 25

25. Competitor analysis example APPLE SAMSUNG Strengths One of the top most companies of the world for its brand value The simplicity in its product line No. 1 spot with shipments reaching 58 million units of mobile phones in Q2 2021(Counterpoint, 2021). Won many awards on its high quality products Weaknesses Apple Iphone design is very consistent +High price Use the Google Android (viewed as an inferior product to Apple’s iOS) Positioning Apple has positioned to a certain type of customer: wealthy people and innovators Not target any specific segment, but seem to serve the high-end people, business people, young adults. Competitive strategy Based on product differentiation, sustainable competitive strategy, product innovation Relied on vertical integration as a chief competitive advantage

26. Competitor Selection  Strong or weak competitors?  Use customer value analysis  Rank competitors by valued attributes  Rank yourself against competitors  Pricing strategies; or develop capabilities?  Are they close or distant competitors?  Most compete against companies that resemble them most  Well behaved or disruptive competitors? 27

27. Tips  Be sensitive to new competitive forms as they emerge – don’t rely on historical data and process to guide future actions even if profitable.  Include more than primary competitors in analysis.  Relate analysis to projected level of immediacy. 28

28. Tips (con’t)  Assess competitors from consumer perspective.  What car would a buyer purchase if Ferrari were not available?  Assess competitors from product use associations  Ask consumers to identify ‘use contexts’ and nominate products for each identified context. Then, cluster similar products related to context. 29

29. Tool: Competitor Landscape Analysis Cur. Probable Potential Direct compet i tors A B C Indirect compet i tors D E F

30. Competitor Landscape Analysis HP Laptop Cur. Probable Potential A B C Direct com p etit o rs D e ll IBM Asus Apple Lenovo S a msu n g Microsoft D E F Indirect com p etit o rs Tablets Netbook Blackberry Portable media Smart phones ?

31. Tool: Substitutes Threat Assessment Customer group: Functions and Benefits “ What does my product help my customers do? What benefits do they get from my product?” Potential Substitutes “What are the other ways to fulfill the same functions or obtain the same benefits?

32. Substitutes for FedEx Overnight Delivery Functions and Benefits “What does my product help my customers do? What benefits do they get from my product?” Potential Substitutes “What are the other ways to fulfill the same functions or obtain the same benefits? Deliver non-sensitive documents Other OD services (e.g., DHL) Postal Service Fax Email Web p o sting Deliver sensitive documents Other OD services Postal Service Certifi e d mail X Encrypted Email X Share datasets Other OD services PS Certifi e d mail X Em a il FTP Web p o sting Deliver parcels UPS Postal Service X X X Customer group : Professional practices

33. Substitutes for Unicef Greeting Cards Functions and Benefits “What does my product help my customers do? What benefits do they get from my product?” Potential Substitutes “What are the other ways to fulfill the same functions or obtain the same benefits? Feel socially responsible Buy other products from ch a rit a ble org. Don a ti o ns to other charities V o lu nt eer work Buy “green” produc t s … Keep in touch with friends Other cards E-mail Phone call Visit … Congratulate on happy news Other cards Phone call Visit Send gift or flowers … Express support or sympathy Other cards Phone call Visit Send fl o w e rs … Customer group : Older consumers

34. Empirical Approaches Identify competition based on what customers choose or what they perceive. Insist on usage context. Judgments of substitutability (survey/interviews): “ It’s 5:30 PM on Friday. You have a confidential price list to send to one of your major customers located in another state by Monday morning. Suppose that, for some reason, FedEx is not an option. What would you do?”

35. Tool: Substitutability Worksheet Order Customer 1 Customer 2 Customer 3 1 2 3 4 5 Score 10 8 6 4 2

36. Assessment of FedEx Substitutes Order Customer 1 Customer 2 Customer 3 Weights 1 DHL EMS DHL 10 2 EMS Vietel Post EMS 8 3 EMAIL DHL UPS 6 4 FAX EMAIL EMAIL 4 5 Phone FAX FAX 2 DHL = 10 + 6 +10 = 26 UPS = 8 + 10 + 6 = 24 EMAIL = 6 + 4 + 2 = 12

37. Competitive Analysis Process Com p etiti v e predictions Competitive set definition I ntell i gence Gathering I ntell i gence analysis Competitive actions/reactions

38. 39 Understanding the Competitors Objectives and Commitment Image and Posi t ioning Size, Growth & Profitability Current and Past Strategies Strengths and Weaknesses Cost Structure Exit Barrriers Organization and Culture Competitor Actions

39. II. Intelligence Gathering Consider broad list of intelligence sources Be efficient in intelligence gathering Beware of legal and ethical hazards Filter for reliability Intelligence gathering is a “two-way” street: Take appropriate protective measures

40. Sources of competitor information

41. Sources of Competitive Intelligence  Competitors’ annual reports  Competitor’s speeches and public announcements  Competitor’s products  Competitor’s web site  Competitor’s customers: purchasing agents, engineers, corporate officers  Employment ads and head hunters  Securities and Exchange Commission filings  Patent filings in US & overseas  Government contract administration Banks Ad agencies Independent truck fleets Retailers Trade magazines Professional meetings: displays, brochures, scientific papers Own personnel: executives, sales force, engineers Industry observers: consultants, stock analysts Newspapers (especially local) Creative observation

42. Efficient Intelligence Gathering Assess what is already known internally Define what you expect to learn Set priorities Verify “Who else needs it?” Monitor competitor’s transactions

43. Intelligence Filtering Cross-validate Pilot-test external sources Factor in ambiguity & reversibility Factor in trustworthiness of context Code for reliability: rumor=1;  reliable = 2; fact = 3

44. Competitive Analysis Process Com p etiti v e predictions Competitive set definition I ntell i gence Gathering I ntell i gence analysis Competitive actions / r eac t ions

45. III. Principle of Intelligence Analysis Benchmarking Holistic interpretation The value chain

46. Competitive Benchmarking Identify who to benchmark against Identify what aspects of business to benchmark Collecting relevant data to enable processes & operations to be compared Comparing with own processes Best-in-class, industry leaders All aspects of business, value chain Published sources (company reports), data sharing, direct interviews Compare & contrast

47. Tool: Multi-Attribute Modeling Criteria Weights Harvard ratings Duke ratings Columbia ratings Stanford ratings Brand Name 15% 10 6 8 10 Location 30% 7 4 10 6 Placement record 25% 9 7 8 8 Curriculum 10% 9 7 6 6 Latest Rankings 10% 9 7 7 6 Student profiles 10% 7 8 8 7

48. Holistic Interpretation Help wanted ad: C seeks experienced programmers Sales force: C is opening sales offices Rumor: Prospects approached by C for test marketing Multiple UCC filings for major equipment

49. The Value Chain The ultimate goal of any business is to provide value to its customers. A business will be profitable if the value it creates is greater than the cost of producing its products or services.

50. The Value Chain Support Activit i es Primary Activities I nbou n d Logistics Operations Outbound Logistics M ar k et i ng & Sales Service Firm Infrastructure Human Resource Management Technology Development Procurement Porter (1985) identifies five primary activities that add value to the final output of a company

51. The Value Chain An organisation’s value chain consists of nine interrelated activities that collectively describe everything it does. The five primary activities consist of the activities performed in order to create, market, and deliver products and services to customers and also to provide post-sales services and support.

52. Exercise 1 Use provided Competitor Threat Landscape to discuss and analyze your competitors of the chosen brand (20 min)  Share your works with class (5 min each) Note ： Exercise worksheet downloaded from e-learning

53. Competitive Analysis Process Com p etiti v e predictions Competitive set definition Intelligence Gathering I ntel l i g ence analysis Competitive actions / r eac t ions

54. IV. Competitive Prediction To determine competitors’ response profiles – how a competitor might behave when faced with various environmental and competitive changes. Is the competitor satisfied with the current position ? What likely moves or strategy shifts will the competitor make? Where is the competitor vulnerable ? What will provoke the greatest and most effective retaliation by the competitor?

55. Predict competitors’ future strategies

56. Competitive Analysis Process Competitive predictions Competitive set definition Intelligence Gathering I ntel l i g ence analysis Competitive actions / r eac t ions

57. V. Competitive Actions/Reactions  Formulate competitor-specific strategies  Prepare competitor response profiles  Play games: Select best course given competitor’s probable actions and reactions  Flesh out response options  Change the rules of the game if unhealthy

58. Reacti o ns Estimating competitors’ reactions Cost based Differentiation based Use similar strategies? 62

59. C ompet i - tors Market Share Positions Relative Strengths Re l at iv e Weak- nesses Current Objective & Strategy Future Object iv es & P rob a bl e Strategy Threats & Opportu- nities P rese n ted P ro p osed Strategy Total Market Seg- ment 1 Seg- me n t2 Seg- ment 3 Seg- ment 4 Cur. Cur. Cur. Cur. Cur. Prev. Prev. Prev. Prev. Prev. Cur. Cur. Cur. Cur. Cur. Prev. Prev. Prev. Prev. Prev. Cur. Cur. Cur. Cur. Cur. Prev. Prev. Prev. Prev. Prev. Cur. Cur. Cur. Cur. Cur. Prev. Prev. Prev. Prev. Prev. Tool: Competitive Summary Assessment Template

60. Tool: Game Theory Your possible courses of actions Competitor’s possible courses of actions Outcome for competitor Outcome for you

61. “Prisoner’s Dilemma” Lower: P=1 ,8 Lower: P=1 ,8 Maintain: P=2,000 Main t ain: P=2,000 A B 50 (30,000) 50 (30,000) 50 (40,000) 50 (40,000) 80 (54,000) 20 (10,000) 20 (10,000) B A VCU = 1,000 TFC = 10,000 Total market size = 100 A B 80 (54,000) Profit S ales B A B A

62. Effects of Differentiation Lower: P=1 ,8 Lower: P=1 ,8 A M ain t ain: P=2,000 M ain t ain: P=2,000 B 50 (30,000) 40 (30,000) A B A B 50 (30,000) 60 (38,000) 60 (38,000) 50 (40,000) A B A B 40 (30,000) 50 (40,000) VCU = 1,000 TFC = 10,000 Total market size = 100

63. Influencing Competitors  Send market signals  Play “tit-for-tat”  Not unnecessarily aggressive  Firm  Clear  Avoids over-reaction  Forgiving  Don’t be too greedy  Hide under dominant brand’s umbrella  Limit pricing  Educate

64. Market Signaling  Form  Prior announcement  Announcement after the fact  Discussion of own moves  Public discussion of industry  Purpose and Content  Preemption  Communicate strategic advantage,  Promote coordination  Threat  Minimize provocation

65. Flesh Out the Response Should we respond? How should we respond? What type? How aggressively? In kind or not in kind? In which market or territory? When should we respond? For how long?

66. Example: Response Options toward New Entrants Source: Gatignon, H. & D. Reibstein (1997)

67. Learning from competitors

68. Customer or competitors orientation? Competitor Oriented Company  A company whose moves are mainly based on competitors’ actions and reactions Customer Oriented Company  A company that focuses on customer developments in designing its marketing strategies Market Oriented Company  A company that pays balanced attention to both customers and competitors in designing its marketing strategies 72

69. Evolving Company Orientations

70. Market Orientation  The market and the customers that form the market should be the starting point in formulating the overall business strategy.  Market Orientation: “the organisational culture that most effectively and efficiently creates the necessary behaviours for the creation of superior value for buyers and, thus, continues superior performance for the business (Narver and Slater, 1990).”

71. Conclus i on s - I  Two types of competitor identification methods  Structured judgment  Empirical identification based on actual problem-solving and choice  N u merou s sources of comp e t i t i v e i n te l l i ge n ce . Be efficient in searching them: set expectations, specificity, priority, etc.  Important step in competitive analysis is intelligence filtering

72. Conclusions-II  Intelligence gathering does not mean breaking the law  Intelligence gathering is a two-way street. Perform a risk analysis. Make protective measures simple  Key analysis principles: (1) elaborate, (2) use benchmarks, (3) decompose, and (4) look for the big picture

73. Conclusions-III  Don’t just react to competitor moves, anticipate them  Don’t just anticipate competitor moves, try to dictate them  Use game theory as a tool to model competitive interactions  Strategies for playing competitive game:  Tit-for-tat  Competitor education  Changing the rules

74. Conclusions-IV Always compute the break-even before changing price as a competitive move Make sure that you are indeed playing the same game, that is, playing by the same rules