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Competitor Analysis: Understanding Strategies, Objectives, and Capabilities

This chapter explores the importance of competitor analysis in shaping a successful strategy. Learn how to define your competitive set, analyze the industry and competitors at a macro and micro level, and gather primary and secondary data to assess their current and future strategies. Understand competitor advantages, assess their capabilities, and anticipate their future moves.

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Competitor Analysis: Understanding Strategies, Objectives, and Capabilities

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  1. 4 C H A P T E R Competitor Analysis • Essence of a “Strategy” • Increasing Importance

  2. Continuiting from Chs. 2 & 3 • Define the competitive set  Boundary • Industry Analysis  Macro level • Competitor Analysis  Micro level

  3. Secondary data Primary data • Key questions: • Who are they? • What are the competing product features? • What do they want? • What is their current strategy? Differential competitor advantage analysis i.e. Who has the competitive product advantage? What are they going to do? Competitor Analysis System Differential Advantage Analysis

  4. Key Questions to Ask • Do you know…? • What are the Capabilities of competitors? • What are the Competitors’ Objectives? • What are the Current Strategies being used and how successful have they been? • What are their likely Future Strategies?

  5. Secondary data Secondary Sources of Competitor Information http://www.beernet.com http://www.crn.com Internal sources Customer communications Local newspapers Consultants Annual reports Trade press Patent filings Internet 10Ks Promotional literature Business press Trade associations Electronics databases Government News releases www.dialog.com www.dnb.com

  6. Primary data Primary Sources of Competitor Information Investment bankers Consultants/Specialized Firms Sales force Suppliers Employees Customers

  7. Other Sources of Information • Help-Wanted Ads • Reverse Engineering • Monitoring Test Markets • Hiring Key Employees* • Plant Tours

  8. Information Sources with Ethical Considerations • Aerial Reconnaissance • Buying/Stealing Trash (Garbology) • PCs/Printers • Phony Want Ads

  9. Step1: Assess Competitors’ Objectives • Three Categories • Market share or profit • Issues to consider • Ownership structure • Operating philosophy and procedures • Country of origin

  10. Step 2: Assess Competitors’ Current Strategies • Assess competitors’ Marketing Strategy • Target Market Selection • Core Strategy (Value-chain comparison) • Implementation (Supporting Marketing Mix) • Pricing • Promotion • Distribution • Product/Service Capabilities: Product Features Matrix (Figure 4-8)

  11. Firm Infrastructure Human Resource Management Technology Development Procurement Support Activities Margin Service Inbound Logistics Operations Outbound Logistics Marketing and Sales Margin Primary Activities Value Chain

  12. Example) Energy Bars: Competitor Feature/Strategy Matrix

  13. Step 2: Assess Current Strategies (Cont’d) • How to Assess Competitors’ Strategies • Two key elements of a strategy: • Segments appealed to • Core strategy • For Industrial Products: Sales literature • For Consumer Products: Media Tracking (SOV) • Marketing Mix variables: Ask Distributors, Salespeople, Customers

  14. Step 2: Assess Current Strategies (cont’d) Assessing Competitors’ Technological Strategy • Technology selection or specialization • Level of competence • Sources of capability: internal versus external • R&D investment level • Competitive timing: initiate versus respond • R&D organization and policies

  15. Step 2: Assess Current Strategies (cont’d) Four Basic Technological Strategies (Figure 4-11) • First to Market • Second to Market • Late to Market or Cost Minimization • Market Segmentation For your report:Figure 4-12* (p. 102)

  16. Step 3: Assess Competitors’ Capabilities • Ability to conceive and design • Ability to produce • Ability to market • Ability to finance • Ability to manage • Don’t Forget to include your firm too!

  17. What to do with all the information? Make a Table! (Differential Advantage Analysis) Simplified Competitive Analysis: Wine Market Factors

  18. Energy Bars: Differential Advantage Analysis

  19. Energy Bars: Differential Advantage Analysis

  20. Step 4: Assess A Competitor’s Will and Future Strategy • Questions to assess a competitor’s will - How crucial is this product to them? - How visible is the commitment to the market? - Who is involved? • To Figure out Future Strategy • Forecast with historical data • Simulation with historical data • Game Theory

  21. A Competitive Conjecture Process Customer response First period Our unit sales Our profit Their expected price Our total outcome We lower our price Their price reaction Our unit sales Our profit Customer response Second period Should we cut price?

  22. Example:Energy Bars: Current & Future Strategy Matrix

  23. In summary, you need to know • Major Competitors’ Objectives • Major Competitors’ Strategies* • Target Market • Core Strategy • Major Competitors’ Capabilities

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