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APPROACHES

TO COMPETITOR ANALYSIS

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Strategic Marketing

Impact of markets on strategy


Markets are never static they are dynamic There are different forces causing the change:

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deregulation globalization mergers and acquisitions changing customer expectations disruptive technologies demographic and lifestyle shifts

Market Sensing

The changes put a new kind of pressure from new customers and new competitors or new strategies

Strategic Marketing

Value Migration
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Customers shifting their purchases away from the products generated by outdated business models to new ones that offer superior value.

Strategic Marketing

Value Migration

Value is not a static entity it is unique to each customer and viewpoint, and is constantly evolving. Value migration may affect a product category, a company, or an entire industry Market sensing and staying ahead is crucial

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Strategic Marketing

Value Migration
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Strategic Marketing

Value Migration

There are three stages to value migration:

Stage 1: Value inflow stage - value is absorbed from other companies or industries

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Stage 2: Value stability stage - competitive equilibrium with stable market shares and stable profit margins
Stage 3: Value outflow stage - companies lose value to other parts of the industry - reduced profit margins - loss of market share - outflow of talent and other resources

Strategic Marketing

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Strategic Marketing

Product Market Scope and Structure


Define scope of the product market
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Analyzing market structure and composition

estimating how market will change in future

Forecasting market Size and Rate of change

Strategic Marketing

Mapping Product Markets

Product Market

Market is a group of people having common needs and a demand for a set of benefits or solutions Solutions can be many i.e., various ways to solve the problem; substitutes

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Product market is defined as the set of products which are substitutes within those usage situations in which similar patterns of benefits are sought by groups of customers Benefits sought are never static: changing consumer buying behavior owing to changes coming from various areas.

Strategic Marketing

MAPPING PRODUCT MARKETS

SUPER MARKETS

MICROWAVE OVENS
FAST FOOD

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CONVENIENCE STORES

TRADITIONAL RESTAURANTS

Strategic Marketing

Mapping Product Markets

Matching needs with product benefits

Substitutes: Telephone = Cell phone Internet = mail A vacation trip = a laptop = a pair of jeans and so on

Substitute depend on the share-of-the-wallet and unique needs of the customer

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E.g progressive Insurance

Strategic Marketing

Mapping Product Markets

Mapping Product-Market Boundaries and Structure

Identifying the generic need category of interest to the firm Fast and convenient food Identify the products/services that fit into the category A Snack or a Bar TV Dinner or Frozen Pizza or a home delivery Burgers or a Deli Break-out relevant specific product-markets Microwave oven Convenience store Super markets Traditional Restaurants

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Strategic Marketing

Mapping Product Markets

Product Category Structure


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Generic Product Class Product type Product variant Brand

Strategic Marketing

ILLUSTRATIVE PRODUCT MARKET STRUCTURE


Food and beverages for breakfast meal

Generic Product Class Product Type Variant A


Regular Pre-sweetened

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Cereals

Ready to eat

Variant B

Nutritional
weetabix Special K

fuji

Strategic Marketing

Mapping Product Markets

Factors Affecting Market Complexity

The functions or the uses of the product performed by the customer


Wipe up sawdust
Repels Ants Eliminate static electricity

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Fabric Softener
odor out of books and photo albums

Softens

musty suitcases

Collect cat hair

Golfers

Strategic Marketing

Mapping Product Markets

Different technologies may satisfy the same need


Steel = Aluminum = Alloy = Composite Fedex = E-mail = Fax = SMS = Cell phone

The different customer segments asking for unique benefits:

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Crest Toothpaste Cleaning Fresh Breath Decay Whitening

Markets are defined by the end-users; derived demand

Strategic Marketing

ANALYZING COMPETITION
5. Identify New Competitors

1. Define Industry Structure and Characteristics 2. Identify and Describe Key Competitors

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PRODUCTMARKET STRUCTURE AND MARKET SEGMENTS


. Anticipate Actions by Competitors

3. Evaluate Key Competitors

Strategic Marketing

MARKETS

AND STRATEGIES Analyzing Competition


Step1: Define Industry Structure and Characteristics

Industry Characteristics and Trends sales, number of firms, growth, emerging technologies watch out conglomerates and international players strategic alliances and co-branding usual marketing practices Value Chain Analysis Supplier side and distribution sides: How they work! outsourcing and contacting customers cybermediation Consolidation and forward or backward integration

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Strategic Marketing

MARKETS

AND STRATEGIES Analyzing Competition


Step 2: Identifying Key Competitor
A key competitor is a firm going after the same target market. Archrivals New entrants. Keep eyes open for signs of any business that seems to be offering a new competing product, starting to win over your customers or be growing faster than you Substitute product sellers

Analysis must include historical backgrounds and key decisions made in the past depict patterns or footprints of changing corporate strategy

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Strategic Marketing

MARKETS

Analyzing Competition

AND

STRATEGIES
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Identifying Key Competitor


Perceptual Maps

a Mental Map of how our product is perceived by consumers relative to the different competing products in the marketplace. Linking Segmentation and Positioning. Set of products chosen must be the set of competitive products that are relevant for managerial decision-making.

Strategic Marketing

MARKETS

AND

STRATEGIES
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Strategic Marketing

PERCEPTUAL MAPS

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Strategic Marketing

MARKETS

AND STRATEGIES Analyzing Competition


Step 3: Evaluating Key Competitor
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Extent of Market Coverage Customer satisfaction Past performance Current Capabilities


Handout: To Get Grips with your Competitors, The Chartered Institute of Marketing, UK 2004

Strategic Marketing

MARKETS

AND STRATEGIES Analyzing Competition


Step 4: Identifying Key Competitor
Evaluating the competitor Extent of Market Coverage Customer satisfaction Past performance Current Capabilities Handout: To Get Grips with your Competitors, The Chartered Institute of Marketing, UK 2004
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Strategic Marketing

MARKETS

Analyzing Competition

AND

STRATEGIES
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Step 5: Identifying new competitors


Identify new competitors

companies competed in related product markets companies with related technologies companies looking cross selling companies competing in different geographical markets

Strategic Marketing

REASONS

FOR FIRMS TO ENTER A

GIVEN MARKET
High profit margins are being achieved Future growth opportunities No major market entry barriers Few competitors Ability to gain a competitive advantage
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Strategic Marketing

ANALYZING
Competitor array

COMPETITION

Define your industry - scope and nature of the industry Determine who your competitors are Determine who your customers are and what benefits they expect Determine what are the key success factors are in your industry Rank the key success factors by giving each one a weighting - The sum of all the weightings must add up to one. Rate each competitor on each of the key success factors Multiply each cell in the matrix by the factor weighting.

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Strategic Marketing

COMPETITOR

ARRAY

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