Analysing Competitors

7MARK020 - week 4
 Why?
• Predict your industry’s evolution paths
• Understand competitors’ behaviours and predict
significant competitive moves
• Pinpoint competitors’ soft spots, blindspots, and
strategic vulnerabilities
• Assess the importance of information and the
right questions to ask your collection network
• Evaluate your own company’s strategy and its
blindspots, as well as pinpoint its vulnerabilities
• Identify sources of critical change in the market
• Create proactive intelligence to preempt
competitors’ strategic moves
 Analysing Competitors - Kotler

Identify Determine
competitors objectives

Identify Assess
strategies strengths/weaknesses

Estimate Select those

reaction patterns to attack/avoid
Analysing Competitors – El-Murad

Identify competitors

Observe Assess strengths Observe

strategies & weaknesses reactions

Determine objectives

Decide whom to attack/avoid

Analysing Competitors - why?
If you know neither the enemy nor
yourself, you will succumb in every
battle.
If you know yourself, but not the
enemy, for every victory you gain you
will suffer a defeat.
If you know your enemy as you know
yourself, you need not fear the result
of a hundred battles.
(Sun Tzu Ping Fa)
What is Competitor Analysis?

analysis of data and

information about Competitors

to generate outputs that are

useful in decision making

(Kotler)
Data » Information » Intelligence

• DATA
– Unintegrated “raw” individual items
• requires identification and collection
• INFORMATION
– Evaluated data
• requires judgements
• INTELLIGENCE
– Information that informs decision
making
• requires judgement and use
What is Competitor Analysis?

It is NOT about:
• massive data banks
• intricate computer retrieval
systems
• large numbers of data collectors
• full-time data analysers
Competitor Analysis –
Common Problems

• Preoccupation with data - not

intelligence
• Data massaging vs Analysis
• Outputs not geared to decision-
makers’ needs
• Analysts not part of decision making
process
Uses of Competitor Analysis

To learn about the competitive environment

• Current and potential competitors

• customers
• distributors
• suppliers
• technology
Uses of Competitor Analysis
To learn about your own company

• competences (strengths)
• vulnerabilities (weaknesses)
• constraints
• strategies
....
Uses of Competitor Analysis

In order to generate
more successful
strategies
 3 Requirements for good CA

1: Driven by Decisions

2: Knowledge 3: Skills
of in
• organisation • data gathering
• industry • using analysis
• analysis techniques techniques
• data sources • drawing inferences
• transmitting data
Identifying Competitors

WHO ARE OUR COMPETITORS?

All those firms that compete in

the same market as we do.
Marketing Myopia (Levitt)

Kodak vs Fuji vs filmless cameras

Unilever vs P&G vs ultrasound washing machines
Identifying Competitors

LEVELS OF COMPETITION

Brand competition
Industry competition

Form competition

Generic competition
 Levels of Competition
• VW’s UK COMPETITORS:
• Ford and Vauxhall
– but not Skoda or Mercedes
• All car manufacturers
• All manufacturers of personal
transportation
• All major consumer spending
opportunities
– (eg foreign holidays, home improvement,
PostGrad courses?)

Parker Pen
Identifying Competitors

WHO ARE OUR

• current Direct competitors?
• potential Direct competitors?
• current Substitute competitors?
• potential Substitute competitors?
Identifying Competitors

WHO ARE OUR

• Current Direct competitors?

• potential Direct competitors?

• current Substitute competitors?

• potential Substitute competitors?

Identifying Competitors

TWO APPROACHES:

• The INDUSTRY

• The MARKET
The INDUSTRY Concept

AN INDUSTRY IS ...
a group of firms producing products
that are close substitutes for each
other
Demand
for Y
(Michael Porter)

Substitutes are products

b2 that have high cross-
b1 elasticities of demand

a1 a2 Eg. Vauxhall vs Ford

Price of X
Pepsi vs Coke
The INDUSTRY Concept

• Number of sellers and degree of

differentiation
• Entry barriers
• Exit barriers
• Cost structures
• Vertical integration
• Global reach
The MARKET Concept

Instead of looking at companies that

make the same product,
look at companies that satisfy the
same customer need
The MARKET Concept

Refine by market segment:

• by end-customer
• by distribution channel
• by geography
• by technology
Identifying Competitors

Identifying competitors by linking

industry and market analysis
through mapping the

Product/Market Battlefield.
 Product/Market Battlefield
for toothpaste

Plain toothpaste Colgate Colgate Colgate

P&G P&G P&G
Toothpaste with fluoride Colgate Colgate Colgate
segmentation

P&G P&G P&G

Product

Gel Colgate
The market
Colgate
for
Colgate
P&G toothpaste
P&G P&G
Lever Bros Lever Bros Lever Bros
Striped Beecham Beecham
Smoker's toothpaste Topol Topol
Children 19-35 36+

Customer segmentation
by age group
Identifying Competitors’ Strategies

Strategic mapping:
construct a series of two-dimensional maps
where the axes are key strategic
dimensions:
plot your company and your competitors
Speed Speed
z
x
x

Price Comfort
Identifying Competitors’ Strategies

Differen- Cost
Industry-wide tiation Leader-
ship

Single segment Focus

(Porter)
Identifying Competitors’ Strategies
Strategic profiling: summarise the apparent
strategy of each key competitor in tables:

– Who are they Targeting?

– What is their Positioning?
– How do they differentiate their
product?
– 4Ps/7Ps
– etc
Determining Competitors’ Objectives

What is the competitor trying to achieve?

Profit Maximisation

Short Term
? Long Term
High price rel. cost Low price rel. cost
Low investment High investment
Possible Competitors’ Objectives

• Current profits
• Cash-flow
• Long Term profits through
– market-share growth
– technological leadership
– service leadership
– quality leadership
 Assessing their strengths and
weaknesses

Gather data on: Sources of Data:

Sales
Market share
Profit margin Desk research (2ry data)
ROI Primary marketing research
Cash flow • customers
New investment • suppliers
Capacity utilisation • dealers
Marketing mix Observation
Etc
Estimating C’s Reaction Style

The Laid Back Competitor

no quick or strong reaction, because:
• feels customers are loyal
• milking the business
• slow to notice
• lacks funds to react
Estimating C’s Reaction Style

The Selective Competitor

Reacts only to certain types of attack, eg
price cuts. Reacts swiftly to demonstrate
that this particular strategy is futile, and
will not be tolerated.
 Estimating C’s Reaction Style

The Tiger Competitor

• Reacts swiftly and strongly to any
encroachment on its territory.

E.g. P&G will not allow any new

detergent to come easily onto the
market.

Canada Dry
 Estimating C’s Reaction Style

The Stochastic Competitor

No predictable
reaction pattern
Whom to attack/avoid?

Strong vs. Weak competitors

Levitt:
“If thinking is an intellectual
response to a problem, then the
absence of a problem leads to the
absence of thinking”
Whom to attack/avoid?

• Close vs. Distant

– if you destroy your close competitors
you may open the way for tougher
competition –
– e.g.. Bausch & Lomb forced their
competitors to sell out to Revlon and
J&J
 Whom to attack/avoid?

• Good vs. Bad

– good competitors “play by the rules”: prices,
accept general level of share & profits

– Support these & attack the bad

competitors, who price below cost to buy share
rather than earn it
– E.g. For IBM, Cray is good, Fujitsu is bad
(Kotler)
Competitor vs Customer Orientation

Customer centred
No Yes

Product/
Customer
No Production
Orientation
Orientation
Competitor
Centred
Competitor Market
Yes
Orientation Orientation
Competitor vs Customer Orientation
Competitor W is going all out to crush us in
France
We will withdraw from France because we
cannot afford to fight this battle
Competitor X is improving distribution in
Germany, and hurting our sales
We will increase advertising in Germany
Competitor Y has cut its price in Manchester
We will meet competitor Y’s price in
Manchester
- - - REACTIVE
Competitor vs Customer Orientation

The quality-sensitive segment is growing

We will improve quality, and emphasise it in
our advertising

The deal-prone customer segment is growing

fast, but these customers are not loyal
We will avoid cutting prices & making deals
because we do not want the type of
customer who buys in this way.
Pro-Active
 Market Orientation
The two principal threats facing any
marketing organisation:

• Someone will “steal” your

customers
• Customers will no longer need
your goods/services
Market Orientation

Need to keep track of

both of these
elements, need to
find and maintain
correct balance:

the Market
orientation