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2. C H A P T E R . Defining the Competitive Set. Key Question for This Chapter: Who do we or will we compete against?. Major Topics for Ch. 2. Bases of Competition Levels of Competition* Methods for Determining Competitors** Right Level of Competition for You. Bases of Competition.

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C H A P T E R

Defining the Competitive Set

Key Question for This Chapter:

Who do we or will we compete against?

major topics for ch 2
Major Topics for Ch. 2
  • Bases of Competition
  • Levels of Competition*
  • Methods for Determining Competitors**
  • Right Level of Competition for You
bases of competition
Bases of Competition
  • Product-oriented Approach

Similar Physical Attributes

Functional Similarity

  • Customer-oriented Approach

Who they are – competition for same budget

When they use the product

Why they use the product - benefits sought

bases of competition con t
Bases of Competition (con’t).
  • Marketing oriented: promotion & distribution

- Media

- Distribution

IV. Resource-oriented Approach (Internal)

- Raw materials

- Employees

- Financial resources

  • Geographic: Becoming less relevant
levels of competition
Beer

Ice

cream

Tea

Regular

colas

Diet

lemon

limes

Diet-Rite

cola

Wine

Product form competition: Diet colas

Diet

Pepsi

Diet

Coke

Juices

Fast food

Fruit flavored colas

Product category competition: Soft drinks

Video

rentals

Lemon

limes

Bottled

water

Generic competition: Beverages

Coffee

Baseball

cards

Budget competition: Food and entertainment

Levels of Competition
example 1 energy bar competition
Example 1: Energy Bar Competition

Other Snacks

Healthy Snacks

Snack/Health Bars

Energy Bars

Odwalla

Power Bar

Balance Bar

Clif

Nutrigrain Bars

Slimfast Bars

Granola Bars

Fruits

Nuts

Juice

Crackers

Chips

Candy

levels of competition implications for product strategy
Levels of Competition: Implications for Product Strategy

Competitive Level

Product Management Task

Product Form

Convince Customers that the Brand is Better than Others

Convince Customers that the Product Form is Best in the Category

Product Category

Generic

Convince Customers that the Product Category is the Best Way to Satisfy Needs

Budget

Convince Customers that the Generic Benefits are the Most Appropriate Way to Spend their Money

methods for determining competitors
Methods for Determining Competitors*
  • Existing categories: ex) IRI; SIC  NAICS

www.census.gov/epcd/www/naics.html

  • Managerial judgment
  • Customer-purchase-based measures
  • Customer-judgment-based measures
managerial judgment of competition
Managerial Judgment of Competition

Product/Services

Markets

Same

Different

A

B

Same

C

D

Different

customer purchase based measures
Customer-purchase-based measures
  • Brand Switching Data  The Extent of Substitutability among Brands
  • Cross-Elasticity of Demand:
    • Change in Brand B’s Sales/

Change in Brand A’s Price

  • Mainly Used for Nondurable Products
customer judgment based measures
Customer-Judgment-Based Measures
  • Overall similarity (by Perceptual Mapping)*
  • Similarity of consideration sets
  • Product deletion (based on product unavailability)
  • Substitution In Use:
    • List all the uses of a product
    • List other products that provides the same uses
perceptual mapping
Perceptual Mapping
  • Means graphic description of customers’ perception about different brands/products.
  • You can use it to gain
    • Better understanding of market structure
    • Customer perceptions for a new product concept
    • Direction for R&D efforts to satisfy customers better
developing a perceptual map
Developing A Perceptual Map
  • Two Alternative ways
    • Attribute Rating method (AR)
    • Overall Similarity method (OS)
  • Attribute Rating Method
    • Data Cube (brands*attributes*respondents)
    • Statistical Analysis (Factor Analysis)
    • Find out two (or three) axes for the perceptual map
    • Attribute Analysis
    • Limitations
    • Suitable for B-to-B products
developing a perceptual map17
Developing A Perceptual Map
  • Overall Similarity method (OS)
    • Suitable for consumer products and services
    • Ask consumers’ perception the extent of similarity of pairs of items.
    • Similarity Data Analysis (Multidimensional Scaling)
    • You name the axes and infer the attributes
defining competition with perceptual mapping example desserts
Defining Competition with Perceptual Mappingexample: desserts
  • Moist
  • Needs refrigeration

As a formal dessert

Custard mix

Bakery pie •

Bakery cake

Pudding mix

  • Tapioca pudding mix

Homemadecake •

  • Homemade pie

Local mix •

  • Layer cake mix

Takes a long time to prepare •

  • Jell-O

D-zer ta •

  • Cheese cake mix

Bundt cake mix •

  • Frozen pie

••

Chocolate torte mix •

  • Canned pudding
  • Frozen cake

Boston crème pie mix

“Light Style” cake mix

  • “Stir’n Frost cake mix
  • Individual pie

Coffee cake mix •

  • Quick bread mix

“Snackin’ Cake” mix •

  • Hostess cupcakes

Date bar mix •

Brownie mix •

Homemade cookies

Cookie mix •

  • Oatmeal cookies

  • Pepperidge Farm cookies

Bakery cookies •

Pillsbury cookie dough •

Good for a coffee break•

  • Between meal snack
  • Easy to carry with me

In my school work lunch •

two key things to remember
Two Key Things to Remember
  • How would you determine competition?
  • Choose the focal level of competition*
right level of competition for you
Right Level of Competition for You
  • Your Firm’s Market Position
  • Time Horizon

III. Product Life Cycle and Technology Change

IV. Your Position in the Firm

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