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C H A P T E R

4. C H A P T E R. Competitor Analysis. Essence of a “Strategy” Increasing Importance. Continuing from Chs. 2 & 3. Define your competitive set  Boundary Industry Analysis  Macro level Competitor Analysis  Micro Level* * First decide which competitors to focus on:

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C H A P T E R

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

  2. Continuing from Chs. 2 & 3 • Define your competitive set  Boundary • Industry Analysis  Macro level • Competitor Analysis  Micro Level* * First decide which competitors to focus on: The more specific, the better ** Need to know your own company too!

  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 for Competitor Analysis* • Do you know…? • What are the Competitors’ Objectives? • What are the Current Strategies being used and how successful have they been? • What are the Capabilities of Competitors? • 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 (Retailers)*

  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. Step 1: Assess Competitors’ Objectives • Three Categories • Market share or profitability? • 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 4-7 on p. 109)

  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. My Own Example of Value-Chain Comparison (Cost Leadership) 8/9/2014 12

  13. My Own Example of Value-chain Comparison (Differentiation) 8/9/2014 13

  14. Example) Energy Bars: Competitor Feature/Strategy Matrix*

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

  16. 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

  17. Step 2: Assess Current Strategies (cont’d) Four Basic Technological Strategies (Figure 4-10) • First to Market • Second to Market* • Late to Market or Cost Minimization • Market Segmentation For your term project:Figure 4-11* (p. 120)

  18. Step 3: Assess Competitors’ Capabilities Analyze differential advantage along • 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!

  19. What to do with all the information? Make a Table! (Differential Advantage Analysis)* Simplified Competitive Analysis: Wine Market Factors (Figure 4.14: p. 125)

  20. Energy Bars: Differential Advantage Analysis

  21. Energy Bars: Differential Advantage Analysis

  22. Step 4: Assess A Competitor’s Will and Future Strategy • Questions to ask 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 (Coopetition!)

  23. 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?

  24. Example:Energy Bars: Current & Future Strategy Matrix Other examples: Retail Coffee (pp. 129-132) and MP3 Cell Phone (pp. 132-134)

  25. In summary, you need to know • Who Major Competitors Are • Major Competitors’ Objectives • Major Competitors’ Strategies* • Target Market • Core Strategy (Value-chain) • Major Competitors’ Capabilities

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