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4. C H A P T E R . Competitor Analysis. Essence of a “Strategy” Increasing Importance. Continuiting from Chs. 2 & 3. Define the competitive set  Boundary Industry Analysis  Macro level Competitor Analysis  Micro level. Secondary data. Primary data. Key questions: Who are they?

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4

C H A P T E R

Competitor Analysis

  • Essence of a “Strategy”

  • Increasing Importance


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Continuiting from Chs. 2 & 3

  • Define the competitive set  Boundary

  • Industry Analysis  Macro level

  • Competitor Analysis  Micro level


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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


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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?


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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


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Primary data

Primary Sources of Competitor Information

Investment bankers

Consultants/Specialized Firms

Sales force

Suppliers

Employees

Customers


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Other Sources of Information

  • Help-Wanted Ads

  • Reverse Engineering

  • Monitoring Test Markets

  • Hiring Key Employees*

  • Plant Tours


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Information Sources with Ethical Considerations

  • Aerial Reconnaissance

  • Buying/Stealing Trash (Garbology)

  • PCs/Printers

  • Phony Want Ads


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Step1: Assess Competitors’ Objectives

  • Three Categories

  • Market share or profit

  • Issues to consider

    • Ownership structure

    • Operating philosophy and procedures

    • Country of origin


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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)


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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


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Example) Energy Bars: Competitor Feature/Strategy Matrix


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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


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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


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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)


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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!


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What to do with all the information? Make a Table! (Differential Advantage Analysis)

Simplified Competitive Analysis: Wine

Market Factors




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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


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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?


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Example:Energy Bars: Current & Future Strategy Matrix


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In summary, you need to know

  • Major Competitors’ Objectives

  • Major Competitors’ Strategies*

    • Target Market

    • Core Strategy

  • Major Competitors’ Capabilities


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