Lindell

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Lindells Lecture Notes
CHAPTERS 3 4 B
(supplement) YOUR COMPETITIVE
ANALYSIS Expanded

• BA 315 Marketing Management

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Market Structure and Competitor Analysis

• Performing a market analysis to identify your
  major competitors.
• Performing a competitor analysis.
• Alternative sources of information for analyzing
  competitors

3
Analyze Critical Development of Marketing Plan

• Defining the competition is important in
  determining which products are competing.
• Studying competitors is crucial to develop a
  value proposition.
• It is beneficial to anticipate competitors moves
  and act in a preemptory fashion.

4
Market Structure Analysis

• A market structure analysis enables the marketing
  manager to understand the competition.
• Overlooking an important competitive threat can
  be disastrous.
• Ambiguous definition of the competition creates
  uncertainty.

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Different Terms Used in Defining a Market

• Industry.
• Product class.
• Product types.
• Product brands.

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Competition Is Defined by the Customer

• Product form competition - includes only products
  or services of the same product type.
• Product category competition - products that have
  similar features and provide the same basic
  function.
• Generic competition - incorporates the customers
  notions of substitutability.
• Budget competition - products and services that
  are purchased from the same general budget.

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Competition Is Defined by the Customer

• Product form competition - includes only products
  or services of the same product type.

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Competition Is Defined by the Customer

• Product category competition - products that have
  similar features and provide the same basic
  function.
• .

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Competition Is Defined by the Customer

• Generic competition - incorporates the customers
  notions of substitutability

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Competition Is Defined by the Customer

• Budget competition - products and services that
  are purchased from the same general budget.

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Critical Differences- Competitor Levels

• Product form or product category competition are
  inward oriented.
• Generic competition is outward oriented.
• Product form and product category competitors are
  defined by product that look like yours.
• Generic competitors are defined by looking
  outside the firm to the customers.

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The Marketing Managers Job

• Product form level - marketing activities
  directly aimed at similar competitors.
• Product category level - you must convince
  customers that the product form is the best.
• Generic competition level - you must convince
  customers the product category solution is
  superior

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Customer Target Change

• Product form competition involves battling for
  exactly the same customers.
• Generic competition can destroy entire product
  categories when a major innovation occurs

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Measurement Issues

• Government documents provide valuable information
  about product form and category competitors.
• Consulting firms, trade associations, and
  professional publications may supply own product
  category data.

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Cross-Elasticity of Demand

• Indicator of substitutability.
• Percentage change in one products sales due to a
  percentage change in a marketing variable for
  another product.
• Cross-elasticity - price is positive, the two
  products are considered to be competitive.

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Competitor Strengths and Weaknesses

• The ability of the competitor to conceive and
  design new products.
• The ability of each competitor to produce the
  product.
• The ability to market.
• The ability to finance.
• The ability to manage.

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Competitor Strengths and Weaknesses

• The ability of the competitor to conceive and
  design new products.

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Competitor Strengths and Weaknesses

• The ability of each competitor to produce the
  product.

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Competitor Strengths and Weaknesses

• The ability to market.

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Competitor Strengths and Weaknesses

• The ability to finance.

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Competitor Strengths and Weaknesses

• The ability to manage.

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Competitor Analysis

• A determination of the competitors major
  objectives.
• An assessment of their marketing strategies.
• An assessment of their strengths and weaknesses.
• An internal analysis of your firms strengths and
  weaknesses relative to competitors

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Competitor Strategies

• Marketing managers must monitor
• Segments pursued.
• Competitors targets.
• Product features.
• Core strategy.
• Supporting marketing mix.

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Customer and Competitor Target

• Product sales literature.
• Your own sales force.
• Trade advertising.

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Core Strategies

• Studying their marketing communications.
• How are they differentiating themselves?
• What is their value proposition?

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Supporting Marketing Mix

• Price - What is the pattern of price change over
  time?
• Communication - What advertising media are being
  used?
• Distribution - What kinds of selling approaches
  are being used?
• Product capabilities - a comparison of
  capabilities is useful.

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Expected Future Strategies

• Sometimes competitors tell you what their future
  strategy will be.
• Identifying a trend in their past actions and
  extrapolating it into the future.
• Forecast competitors action by simulating them.
• Use scenario planning.

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SWOT Analysis

• Strengths.
• Weaknesses.
• Opportunities.
• Threats

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Secondary Sources

• Internal sources.
• Annual reports.
• Patent and trademark filings.
• General business and trade publications.
• Consultants.
• Trade associations.
• Help wanted ads.
• Electronic data services.

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Primary Sources

• Sales force and customers.
• Employees.
• Suppliers.
• Reverse engineering or sampling.
• Competitors products.
• Plant tours.
• Internet newsgroups.

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YOUR COMPETITION Even though you may have done a
great job in pinpointing and studying your market
segment the job isn't done until you have
considered your competition.

• My main competitors in my market area are
• Name of firm (list)

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YOUR COMPETITION Based on my market research of
statistical data (such as Sales Management) the
amount of buying power per business represented
in my area for this kind of business is -. If 1
can generate that amount of sales, it will be
sufficient for me to operate successfully.

• Five reasons why customers would buy from me
  rather than my competitors are
• Five weaknesses my business will have, in
  comparison to my competitors, are
• In order to overcome these weaknesses, I will

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STEPS OF COMPETITIVE ANALYSIS

• 1. DEFINE THE TARGET MARKET
• 2. DEFINE THE DIRECT COMPETITORS (SERVING THE
  SAME MARKET
•     SEGMENT(S)
• USE...PERCEPTUAL MAPPING
•          A. MULTIDIMENTIONAL
• SCALING
•          B. FACTOR ANALYSIS
• 3. ASSESS COMPETITIVE DYNAMICS
•          A. PIONEERING ADVANTAGE
•          B. POTENTIAL FOR
• TECHNOLOGY DISCONTINUITY
•          C. IDENTIFY FUTURE COMPETITORS
• (NEW ENTRANTS)
•          D. BARRIERS

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STEPS OF COMPETITIVE ANALYSIS

• 4. ASSESS COMPETITIVE INTENSITY-INCLUDE
  CONDITIONS THAT FOSTERS INTENSE COMPETITION
• 5.IDENTIFY AVENUES FOR ATTAINING A SUSTAINABLE
  ADVANTAGE OVER
• COMPETITION
• 6.SOURCES OF COMETITIVE INTELLEGENCE
• YOU MAY COMBINE STEPS 3 AND 4 INTO COMPETITIVE
  MARKET FORCES

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Chapter Objectives

• 1. To gain an appreciation of the need for
  performing
• competitive analysis.
• 2. To understand the five step approach to
  carrying out a
• competitive analysis.
• 3. To become acquainted with perceptual mapping
  and the
• techniques used.
• 4. To gain an appreciation and awareness of
  sources of
• competitive intelligence

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Definition of the target market

• We establish the product market boundaries of
  interest and identify any specific target
  segments.

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identifies direct competitors

• who are likely to gain or lose a substantial
  customer share over time because they serve the
  same customers and offer similar benefits.

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perceptual mapping

• Perceptual mapping methods are used to position
  the firm against competitors as seen by the
  consumer. Product positioning is used to
  determine the brands that consumers see as being
  similar.

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perceptual mapping

• Managers rely on some perceptual mapping
  techniques to portray how customers perceive the
  various market competitors. There are two types

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Multidimensional scaling relies on similarity
judgments of consumers in determining the degree
of similarity between pairs of products.
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A factor analysis based approach relies on buyers
assessment of determinant attributes to evaluate
alternatives

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ALMOST HOMETHE BATTLE FOR THE COOKIE MARKET

• In 1982, marketers in the cookie industry
  received a doublebarreled attack with the
  entrance of Procter Gamble's Duncan Hines
  cookies and Frito Lay's Grandma's brand.
  Initially, both lines were successfully test
  marketed in Kansas City, and by 1983, Frito Lay
  had begun moving into a variety of other markets.

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ALMOST HOMETHE BATTLE FOR THE COOKIE MARKET

• 1. Multidimensional scaling relies on similarity
  judgments of consumers in determining the degree
  of similarity between pairs of products.
• 2. A factor analysis based approach relies on
  buyers assessment of determinant attributes to
  evaluate alternatives

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perceptual mapping

• NOW APPLY YOUR ADVENTURE WITH YOUR SUPERMARKET
  FROZEN FOODS EXCURSION.
• YOU, THE TARGET RATED 10 TV DINNERS

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Assessing competitive dynamics

• Assessing competitive dynamics, step 3 of the
  competitive analysis, involves attempting to
  project what the future competitive environment
  will look like.

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Pioneering advantage HOYLE SCHWEITZER invented
WINDSURFER(ing)is the market advantage that
results from a competitor being the innovator in
a market. Several factors contribute to this
advantage

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1.Pioneer products act as "prototypes" for
competitors.2. Initial brands potentially build
significant loyalty.3. Late entrants will have
difficulty obtaining awareness and trail by
distributors and consumers.

• Pioneering advantage

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If the future competitive structure of a market
is to be understood, managers should attempt to
determine the potential for technological
discontinuity. Note- LPC WINDSURFER EXAMPLE

• Steps of competitive analysis (continued)

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Although the identity of current direct
competitors is important, it is equally essential
to identify future competitors, i.e., new
entrants.Such asMISTRAL,BIC

• Steps of competitive analysis (continued)

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Barriers to entry make it difficult to become a
significant competitor in a new market. PLEASE
REFERENCE OUR HANDOUT ON INDUSTRY ATTRACTIVENESS
in your packet

• Steps of competitive analysis (continued)

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Barriers to entry Economies of scale, initial
financial investment, lack of access to sources
of production, and limited access to distribution
channels are some typical barriers to entry.

• Steps of competitive analysis (continued)

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Barriers to entry Tariffs, quotas, customs, and
governmental intervention are some international
entry barriers.

• Steps of competitive analysis (continued)

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New entrants can cause considerable competitive
concern through improved price performance trade
offs, by bringing new skills to the industry,or
by virtue of cross subsidizations.

• Steps of competitive analysis (continued)

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The importance of assessing competitive
intensity, step 4, is twofold to determine the
likely cost of meeting competition and to
recognize the most important bases and types of
competition.

• Steps of competitive analysis (continued)

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Several basic conditions which foster intense
competition are numerous competitors, slow
industry growth, undifferentiated products and
services, low switching costs, significant
economies of scale, industry overcapacity, and
management loyalty

• Steps of competitive analysis (continued)

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The ultimate purpose of performing a competitive
analysis is to identify possible avenues for
attaining a sustainable advantage over
competitors so as to achieve product or product
line objectives.

• Steps of competitive analysis (continued)

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In assessing competitive advantage, managers must
identify the positions and sources of advantage
that lead to desired market performance
outcomes..

• Steps of competitive analysis (continued)

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1. Positional advantages depend on the
customer's perception of these advantages..

• Steps of competitive analysis (continued)

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2. Source advantages include skills of people
within the organization, the systems or
arrangement developed for market response, and
the organization's resources...

• Steps of competitive analysis (continued)

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3. Superior resources, intangible and tangible,
can enable a firm to either underprice the
competition or to offer better or unique
performance...

• Steps of competitive analysis (continued)

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Sources for obtaining competitive intelligence
fall into three basic categories published
material documents, competitors' employees,
suppliers, or customers and direct
observation..

• Steps of competitive analysis (continued)

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PLEASE REFERENCE OUR HANDOUT... INDUSTRY
ATTRACTIVENESS SUMMARY

• AGGREGATE MARKET FACTORS
• INDUSTRY FACTORS
• ENVIRONMENTAL FACTORS

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PLEASE , ALSO, REFERENCE THE BOOK THE ART OF WAR

• LPC1_at_UMSL.EDU

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Competitive analysis-LPC_at_umsl.edu

• Dont forget your handout packet An exam
  question We analyze a competitor on five
  abilities.. The abilitiy to..