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![Page 1: McGraw-Hill/Irwin © 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved. C H A P T E R Competitor Analysis 4 1.Essence of a “Strategy” 2.Increasing](https://reader036.vdocuments.us/reader036/viewer/2022062516/56649d385503460f94a10d95/html5/thumbnails/1.jpg)
McGraw-Hill/Irwin © 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.
C H A P T E R
Competitor Analysis4
1. Essence of a “Strategy”
2. Increasing Importance
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Continuiting from Chs. 2 & 3Continuiting from Chs. 2 & 3
• Define the competitive set Boundary• Industry Analysis Macro level• Competitor Analysis Micro level
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Competitor Analysis SystemCompetitor Analysis System
What are they going to do?
Differential competitor advantage analysis i.e. Who has the competitive product advantage?
Key questions: - Who are they?- What are the
competing product features?
- What do they want?
- What is their current strategy?
Primary dataSecondary data
Differential Advantage Analysis
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Key Questions to AskKey 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 Sources of Competitor Secondary Sources of Competitor InformationInformation
Secondary data
Customer communications
Internal sources
Local newspapers
Annual reports
Patent filings
Business press
10Ks
GovernmentElectronics databases
News releasesTrade associations
Promotional literature
Internet
Trade press
Consultants
www.dialog.comwww.dnb.com
http://www.beernet.comhttp://www.crn.com
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Primary Sources of Competitor InformationPrimary Sources of Competitor Information
Primary data
Consultants/Specialized
Firms
Investment bankers
Employees
Customers
Suppliers
Sales force
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Other Sources of InformationOther Sources of Information
• Help-Wanted Ads• Reverse Engineering • Monitoring Test Markets• Hiring Key Employees* • Plant Tours
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Information Sources with Ethical ConsiderationsInformation Sources with Ethical Considerations
• Aerial Reconnaissance• Buying/Stealing Trash (Garbology)• PCs/Printers• Phony Want Ads
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Step1: Assess Competitors’ ObjectivesStep1: Assess Competitors’ Objectives
Three Categories Market share or profit Issues to consider
Ownership structureOperating philosophy and procedures Country of origin
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Step 2: Assess Competitors’ Current StrategiesStep 2: Assess Competitors’ Current Strategies
Assess competitors’ Marketing StrategyTarget Market SelectionCore Strategy (Value-chain comparison)Implementation (Supporting Marketing Mix)
PricingPromotionDistributionProduct/Service Capabilities: Product Features
Matrix (Figure 4-8)
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Value ChainValue Chain
ServiceService
Firm InfrastructureFirm Infrastructure
Human Resource ManagementHuman Resource Management
Technology DevelopmentTechnology Development
Procurement Procurement
Marketing Marketing and Salesand Sales
OperationsOperations Outbound Outbound LogisticsLogistics
Inbound Inbound LogisticsLogistics
Margin
Margin
Support Activities
Primary Activities
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Example) Energy Bars: Example) Energy Bars: Competitor Feature/Strategy MatrixCompetitor Feature/Strategy Matrix
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Step 2: Assess Current Strategies (Cont’d)Step 2: Assess Current Strategies (Cont’d)
How to Assess Competitors’ StrategiesTwo key elements of a strategy:
Segments appealed toCore 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)Step 2: Assess Current Strategies (cont’d)
Assessing Competitors’ Technological Strategy
1. Technology selection or specialization
2. Level of competence
3. Sources of capability: internal versus external
4. R&D investment level
5. Competitive timing: initiate versus respond
6. R&D organization and policies
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Step 2: Assess Current Strategies (cont’d)Step 2: Assess Current Strategies (cont’d)
Four Basic Technological Strategies (Figure 4-11)
1. First to Market
2. Second to Market
3. Late to Market or Cost Minimization
4. Market Segmentation
For your report: Figure 4-12* (p. 102)
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Step 3: Assess Competitors’ CapabilitiesStep 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? What to do with all the information? Make a Table! (Differential Advantage Analysis)Make a Table! (Differential Advantage Analysis)
Gallo Heublein Vintners Canandaigua Seagram
Commitment to wine business 1 5 2 3 4
Financial strength2 1 4 5 3
Brand awareness1 2 3 5 4
Management ability 1 4 2 3 5
Highest = 1
Lowest = 5
Market Factors
Simplified Competitive Analysis: WineSimplified Competitive Analysis: Wine
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Energy Bars: Differential Advantage AnalysisEnergy Bars: Differential Advantage Analysis
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Energy Bars: Differential Advantage Analysis Energy Bars: Differential Advantage Analysis
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Step 4: Assess A Competitor’s Will and Step 4: Assess A Competitor’s Will and Future StrategyFuture 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 dataSimulation with historical dataGame Theory
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A Competitive Conjecture ProcessA Competitive Conjecture Process
Customer response
We lower our price
Our unit sales
Their expected price
Our profit
Their price reaction
Customer response
Our unit sales Our profit
Our total
outcome
Second period
First period
Should we cut price?
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Example:Example:Energy Bars: Current & Future Strategy MatrixEnergy Bars: Current & Future Strategy Matrix
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In summary, you need to knowIn summary, you need to know
Major Competitors’ Objectives
Major Competitors’ Strategies* Target MarketCore Strategy
Major Competitors’ Capabilities