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What are the strengths and weaknesses of our competitors? How are our competitors likely to respond to any changes to the way we do business? Sources of information for competitor analysis Davidson (1997) described how the sources of competitor information can be neatly grouped into three categories: Recorded data: this is easily available in published form either internally or externally. Good examples include competitor annual reports and product brochures; Observable data: this has to be actively sought and often assembled from several sources. A good example is competitor pricing; Opportunistic data: to get hold of this kind of data requires a lot of planning and organisation. Much of it is anecdotal, coming from discussions with suppliers, customers and, perhaps, previous management of competitors. The table below lists possible sources of competitor data using Davidsons categorisation: Recorded Data Observable Data Opportunistic Data Meetings with suppliers
Annual report & accounts Pricing / price lists Press releases Newspaper articles Analysts reports Regulatory reports Government reports Presentations / speeches
Advertising campaigns Trade shows Promotions Tenders Patent applications Sales force meetings Seminars / conferences Recruiting ex-employees Discussion with shared distributors Social contacts with competitors
In his excellent book [Even More Offensive Marketing], Davidson likens the process of gathering competitive data to a jigsaw puzzle. Each individual piece of data does not have much value. The important skill is to collect as many of the pieces as possible and to assemble them into an overall picture of the competitor. This enables you to identify any missing pieces and to take the necessary steps to collect them. What businesses need to know about their competitors
The tables below lists the kinds of competitor information that would help businesses complete some good quality competitor analysis. You can probably think of many more pieces of information about a competitor that would be useful. However, an important challenge in competitor analysis is working out how to obtain competitor information that is reliable, up-to-date and available legally(!). What businesses probably already know their competitors Overall sales and profits Sales and profits by market Sales by main brand Cost structure Market shares (revenues and volumes) Organisation structure Distribution system Identity / profile of senior management Advertising strategy and spending Customer / consumer profile & attitudes Customer retention levels
What businesses would really like to know about competitors Sales and profits by product Relative costs Customer satisfaction and service levels Customer retention levels Distribution costs New product strategies Size and quality of customer databases Advertising effectiveness Future investment strategy
http://www.tutor2u.net/business/strategy/competitor_analysis.htm
http://www.netmba.com/strategy/competitor-analysis/
When the organization is planning for the diversification and expansion plan; To study forthcoming trends in the industry; Understanding the current strategy strengths and weaknesses of a competitor can suggest opportunities and threats that will merit a response; Insight into future competitor strategies may help in predicting upcoming threats and opportunities.
Competitors should be analyzed along various dimensions such as their size, growth and profitability, reputation, objectives, culture, cost structure, strengths and weaknesses, business strategies, exit barriers, etc.
What strategies are our competitors pursuing and how successful are these strategies? What are the strengths and weaknesses of our competitors? How are our competitors likely to respond to any changes to the way we do business?
Competitor analysis is a business term used to describe researching primary and secondary competitors. Such analysis occurs when a company conducts formal or informal studies regarding what its competitors are doing. Analyzing competitors can be useful to find a benchmark for quality, to assess threats, and to determine the potential for growth. Every company has competitors. These may be primary and secondary competitors. For example, a movie theatres primary competitors are other movie theatres, while its secondary competitors may be home movie rental chains. Analyzing the behaviour of competitors can be a vital tool for a business. Competitor analysis normally involves looking at the strengths and weaknesses of the competition. The analysis may be a wide scale analysis of the whole company or may be a more focused analysis, such as a competitive analysis only of marketing strategies. Observing a competitor also allows a business to see what the competitor is doing well. The company can then determine how to incorporate some of those successful strategies into its own business model. Ideally, the company can also learn how to make improvements on the strategies it incorporates.
Competitor analysis also allows a company to see his competitors' weak spots. This can provide the company with an opportunity to use those weak spots to recruit new customers or to emphasize its superiority. For example, if a company conducts a competitor analysis and determines that customer service is lacking within the industry, it can tout itself as the best option for customer service, thus attracting customers who are tired of the poor quality service they are getting. Threats can also be easily and quickly identified through competitor analysis. For example, a company may be able to see that one of its competitors is gaining market share. This can be an important fact, since the company can then take steps to ensure it is not forced out of business by the growth of the competitor. Finally, competitor analysis can also help a company determine the potential for growth. By observing the entire customer base, including those who currently work with competing businesses, a company can get a broader understanding of the market. This can allow the company to determine how much it can expand within that market, and how best to do so, given the current behaviour and activity of its competitors.
What Are the Different Competitor Analysis Tools? What Are the Different Competitor Analysis Models? What Is Competitive Industry Analysis? What Is Business Model Analysis? What Is Business Analysis? What Is an Industry Analysis? What Is Clickstream Analysis?
Meeting the need of customers is the aim of marketing, but this alone is not enough to guarantee success the real challenge is the ability to satisfy customer needs better than competitors. Competitor analysis starts with seeking answers to the following questions, as identified in Jooste et al, (2009): Who are our present and potential competitors (Identify competitors)? Although the answer to the question might appear straightforward, the range of potential and current competitors is often far broader than appears at first sight. Companies must realise that competitors dont always offer the same or similar products or services. What are the positions competitors established in the market (Analyse strategic groups)? Competitors can initially be categorised into groups on the basis of similarities and differences in the strategies pursued. The conceptualisation of strategic groups makes the process of competitor analysis more manageable. Having a more focused and narrow approach will assist in strategy implementation and success. What are their strategic objectives and thrusts? The analyses of competitors objectives is important because it provides insight into whether a competitor is satisfied with its important profit and market position, and thus how likely it is to retain its present strategy, especially when the competitor makes particular strategic move. Companies must understand competitor objectives and thrusts as it will influence its own strategic decisions. What are their present and future strategies? Past and present strategies of each major competitor need to be reviewed by companies. Past strategies provide insight into failures and reveal how organisations engineered changes. Reviewing competitor strategies involves the assessment of the competitors target market and differential advantage. It is also advantages for organisations to evaluate how successful the competitors have been in achieving its objectives and carrying out its strategies. What are their strengths and weaknesses? A precise understanding of a competitors strengths and weaknesses is an important prerequisite for developing a strategy to compete against it. Whether competitors can carry out their strategies and reach their goals depends on their resources and capabilities. Ideally with this in mind organisation would use its own strengths to take advantage of a competitors weaknesses. What are their response patterns? A major objective of competitor analysis is to be able to predict competitors responses to market and competitive changes. Scenario planning and counter response strategies could minimise risk and assist with the implementation of own strategies and plans. Failure to understand competitors will lead to costly marketing mistakes and could have detrimental financial implications for companies.