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COMPETITION
ANALYSIS
Dr. Kartik Dave
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Sun Tzu and the Art of War
Around the year 500 C! the "reat Chine#e $i%itary #trate"i#t! Sun
Tzu &rote a di##ertation on the Art of War. 'ro$ a ()#t *entury
+er#+e*tive! $any o, Sun T-u.# a++roa*he# &ou%d /e vie&ed a#
/ar/ari* today. Neverthe%e##! hi# vie&# on #trate"y are #ti%% re%evant
today 0 ,or /oth $i%itary *o$$ander# and /u#ine## %eader# %ookin"
at ho& to &in a"ain#t *o$+etitor#. 'or in#tan*e1

If you are ignorant of both your enemy and yourself,


then you are a fool and certain to be defeated in every battle.

If you know yourself, but not your enemy,


for every battle won, you will suffer a loss.

If you know your enemy and yourself, you will win every battle.
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Competitor analysis
Cometitor analysis in $arketin" and
#trate"i* $ana"e$ent i# an a##e##$ent o, the
#tren"th# and &eakne##e# o, *urrent and +otentia%
*o$+etitor#. Thi# ana%y#i# +rovide# /oth an
o,,en#ive and de,en#ive #trate"i* *onte2t throu"h
&hi*h to identi,y o++ortunitie# and threat#.
Co$+etitor +ro,i%in" *oa%e#*e# a%% o, the re%evant
#our*e# o, *o$+etitor ana%y#i# into one ,ra$e&ork
in the #u++ort o, e,,i*ient and e,,e*tive #trate"y
,or$u%ation! i$+%e$entation! $onitorin" and
ad3u#t$ent.
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Marketing not only requires a focus on
satisfying customer needs it also has a
competitive dimension.
The firm must seek a value proposition
that satisfies the needs of target
customers more effectively than
competitors.
WHY COMPETITOR
ANALYSIS?
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WHY COMPT!TO" #$#%Y&!&'
Current strategy( strengths and
)eaknesses of a competitor can suggest
opportunities and threats that )ill merit
a response.
!nsights into future competitor strategies
may allo) the prediction of emerging
threats and opportunities.
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# decision a*out strategic alternatives might


easily hinge on the a*ility to forecast the likely
reaction of key competitors.

+inally( competitor analysis may result in the


identification of some strategic questions(
questions that )ill *e )orth monitoring closely
over time.
WHY COMPT!TO" #$#%Y&!&'
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There are t)o different )ays of


identifying current competitors.

+rom the perspective of the customer ,


grouping of competitors according to the
degree they compete for a *uyer-s choice.

On the *asis of their competitive strategy


, placing of competitors in strategic
groups .
!.$T!+Y!$/ COMPT!TO"&
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+rom the perspective of the customer0

+ocus on customer choice. # *uyer of a


particular *rand could *e asked )hat *rand
)ould have *een purchased if that *rand )as
out of stock or )hat are the other *rands he
had considered for purchase.
IDENTIFYIN COMPETITORS
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#ssociation of products )ith specific use


conte1ts or applications. # num*er of
respondents could *e asked to list out the
different use situations for a particular
product under study. Then these respondents
could *e asked to name all the products that
are appropriate for each of these use
conte1ts.
IDENTIFYIN COMPETITORS
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Brand Competition
When a company sees its competitors as
other companies offering a similar
product or services to the same
customers at similar prices.
IDENTIFYIN COMPETITORS
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Industry Competition
When a company sees its competitors as
all companies making the same product
or class of products.
IDENTIFYIN COMPETITORS
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Form Competition
When a company sees its competitors as
all companies manufacturing products
that supply the same service.
IDENTIFYIN COMPETITORS
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Generic Competition
W!en t!e "ompany sees its
"ompetitors t!at "ompete #or
t!e same "ons$mer money%
IDENTIFYIN COMPETITORS
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A strategic grou is a grou of firms
that!

"ver time ursue similar cometitive


strategies #e.g., roduct differentiation, use
of same distribution channel$.

%ave similar characteristics #e.g., size,


aggressiveness$.

%ave similar assets and skills #e.g., strong


brand, e&cellent service 'uality image$.
IDENTIFYIN COMPETITORS &
STRATEIC RO'PS
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PROCED'RE FOR
CONSTR'CTIN A STRATEIC
RO'P
I(enti#y t!e "ompetiti)e
"!ara"teristi"s t!at (i##erentiate
#irms in t!e in($stry%
Pri"e * +$ality ran,e
eo,rap!i" "o)era,e
De,ree o# )erti"al inte,ration
Pro($"t line -rea(t!
'se o# (istri-$tion "!annels
De,ree o# ser)i"es o##ere(
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Plot t!e #irms on t.o/)aria-le
map $sin, pairs o# t!ese
(i##erentiatin, "!ara"teristi"s%
Assi,n #irms t!at #all in a-o$t
t!e same strate,y spa"e to
t!e same strate,i" ,ro$p%
PROCED'RE FOR
CONSTR'CTIN A STRATEIC
RO'P
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STRATEIC RO'PS IN MA0OR APPLIANCE
IND'STRY
RO'P A
Narro. line
Lo.er man$#a"t$rin, "ost
1ery !i,! ser)i"e
Hi,! pri"e
RO'P C
Mo(erate line
Me(i$m man$#a"t$rin, "ost
Me(i$m ser)i"e
Me(i$m pri"e
RO'P 2
F$ll line
Lo. man$#a"t$rin, "ost
oo( ser)i"e
Me(i$m pri"e
RO'P D
2roa( line
Me(i$m man$#a"t$rin, "osts
Lo. ser)i"e
Lo. pri"e
Hi,! 1erti"al Inte,ration
1erti"al Inte,ration
Assem-ler
3
$
a
l
i
t
y
Lo.
Hi,!
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'SIN THE STRATEIC RO'P
CONCEPT

T!e "on"ept$ali4ation o# strate,i"


,ro$ps "an ma5e t!e pro"ess o#
"ompetitor analysis more
mana,ea-le% N$mero$s in($stries
"ontain many more "ompetitors t!an
"an -e analy4e( in(i)i($ally%

F$rt!ermore6 little strate,i" "ontent


an( insi,!t .ill -e lost in most "ases6
-e"a$se #irms in a strate,i" ,ro$p .ill
-e a##e"te( -y an( rea"t to in($stry
(e)elopments in similar .ays%
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SO'RCES OF POTENTIAL
COMPETITORS
Mar5et e7pansion
Pro($"t e7pansion
2a"5.ar( inte,ration
For.ar( inte,ration
T!e e7port o# assets an( s5ills
Retaliatory or (e#ensi)e
strate,ies
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Elements in#l$en"in,
Competitor A"tions

Si-e! 4ro&th! and Pro,ita/i%ity

I$a"e and Po#itionin" Strate"y

Co$+etitor O/3e*tive# and Co$$it$ent

Current and Pa#t Strate"ie# o, Co$+etitor#

Co$+etitor Or"ani-ation and Cu%ture

Co#t Stru*ture

E2it arrier#

A##e##in" Stren"th and 5eakne##


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W!at Dri)es
t!e Competitor
W!at t!e Competitor
is (oin, an( "an (o
Competitor8s Response Pro#ile
Ass$mptions
Hel( a-o$t itsel#
an( t!e in($stry
Capa-ilities
2ot! stren,t!s
an( .ea5nesses
F$t$re oals
At all le)els o# mana,ement
an( in m$ltiple (imensions
C$rrent Strate,y
Ho. t!e -$siness is
"$rrently "ompetin,
COMPONENTS OF A COMPETITOR ANALYSIS
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W!at really (ri)es t!e -e!a)io$r
o# a "ompetitor is its #$t$re ,oals
an( t!e ass$mptions it !ol(s
a-o$t its o.n sit$ation an( t!e
nat$re o# its in($stry%

T!ese (ri)in, #a"tors are m$"!


!ar(er to o-ser)e6 yet t!ey o#ten
(etermine !o. a "ompetitor .ill
-e!a)e in t!e #$t$re%
COMPONENTS OF A
COMPETITOR ANALYSIS
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A 5no.le(,e o# ,oals .ill allo.
pre(i"tions a-o$t .!et!er or not
ea"! "ompetitor is satis#ie( .it!
present position an( #inan"ial
res$lts6 an(6 t!ere#ore6 !o.
li5ely t!at "ompetitor is to
"!an,e strate,y an( )i,o$r .it!
.!i"! it .ill rea"t to o$tsi(e
e)ents or to mo)es -y ot!er
#irms%
COMPONENTS OF A
COMPETITOR ANALYSIS
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T!e ass$mptions a-o$t its o.n
sit$ation .ill ,$i(e t!e .ay
t!e #irm -e!a)es an( t!e .ay
it rea"ts to e)ents%
I# it sees itsel# as a lo./"ost
pro($"er6 #or e7ample6 it may
try to (is"ipline a pri"e "$tter
.it! pri"e "$ts o# its o.n%
COMPONENTS OF A
COMPETITOR ANALYSIS
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E)ery #irm also operates on
ass$mptions a-o$t its
in($stry an( "ompetitors%
E7aminin, ass$mptions o# all
types "an i(enti#y -iases t!at
may "reep into t!e .ay
man,ers per"ei)e t!eir
en)ironment%
COMPONENTS OF A
COMPETITOR ANALYSIS
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A "ompetitor8s strate,y is most
$se#$lly t!o$,!t o# as its 5ey
operatin, poli"ies in ea"!
#$n"tional area o# -$siness an(
!o. it see5s to interrelate t!e
#$n"tions%
A 5no.le(,e o# a "ompetitor8s
pattern o# ne. pro($"t or ne.
mar5et mo)es "an !elp one
anti"ipate #$t$re ,ro.t!
(ire"tions%
COMPONENTS OF A
COMPETITOR ANALYSIS
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I# a (i##erentiation strate,y is
(ete"te(6 to .!at e7tent (oes it
rely on pro($"t/line -rea(t!6
pro($"t +$ality6 ser)i"e6 or
(istri-$tion ?
I# a lo. "ost strate,y is
employe(6 is it -ase( on
e"onomies o# s"ale6 t!e
e7perien"e "$r)e6 man$#a"t$rin,
#a"ilities an( e+$ipment6 or
a""ess to ra. materials?
COMPONENTS OF A
COMPETITOR ANALYSIS
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The assessment of a cometitor(s strengths and


weaknesses starts with an identification of
relevant assets and skills for the industry and
then evaluates the cometitor on the basis of
those assets and skills.

Comonents of the cometitor(s value chain


must also be e&amined to assess whether any of
these rovide the otential to generate
cometitive advantage for the cometitor.
ASSESSIN COMPETITOR8S
STRENTHS AND WEA9NESSES
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THE GENERIC VALUE CHAIN
Inbound
Logistics
Operations
Outbound
Logistics
Marketin
g
& a!es
er"ice
M
a
r
g
i
n
M
a
r
g
i
n
#ir$ In%rastructure
Hu$an Resource Manage$ent
Tec&no!og' (e"e!op$ent
)rocure$ent
upport
Acti"ities
)ri$ar' Acti"ities
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AREAS OF COMPETITOR
STRENTHS AND WEA9NESSES
INNO1ATION
Te"!ni"al pro($"t s$periority
Ne. pro($"t "apa-ility
R*D
Te"!nolo,ies
Patents
MAN'FACT'RIN
Cost Str$"t$re
Fle7i-le pro($"tion operations
E+$ipment
A""ess to ra. material
1erti"al inte,ration
Capa"ity
MANAEMENT
3$ality o# top an( mi((le man,t%
9no.le(,e o# -$siness
C$lt$re
Strate,i" ,oals an( plans
Entreprene$rial t!r$st
Plannin,:operation system
Loyalty t$rno)er
3$ality o# strate,i" (e"ision ma5in,
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AREAS OF COMPETITOR
STRENTHS AND WEA9NESSES
MAR9ETIN
Pro($"t +$ality rep$tation
Pro($"t "!ara"teristi"s:(i##erentiation
2ran( name re"o,nition
2rea(t! o# t!e pro($"t line
C$stomer orientation
Se,mentation:#o"$s
Distri-$tion
Retailer relations!ip
A()ertisin,:promotion s5ills
Sales #or"e
C$stomer ser)i"e:pro($"t s$pport
C'STOMER 2ASE
Si4e an( loyalty
Mar5et s!are
ro.t! o# se,ments ser)e(
FINANCE / ACCESS TO CAPITAL
From operations
From net s!ort/term assets
From a-ility to $se (e-t * e+$ity #in
Parent8s .illin,ness to #inan"e
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THE COMPETITI1E STRENTH
RID

)irst, the relevant assets and skill for the


industry is to be identified.

The ne&t ste is to scale your own firm


and ma*or cometitors on the relevant
assets and skills.

The result is termed a cometitive


strength grid and serves to summarize the
osition of the cometitors with resect to
assets and skills.
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COMPETITI1E STRENTH RID
Assets an( S5ills
Key for Success
Ne. pro($"t "apa"ity
Pro($"t +$ality
Cost str$"t$re
Pro($"t (i##erentiation
Dealer satis#a"tion
Mar5et s!are
Secondary Importance
Fle7i-le pro($"tion
Finan"ial "apa"ity
3$ality o# mana,ement
Sales #or"e:(istri-$tion
2ran( name re"o,nition
A()ertisin,:promotion
3$ality o# ser)i"e
ro.t! o# tar,et se,ment
Company A
Company 2 Company C
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THE COMPETITOR RESPONSE
PROFILE

The analysis of a cometitor(s future


goals, assumtions, current strategies,
and caabilities, will lead to a rofile of
how a cometitor is likely to resond.

The first ste in building a resonse


rofile is to redict the strategic
changes the cometitor might initiate.
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The ne&t ste in building a resonse


rofile is to determine cometitor(s
defense caability against the feasible
strategic moves our firm might make,
and ossible industry and
environmental changes that might
occur.
THE COMPETITOR RESPONSE
PROFILE
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W!at Dri)es
t!e Competitor
W!at t!e Competitor
is (oin, an( "an (o
Competitor8s Response Pro#ile
Ass$mptions
Hel( a-o$t itsel#
an( t!e in($stry
Capa-ilities
2ot! stren,t!s
an( .ea5nesses
F$t$re oals
At all le)els o# mana,ement
an( in m$ltiple (imensions
C$rrent Strate,y
Ho. t!e -$siness is
"$rrently "ompetin,
THE COMPONENTS OF A COMPETITOR ANALYSIS
Is t!e "ompetitor satis#ie( .it! its
"$rrent position ?
W!at li5ely mo)es or strate,y
s!i#ts .ill t!e "ompetitor ma5e?
W!ere is t!e "ompetitor )$lnera-le?
W!at .ill pro)o5e t!e ,reatest an(
most e##e"ti)e retaliation -y t!e
"ompetitor?
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F'NCTIONS OF COMPETITOR
INTELLEENCE SYSTEM
Colle"tin, #iel( (ata
Colle"tin, p$-lis!e( (ata
Compilin,
T!e (ata
Catalo,in,
T!e (ata
Di,esti)e
Analysis
Comm$ni"ation
To strate,ist
Competitor analysis
For strate,y #orm$lation