CATEGORY, COMPETITOR &

CUSTOMER ANALYSIS
Category Attractiveness Analysis
 Deciding Factors
1. Market Size Estimation
2. Aggregate Market factors
3. Category Factors
4. Environmental Factors
1. Market Size Estimation

 Industry Potential
 Market Potential
 Company Potential
 2.Aggregate Market Factors
• Category Size /Market Size – In general, larger markets are better
than smaller ones. Measured both in units and monetary value

• Category growth/Market Growth – Fast growing categories are

universally desired . Able to support high margins and sustain profits
in future years .

P&G developing US markets for diapers helped others helped J&J

and Kimberly Clark

• Stage in PLC-category size and category growth are often portrayed

through PLC. Introduction and Growth are the early phases of life
cycle when sales are growing rapidly, maturity represents a leveling off
in sales and the decline phase represents the end of the cycle.
 2.Aggregate Market Factors

• Sales Cyclicity – products tied closely to the business cycle- financial

services, agriculture, real estate, automobiles etc. Seen as a
negative factor for these industries.

• Seasonality – consumption skewed in certain time of the year –

festivals, summers, wedding season etc. Companies would like to
minimize dependency on seasonal sales only.

• Profits- variation across industries and time (demand high..higher

profits)
 3.Category Factors
• Threat of new entrants
• Bargaining power of buyers
• Bargaining power of suppliers
• Current category rivalry
• Pressure from substitutes
• Category Capacity
 Threat of new entrants
• Economies of scale- entering automobile is difficult..but
service industry may be easy..economies of scale matter..
• Product differentiation
• Capital Requirements
• Switching costs…costs of switching from one customer to
another…eg Fed Ex giving tracking rights….new entrants
would have to build in systems…etc..to compete
• Distribution channels..new products can find it difficult to
have a shelf
 Bargaining power of buyers
Buyers can be distributors, OEM’s, or end
customers.

Higher buyer bargaining power is negatively

related to industry attractiveness. Buyers can
force down prices and play competitors off
against one another for benefits such as
service.
 Bargaining power of suppliers

• Higher supplier power is clearly not an

attractive situation because it allows suppliers
to dictate price and other terms such as
delivery dates to the buying category.
 Category Rivalry
• A higher degree of rivalry can result in
escalating marketing expenditure , price wars,
employee raids and related activities.
 Pressure from Substitutes
• Categories making products or delivering
services for which there are a large number of
substitutes are less attractive than those that
deliver a relatively proprietary product, one
that uniquely fills a customer need or solves a
problem
 Category Capacity
• Chronic overcapacity is not a positive sign for
long term profitability . When a category is
operating at capacity, its costs stay low and its
bargaining power with buyers is normally high.

eg.During recessions, consumer spending on

travel services is low, resulting in overcapacity
at many world wide resorts…
 4.Environmental Factors
• Political
• Economic
• Social
• Technological
• Regulatory/Legal
Competitor Attractiveness Analysis
DEFINING & ANALYZING COMPETITORS

1.Define Product-Market Boundaries and Structures

2.Identify and Describe End-Users

3.Analyze Industry & Value Added Chain

4.Evaluate Key Competitors

5.Forecast Market Size & Growth Trends

 Product – Market Boundaries &
Structure
• Determining Product-Market Structure

1. Start with the generic need satisfied by the

product category of interest to management
2. Identify the product categories (types) that
can satisfy the generic need
3. Form the specific product – markets within
the generic product –market
Matching Needs with Product Benefits

• A product – market matches people with

needs to the product benefits that satisfy
those needs

“A product – market is the set of products

judged to be substitutes within those usage
situations in which similar patterns of benefits
are sought by groups of customers.”
 Illustrative Fast-Food
Product-Market Structure

SUPER MICROWAVE
MARKETS OVENS
FAST-FOOD
MARKET

CONVENIENCE TRADITIONAL
STORES RESTAURANTS
 Illustrative Product – Market Structure
Food and beverages
for breakfast meal
•Generic Product
Class

Cereals •Product Type

Ready to eat •Variant A

Regular
Natural •Variant B
Nutritional Pre-sweetened

Life Product 19 Special K •Brands

Analyze Industry & Value Added Chain

Extent of Market Complexity – Three

characteristics of markets:

1. Functions or Uses of the product

2. Enabling technology of the product

3. Customer segments in the product-market

 Analyzing Competition
1. Define the Competitive
Arena for the Generic,
Specific, and Variant
Product Markets

PRODUCT 2. Identify &

4. Identify & MARKET
Evaluate Describe Key
STRUCTURE Competitors
Potential
&
Competitors
MARKET
SEGMENTS

3. Evaluate Key
Competitors
 Extent of Market Coverage

Competitor
Current Customer
Capabilities Evaluation Satisfaction

Past
Performance
 4. Analyze Key Competitor

• Business scope and objectives

• Management experience, capabilities, and
weaknesses
• Market position and trends
• Market target(s) and customer base
• Marketing program positioning strategy
• Financial, technical, and operating capabilities
• Key competitive advantages - access to resources,
patents etc.
 Competitor Analysis System
• Analysis of Primary & Secondary data
• Comparing Market strategies of competition -
Key questions -
 Who are they
 What are their competing product features
 What is their current strategy
• Differential competitor advantage analysis-
who has the competitive product advantage
 Comparing Market Strategies

• Value chains
• Marketing Mix
• Technology Strategy –
 Technology selection/specialization
 R&D investments
 Level of competence
 Competitive timing- initiates or responds
 Perceptual Mapping
Typically, a simple perceptual map is a two-dimensional graph
with a vertical axis and a horizontal axis. Each axis has a pair of
opposite attributes at each end of the axis. For example, if the
map is looking at cars, the vertical axis might have a luxury car at
one end and an economy car at the other end; the horizontal
axis might have "family-oriented" at one end and "sporty" at the
other end. Each car is then plotted on the graph based on how
consumers perceive the car relative to those attributes.
 Using a Perceptual Map for Competitor Analysis

A touch of class / a car to be proud to own

• Lincoln •Porsche
• Cadillac
•Mercedes •BMW

Conservative •Toyota Lexus Fun to drive

looking / •Skoda Superb •Audi / sporty look
appeals to • Honda City / appeals to
older people younger
•Ford •Chevrolet people
•SX4 •Nissan
•Toyota Corolla

•Swift Dezire
•VW

Practical / affordable / good gas mileage

 Perceptual Mapping
Market researchers use perceptual mapping to compare
products (and potential products) based on the perceptions of
customers. The purpose of a perceptual map is to identify the
images that consumers have of and the reactions they have to
brands, products, services and other market offerings. This
information can help a business identify potential new products
during the product development process.
 Perceptual Mapping
Perceptual maps can have more than two
dimensions, letting a business compare more
than two pairs of attributes. Using more than
two dimensions for a perceptual map is also
called multidimensional scaling. Although
these maps can become quite complex and
hard to understand, they can also potentially
provide more useful information. Computer
software is available for creating perceptual
maps.
 Product Features!!
• Identify parallel needs – coffee in an
environment, McDonalds in Beijing
• Identify Purchase Patterns – seasonality
• How customers use the product – Pepsi in PET
bottles, CD’s
• Identify customer perception of risk – Citibank
credit cards for students, internet shopping
with cash on delivery
 Competitors Will
• How critical/crucial is this product to the firm?
• How visible is the commitment to the market?
• How aggressive are the managers?
3.Customer Analysis
 Identifying and
Describing Buyers

DESCRIBING
Building How
& ANALYZING Buyers
Customer
Profiles END-USERS Make
Choices

Environmental
Influences
 Identifying and Describing End-Users

Buyer characteristics in consumer markets:

 Family size,
 Age,
 Income,
 Geographical location,
 Gender
 Occupation
 Identifying and Describing End-Users

Buyer factors in business markets:

 Type of industry
 Type of products
 Company size
 Location
 How Buyers Make Choices

Buying Decision Process

1. Problem recognition

2. Information search

3. Alternative evaluation

4. Purchase decision

5. Post-purchase behavior
 Environmental Influences

External factors influencing buyers’ needs and

wants:

Government, social change, economic shifts,

technology etc.

• These factors are often non-controllable but can

have a major impact on purchasing decisions
 Building Customer Profiles
• Start with generic product – market
• Move next to product- type and variant
profiles >> increasingly more specific
• Customer profiles guide decision making
segmenting, targeting, positioning etc.
 Current & Potential Customers

• Who buys & uses the product-

 Initiator
 Influencer
 Decider
 Purchaser
 User

• What customers buy &how they use it

 Benefits
 Purchase pattern
 Product Assortment
 Use
 Current & Potential Customers
• Where Customers buy - channels
• When Customers buy – usage patterns
• How Customers choose –
• Consideration set
• Steps in buyer behavior - attributes, perceptions
• Why they prefer a product – customer lifetime value
 Customer Value of a Brand
• Importance of Usage situations
• Effectiveness of product category in the
situation
• Relative effectiveness of the brand in the
situation
 Sources of Customer Value

• Economic
• Functional
• Psychological
 Current & Potential Customers

• How they respond to marketing programs?

• Will they buy it again – Satisfaction?
• Satisfaction depends on-
 Expectations of performance/quality
 Perceived performance/quality
 Gap between expectations & performance