Competitor Analysis

Chapter 4
Mst. Shuly Aktar
Associate Professor
Department of Marketing
 Competitor Analysis
On the basis of the information a company

May launch more precise (accurate)

attack on its competitors as well as
It may prepare a stronger defense
against attacks.

Basically, competitive strategy involves

positioning a business to maximize the value of
the capabilities that distinguish it from its
competitors.
Competitor analysis is needed to answer:-

• Whom should they pick a fight with in the

industry and with what sequence of
moves?
• What is the meaning of competitor’s
strategic moves and how acutely should
take it?

• What areas should they avoid?

 Objectives of a competitor
analysis:
To develop a profile of competitors.

To find out probable response of

feasible strategic move of the firms.

To identify each competitor’s

probable reaction of industry changes
and broader environmental shifts
Problems of competitors analysis:
• Analysis is not done explicitly in practice
• Risky assumptions can creep (causing an unpleasant feeling of fear)

into marginal thinking about competitors

• Difficult to collect information about
competitors.
Causes are as follows:
►informal impression (idea, feeling, or opinion about sth),
►conjectures (an opinion or idea that is not based on definite
knowledge, and it is form by guessing), and
►intuition (the ability to know something by using your feeling
rather than on fact) etc. which is not the systematic way].
The components of Competitors
Analysis

• Future Goals:
• Assumptions:
• Current Strategy, and:
• Capabilities
Component contd….

Future Goals: A knowledge of goals will allow

predictions about whether or not each competitor
is satisfied with its present position and financial
result.

Future goals will allow:

►To maximize the market share and/ or
►To the satisfaction of customer and/or
►Mix objectives:
 Target in terms of market leadership
 Technological position
 Social performance etc.
 Moreover, Goals at various mgt. level

Corporate wide goals

Business unit/division goals

Goals that can be worked out for individual
functional areas and key managers.
 Ways to determine a competitor’s present and
future goals: (by asking question)
 Stated and unstated financial goals
 Attitude of competitors towards risk
 Economic and non-economic organizational values of
belief
 Organizational structure
 Controlling and incentive system, accounting and
leadership system
 Sales growth and rate of return of the parent company
 Parent company’s diversification plan
 Performance and needs of other companies etc.
 Assumptions:
Assumptions means a belief or feeling that something is
true or that something will happen, although there is no
proof. It falls into two major categories:
 The competitor’s assumption about itself
 The competitor’s assumptions about the industry
and the other companies in it.

Ways to determine a competitor’s assumptions :

► What are the relative position in cost, product,
quality, technology, and other key aspects?
► What are the historical or emotional
identification?
► Do they fill hesitate to utilize the full capacity?
 Current Strategy
A competitor’s strategy is most usefully through of
as its key operating policies in each functional areas
of the business and how it seeks to inter-relate the
functions.

The main focus given on:

what the competitor’s is doing and can do? i.e. How
the firm is currently competing?
 A firm can take any one of the under mentioned
specific strategy:
Position defense strategy: Position defense involves building
superior brand power, making the brand almost impregnable.
Flanking defense: leaders under attack would be foolish to rely
on building fortifications (wall) around their current products; the
market leader should also erect outposts to protect a weak front or
possibly serve as an invasion base for counterattack.
Preemptive defense: A more aggressive maneuver is to attack
before the enemy starts its offense.
Counter offensive defense: In a counteroffensive, the leader
can meet the attacker frontally or hit it flank or launch a pincer
movement.
Contraction Defense: Large companies sometimes
recognize that they can no longer defend all of their territory. The
best course of action then appears to be planned contraction
 Capability
A firm’s strengths and weaknesses will determine
its ability to initiate or react to strategic move and
to deal with environmental or industry events that
occur.
Ways to determine a competitor’s capabilities :
What are the competitor’s capabilities in each of the
functional areas?

How does the competitor measure up the tests of

consistency of its strategy?

Are there any probable changes in those capabilities as the

competitor matures?
A firm should know the ability of its competitors to
adapt with:
Competing on cost
Managing more complex product lines
Adding new product
Competing on service
Escalation in marketing activities
 Areas of competitor strength and weakness:
Products:  Standing of products (from the user’s view point)
 Depth of the product line

Dealer/distribution:  Channel coverage and quality

 Relationship among channel members
 Service of channels

Marketing and selling  skill in marketing mix

 Skill in marketing research and
product development
 Training and skills of the sales forces
Operations  manufacturing cost positions (economies of
scale, learning curve, newness of equipment)
 Technological sophistication of facilities and
equipment
 Location including labor and transportation
cost
 Skill in capacity addition, quality control etc
contd….
Research and engineering  patents and copyrights
 R & Staff skills in terms of
creativity, simplicity,
quality, reliability, etc.
Overall cost  overall relative costs
 Shared costs or activities with other
business units

Financial strength  cash flow

 Short and long term borrowing capacity
 Financial management abilities including
negotiation, raising capital.

Organization  structure
 Labor management relationship

General management abilities  leadership qualities

 Depth of management
 Age, training,
 Ways to prepare the competitor response profile:
A. Offensive (disgusting) moves:
• Satisfaction level with current position
• Probable moves
• Strength and seriousness of moves

B. Defensive (self protective) capabilities:

• Vulnerability
• Provocation
• Effectiveness of retaliation
C. Picking the Battleground:
• The laid back competitor: don't react quickly or strongly
• The Selective competitor: react on certain type of attack
• The Tiger competitors: react swiftly or strongly to any attack
• The stochastic competitor: No predictable reaction pattern.
 Competitor Intelligence System
Various data is required for knowing about competitor’s
probable moves, condition of competitor’s strategies, industry
growth rate, industry structure etc.

Function of CIS:
Sources of data: Field data and published data.
Sources of field data: Sales force, firm’s engineering staff,
distribution channels, suppliers, advertising agencies, personnel hired
from competitors, professional meetings, trade association, market
research firms etc.
published data: Articles, newspaper in competitor’s
locations, government documents speeches of competitor’s
management, patents records, court records etc.

Contact strategy
Collecting With formulation
Compile Cataloging Digestive
Data strategist
 Market Signals
A market signals is any action by a competitor
that provides a direct or indirect indication of
its intentions, motives, goals, or internal
situation.
Most of them are:

► Bluffs,
► Warnings and
► Earnest commitments.
Indications of Signal:

►Significance for developing competitive

strategy
► Essential supplement to competitors
analysis
► Effective competitive moves
► An understanding of competitor’s
components
 Forms of Market signals
1. Prior announcements of moves
2. Announcements of results or actions after the fact
3. Public discussions of the industry by competitors
4. Competitors’ discussions and explanations of their
own moves
5. Competitors tactics relative to what they could
have done
6. Manner in ethic strategic changes are initially
implemented.
Causes of prior announcements of moves:

Seeking to get buyers to wait for its new product

To start a price war i.e. threat of actions to be
taken
To know competitor’s sentiments such as new
warranty programs
Role as threats to other competitors
Communication with the financial community
Announcements of results or actions after the fact:
► Plant addition, sales figures, and other actions
► Carry signals of the disclosed data.
► Misleading data

Public discussions of the industry by competitors :

► Show logic of their competitive moves
► Preemptive (challenging/costly) moves
► Attempt to communicate commitment

Competitors’ tactics relative to what they could have done

A firm feasibly changes its product’s price, advertisement
cost, product characteristics etc. and wants to prove that how
strong they are.