4mbam30 - week 4 · pdf file · 2003-03-094mbam30 - week 4. stokes - unit 4 (1)...
TRANSCRIPT
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Analysing Competitors
4MBAM30 - week 4
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Stokes - Unit 4 (1)Needs, wants, demands
Maslow’s hierarchy of needs
Marketing myopia (Levitt)Matching Benefits to Customers
Benefits vs. featuresProduct mortalityWhat business are we in?
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Stokes - Unit 4 (1)Needs:
what we need to survive & thrive
Want:a specific means of satisfying the need
Demand:a want, backed up by the having the ability to pay for it
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Stokes - Unit 4 (2)Who are our Customers?
Customers or consumers?Customer chainsInternal customers
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Stokes - Unit 4 (3)Markets – old, and new meanings:
Old: a place where buyers and sellers exchange goods/servicesNew: a grouping of customers with similar needs, eg. “the teenage market”New: the total demand for a product, eg. “the jeans market”New: a combination of the two, eg. “the teenage jeans market”
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Stokes - Unit 4 (4)Competitive Forces in the market place
Porter’s 5 Forces
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Analysing CompetitorsIdentifying
competitorsDeterminingobjectives
Identifyingstrategies
Assessing strengths/weaknesses
Estimatingreaction patterns
Selecting thoseto attack/avoid
(Kotler)
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Analysing CompetitorsIdentifying
competitors
Identifyingstrategies
Estimatingreaction patterns
Determiningobjectives
Selecting thoseto attack/avoid
Assessing strengths/weaknesses
(Kotler)
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Analysing CompetitorsIdentify competitors
Observestrategies
Assess strengths& weaknesses
Observereactions
Decide whom to attack/avoidJ El-Murad, 2001
Determine objectives
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Analysing Competitors - why? 1If you know neither the enemy nor yourself,
you will succumb in every battle. If you know yourself, but not the enemy,
for every victory you gain you will suffer a defeat.
If you know your enemy as you know yourself, you need not fear the result of a
hundred battles.(Sun Tzu Ping Fa)
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Analysing Competitors - why? 2Removal of trade barriers (eg EU/GATT/NAFTA)De-regulation, and the encouragement by governments of market forcesThe state of the economy -
domesticglobal in countries where your competitors are based
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What is Competitor Analysis? 1
analysis
of data and information about Competitors
to generate outputs
that are useful in decision making
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Data » Information » IntelligenceDATA
Unintegrated “raw” individual items• requires identification and collection
INFORMATIONEvaluated data• requires judgements
INTELLIGENCEInformation that informs decision making• requires judgement and use
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What is Competitor Analysis? 2
massive data banks
intricate computer retrieval systems
large numbers of data collectors
full-time data analysers
It is NOT about:
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Competitor Analysis - Common ProblemsPreoccupation with data - not intelligenceData massaging vs AnalysisOutputs not geared to decision-makers’ needsAnalysts not part of decision making process
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Uses of Competitor Analysis
Current and potential competitorscustomersdistributorssupplierstechnology
To learn about the competitive environment
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Uses of Competitor Analysis (2)
competences (strengths)vulnerabilities (weaknesses)constraintsstrategies
. . . .
To learn about your own company
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Uses of Competitor Analysis (3)
In order to generate more successful
strategies
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1: Driven by Decisions
2: Knowledgein
• data gathering• using analysis techniques• drawing inferences• transmitting data
of• organisation• industry• analysis techniques• data sources
3: Skills
3 Requirements for good CA
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Identifying CompetitorsWHO ARE OUR COMPETITORS?
All those firms that compete in the same market as we do.
Marketing Myopia (Levitt)
Kodak vs Fuji vs filmless camerasUnilever vs P&G vs ultrasound washing machines
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Identifying Competitors 1LEVELS OF COMPETITION
Brand competition
Industry competition
Form competition
Generic competition
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Levels of CompetitionROVER’S COMPETITORS:Ford and Vauxhall
but not Skoda or Mercedes
All car manufacturersAll manufacturers of personal transportationAll major consumer spending opportunities
(eg foreign holidays, home improvement, MBA courses?)
Parker Pen
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Identifying Competitors 2WHO ARE OUR
current “Direct” competitors?potential “Direct” competitors?current Substitute competitors?potential Substitute competitors?
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Identifying Competitors 2WHO ARE OUR
current “Direct” competitors?
potential “Direct” competitors?
current Substitute competitors?
potential Substitute competitors?
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Identifying Competitors 4TWO APPROACHES:
The INDUSTRY
The MARKET
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The INDUSTRY ConceptAN INDUSTRY IS ...
a group of firms producing products that are close substitutes for each other
(Michael Porter)
Price of X
Demandfor Y
Eg. Vauxhall vs Ford
Substitutes are products that have high cross-
elasticities of demand
a2a1
b1b2
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The INDUSTRY ConceptNumber of sellers and degree of differentiationEntry barriersExit barriersCost structuresVertical integrationGlobal reach
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The MARKET Concept Instead of looking at companies that make the same product, look at companies that satisfy the same customer need
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The MARKET ConceptRefine by market segment:
by end-customerby distribution channelby geographyby technology
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Identifying Competitors 5
Identifying competitors by linking
industry and market analysis through
mapping the
Product/Market Battlefield.
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The market for toothpaste
Product/Market Battlefieldfor toothpaste
Plain toothpaste
Toothpaste with fluoride
Gel
Colgate Colgate Colgate
Colgate Colgate Colgate
Colgate Colgate Colgate
P&G P&G P&G
P&G P&G P&G
P&G P&G P&GLever Bros Lever Bros Lever Bros
Striped Beecham BeechamSmoker's toothpaste Topol Topol
Children 19-35 36+
Customer segmentation by age group
Prod
uct
segm
enta
tion
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Identifying Competitors’ Strategies
Strategic mapping:construct a series of two-dimensional maps
where the axes are key strategic dimensions:plot your company and your competitors
Quality
RangePrice
Qualityx
xy
z
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Identifying Competitors’ Strategies
Differen-tiation
CostLeader-
ship
Focus
Industry-wide
Single segment
(Porter)
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Identifying Competitors’ Strategies
Who are they Targeting?What is their Positioning?How do they differentiate their product?4Ps/7Psetc
Strategic profiling: summarise the apparent strategy of each key competitor in tables:
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Determining Competitors’ ObjectivesWhat is the competitor trying to achieve?
Profit Maximisation
High price rel. costLow investment
Low price rel. costHigh investment
Short Term Long Term?
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Possible Competitors’ ObjectivesCurrent profitsCash-flowLong Term profits through
market-share growthtechnological leadershipservice leadershipquality leadership
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Assessing their strengths and weaknesses
SalesMarket shareProfit marginROICash flowNew investmentCapacity utilisationMarketing mixEtc
Gather data on:
Desk research (2ry data)Primary marketing research
• customers• suppliers• dealers
Observation
Sources of Data:
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Estimating C’s Reaction StyleThe Laid Back Competitor
no quick or strong reaction, because:
feels customers are loyalmilking the businessslow to noticelacks funds to react
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Estimating C’s Reaction StyleThe Selective Competitor
Reacts only to certain types of attack, eg
price cuts. Reacts swiftly to demonstrate that
this particular strategy is futile, and will not
be tolerated.
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Estimating C’s Reaction StyleThe Tiger Competitor
Reacts swiftly and strongly to any encroachment on its territory.
E.g. P&G will not allow any new detergent to come easily onto the market.
Canada Dry
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Estimating C’s Reaction Style
No predictablereaction pattern
The Stochastic Competitor
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Whom to attack/avoid?Strong vs. Weak competitors
Levitt:
“If thinking is an intellectual response to a problem, then the
absence of a problem leads to the absence of thinking”
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• Close vs. Distantif you destroy your close competitors you
may open the way for tougher competition –
e.g.. Bausch & Lomb forced their competitors to sell out to Revlon and J&J
Whom to attack/avoid?
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Good vs. Bad
good competitors “play by the rules”:
prices, accept general level of share & profits
Support these & attack the bad
competitors, who price below cost to buy share
rather than earn it
E.g. For IBM, Cray is good, Fujitsu is bad(Kotler)
Whom to attack/avoid?
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Competitor vs Customer OrientationCustomer centred
CompetitorCentred
No Yes
No
Yes
Product/ProductionOrientation
CompetitorOrientation
CustomerOrientation
MarketOrientation
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CompetitorCompetitor vs Customer OrientationCompetitor W is going all out to crush us in France
We will withdraw from France because we cannot afford to fight this battle
Competitor X is improving distribution in Germany, and hurting our salesWe will increase advertising in Germany
Competitor Y has cut its price in ManchesterWe will meet competitor Y’s price in Manchester
-- -- -- REACTIVEREACTIVE
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Competitor vs CustomerCustomer OrientationThe quality-sensitive segment is growing
We will improve quality, and emphasise it in our advertising
The deal-prone customer segment is growing fast, but these customers are not loyalWe will avoid cutting prices & making deals because we do not want the type of customer who buys in this way.
ProPro--ActiveActive
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Market OrientationThe two principal threats facing any marketing organisation:
Someone will “steal” your customersCustomers will no longer need your goods/services
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Market Orientation
Need to keep track of both of these elements, need to find and maintain correct balance:
the MarketMarket orientation