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Marketing Intelligence - Competitor Analysis

Lesson for the HDN Business program at Prague College
by

Belinda Filippelli

on 4 February 2012

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Transcript of Marketing Intelligence - Competitor Analysis

Competitor Analysis and Sources of Advantage What forces affect a firm’s competitive advantage? Competitive Position
and Profitability Industry
Forces Competitor
Benchmarking Competitive
Advantage Market Entry/Exit
Buyer/Supplier Power
Substitutes/Rivalry Competitor Intelligence
Competitor Analysis
Competitive Benchmarking Cost Advantage
Differentiation Advantage
Market Advantage Determine the attractiveness of the competitive environment.

Developing a strong competitive advantage in an unattractive market can lessen profitabilty. 1. Barriers to Entry
2. Barriers to Exit
3. Customer Buying Power
4. Supplier Selling Power
5. Substitutes
6. Competitive Rivalry To understand the degree to which a business has a position of competitive advantage, we need to engage in a detailed analysis.

While we want to maintain a broad market definition to include all meaningful substitutes, it's often not realistic to conduct a detailed analysis of every competitor. Competitive Position Sources of Competitive Advantage Profit Impact of Cost Advantage Profit Impact of
Differentiation Advantage How do firms achieve these advantages?
– Marketing Expertise, Training, and Knowledge
– Strong Distribution System Knowledge is a Source of Advantage Frontal Attack Strategy When a business directly challenges a competitor in a battle for market share.

Usually done through Price or Marketing/Advertising Battles

Win/Lose proposition Oblique Strategy An oblique strategy is an indirect attack on a competitor's position in order to win market share with minimal expenses product inovations
improved product and/or service quality
innovative marketing programs
lowered costs of acquiring
new marketing channels
more efficient supply-chain customer benefits Competition and Competitive Position Low
High
High
High
Many
Intense High
Low
Low
Low
None
None Unfavorable Favorable Prisoner's Dilemma Industry Analysis Benchmark Competitors Perceptual Mapping
Evaluate the degree to which your customers consider your competitors to be interchangeable
Customers can rate each competitor on the basis on how far apart that competitor is from their ideal product or supplier
Used to capture customer perceptoinms of competing or services Competing Alternatives Degree of Perceived Differentiation Mercedes-Volvo
Mercedes-Lincoln
Mercedes-Honda
Mercedes-Buick
Mercedes-BMW
Mercedes-Ideal A
Mercedes-Ideal B
Volvo-Lincoln
Volvo-BMW
Volvo-Buick
Volvo-Honda
Volvo-Ideal A
Volvo-Ideal B
Lincoln-BMW
Lincoln-Buick
Lincoln-Ideal A
Lincoln-Ideal B
BMW-Honda
BMW-Buick
BMW-Ideal A
BMW-Ideal B
Buick-Honda
Buick-Ideal A
Buick-Ideal B
Honda-Ideal A
Honda-Ideal B 0 1 2 3 4 5 6 7 8 9 10
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0 1 2 3 4 5 6 7 8 9 10 Perceptual Map Dimension II Dimension I +10 +10 BWM Mercedes Lincoln Volvo Honda Buick Ideal Car A -10 -10 Ideal Car B Once a business identifies which competitors it should benchmark, the business now has to engage in a more detailed analysis of these competitors.

It's difficult to conduct, done periodically

Market-based businesses with a strong market orientation are gathering competitor intelligence all the time Competitor Analysis Competitor Intelligence Publicly available:
Dealers/Distributors
Trade/Business Press
Industry Consultants
Trade Shows
Financial Reports
Industry Reports
Government documents
Customers Behavior - Signs
Laying off employees or closing plants/offices
Taking on more debt
Tightening terms of payment conditions
Cutting investment in R&D
Changing advertising and/or agencies often
Frequently cutting prices
Frequent new product failures Competitive Benchmarking Sometimes a business needs to go outside its industry to benchmark a business known to be superior in a particular business process. Application Exercises:
Marketing Performance Tools http://www.rogerjbest.com/mbm4/nav.cfm?A=P&C=6&P=1 Improved production line change time from one Betty Crocker product to another from 4.5 hours to just 12 minutes Improve its own teamwork, helping to cut cereal production costs by 25% Watched the way that Stealth bomber pilots and maintenance crews cooperated Observed how a NASCAR pit crew was able to work with blinding speed simply through better organization Case Study SWOT Analysis (done in class) many products, large product differential
85% of the market share
high brand awareness (95% household)
all under one brand, low adv/mkt costs
environment friendly
affordable pricing (due to low costs)
150 years experience - history
50% of shares owned by descendents of co-founders marketing people they hired, unsuccessful in pushing to consumer field
new brands - ppl dont know the company, no experience with new brands, need to differenciate with different brands
long history, not innovative (maybe)
not able to expand internationally
management turnover
financially having trouble, advertising budget expand into international markets
environmental possibilities, pollution and water quality control
can move into circuit board cleaning and paint removal
diversification of product line to include related consumer products as well as other brand names.
medical/pharmacuetical opportunities
sodium bicarbonate opportunities to supply to other industries/companies competition, many different high competitive markets
operate in many mature markets with limited growth potential
potential backlash from competitors when entering new consumer markets
potential customer confusion through overuse of the family branding which could eventually weaken brand name Potential Strategies they could Pursue Continue to follow with family branding line extension to introduce new products
Expand the limited advertising program for current niche market products to retain and gain market share
Promote products with A&H branding as environmentally safe
Direct resources to testing and developing new brands to lessen dependence on the A&H brand due to the possibility of loss of its present customer appeal.
Since they are competing in mature markets with limited growth potential, tap the opportunities available through the environmental safety of its chemical products
explore opportunity of joint ventures with foreign companies in order to succeed in foreign markets
generate new chemical product applications requiring minimal promotional support while offering opportunties for rapid sales growth The Process of inditifying major competitors, assessing their objectives, strategies, strengths, and weaknesses, and selecting which competitors to attack or avoid Whether a company is a market leader, challenger, follower, or nicher, it must watch its competitors closely and find the competitive marketing strategy that positions it most effectively. And it must continually adapt its strategies to the fast-changing competitive environment.

This question now arises: Can the company spend too much time and energy tracking competitors, damaging its customer orientation? The answer is yes! A company can become so competitor centered that it loses its even more important focus on maintaining profitable customer relationships. A competitor-centered company is one that spends most of its time tracking competitors' moves and market shares and trying to find strategies to counter them.

Pros:
the company develops a fighter orientation
trains its marketers to be on a constant alert, watching for weaknesses in their own position and searching out competitors' weaknesses
Cons:
the company becomes too reactive
Rather than carrying out its own customer relationship strategy, it bases its own moves on competitors' moves.
As a result, because so much depends on what the competitors do, the company does not move in a planned direction toward a goal
it may end up simply matching or extending industry practices rather than seeking innovative new ways to bring more value to customers. A customer-centered company, by contrast, focuses more on customer developments in designing its strategies.
Clearly, the customer-centered company is in a better position to identify new opportunities and set long-run strategies that make sense.
By watching customer needs evolve, it can decide what customer groups and what emerging needs are the most important to serve, then concentrate its resources on delivering superior value to target customers.
In practice, today's companies must be market-centered companies, watching both their customers and their competitors.
But they must not let competitor watching blind them to customer focusing. In 2008, FiOS launched a campaign featuring a handsome, sharp-witted FiOS installer and a "bumbling" cable installer. In a series of spots FiOS was aggressively positioned as a superior product at a better value, while repositioning cable companies as inferior and unable to keep up. This frontal attack could not go unchallenged, especially as it was filled with partial truths and unsupported assertions. Optimum decided to counter-attack and had one objective: To debunk the myth that FiOS is superior to Optimum. They wanted to show that Optimum has best in class products, is in-fact a better value than FiOS, and has millions more satisfied customers. So they created a campaign featuring their own version of a FiOS installer. Only this time he would be accompanied by his mom who would keep him honest. They even cast their FiOS guy to look like the original FiOS guy. The result: a likeable and extremely effective campaign that sets the record straight about FiOS. Including the fact that over 40% of Optimum customers who try FiOS switch back to Optimum.

Interestingly, their FiOS installer campaign has stopped running.
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