Introduction to Competitor Analysis

Both market and pro t can have two variants:

• Existing market and new market.
• Existing product and new product.
Market development involves taking an existing product to a new market.

Penetration involves taking an existing product to an existing market.

Market penetration can be geographic, demographic or psychographic.

Product development is taking a new product to an existing market.

Diversi cation is taking a new product to a new market.

Introduction to Competitor Analysis
Taking a new product to a new market is the most challenge area for
marketing.

Market penetration has lowest risk and diversi cation has highest risk.

Value Disciplines based on what type of value proposition is pursued:

• Operation excellence (Value proposition – Best total cost).
• Product leadership (Value proposition – Best product).
• Customer intimacy (Value Proposition - Best total solution).
The di erent aspects of strategy in interaction among product organizations
and competition produces detailed metrics.

Marketing Objectives
Marketing has 3 generic objectives:
• Engage in activities that perform a socially and economically useful
exchange - ideally has follow-on impact.
• Develop a marketing organization to carry out the marketing functions
and implement marketing strategies.
• Earn su cient surplus/pro t to survive and grow, taking minimum
resources and generating optimum satisfaction of people.
Marketing objectives are a subset of a company’s overall objectives.

There should be an hierarchy of objectives in an organization. First is the

organization’s overall objective. Within that there are a number of objectives
according to di erent functions.
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 Marketing objectives can be subdivided into product, place, promotion and
price objectives.

Promotion objectives can be subdivided into personal selling objectives,

advertising objectives, public relations objectives, sales promotion
objectives and publicity objectives.

Pure competition - A number of companies and none of them hold a

dominant position in the market.

Marketing Objectives
Oligopoly - A few companies are dominating the market. Others are
scattered.

Monopoly - Only one company that dominate the entire market. Their
o erings are the complete set of o erings.
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 Monopolistic competition - There is controlled competition. In state
controlled markets such as electricity or coal.

Most markets have an oligopolistic structure.

Porter’s ve forces are - Suppliers, New Entrants, Substitutes, Buyers,

Industry Competitors/Intensity of Rivalry.

Competitive Advantage - The company has a marketing mix that the target
market sees as better than a competitor’s mix.

To compete successfully a company is required to:

• Understand current competitor’s o erings.
• Anticipate competitor’s likely plans.
• Monitor e ects of changes in competition.

Marketing Objectives
Competitive strategies can carry di erent risks.
• Unrelated diversi cation is most risky.
• Market penetration is most unusual strategy.
• Market development and international growth are pro table ways of
taking advantage of current strengths.
• Trends in environment may make an opportunity more, or less
attractive.
Your pricing strategy/marketing strategy has to take into account the
external factors and internal factors simultaneously.
BCG Matrix:
• If the market growth rate is high and the relative market share is low
that is the star position (most desired).
• If the market growth rate is low and the relative market share is low
that is the dog position. (worst).
• If market growth rate is high but the relative market share is low that is
the cash cow position.
• If market growth rate is high but relative market share is low that is the
question mark position.
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 Strategy and Core Competency
Strategy - The creation of unique and valuable position involving a di erent
set of activities.

A rm has strategy when it “performs di erent activities from rivals or

performs similar activities in di erent ways.”

3 Generic Strategies
• Overall Cost Leadership.
• Di erentiation.
• Focus.
Overall Cost Leadership: As a rm you are the lowest cost provider of an
o ering (products/services). Susceptible to competitive threats.

Di erentiation: O er products that have superior/additional features that the

customers value that puts an image in the mind of the customers.

Focus: Focusing on a small set of customers and understanding them in the

best possible way. Then coming out with a product that best suits the
requirements of that customer segment.
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 Any strategy should be in line with the strategic business unit’s strategy and
the corporate strategy.

A basis for the competitive advantage of a rm lies primarily in the

application of a bundle of valuable tangible or intangible resources (and
capabilities) at the rm’s disposal.

Strategy and Core Competency

Resources: Tangible (machinery, equipment etc)/Intangible (knowledge
inside the organization).

Capabilities: Bundle of resources, speci cally an organizationally embedded

non-transferable rm-speci c resource whose purpose is to improve the
productivity of the other resources possessed by the rm.

Possessing the four characteristics valuable, rare, inimitable and non-

substitutable provides a competitive advantage to a rm.

Valuable resources - Create value for the customers.

Rare - Not common.

Inimitable - Competitors cannot easily replicate it.

Non-substitutable - other di erent types of resources cannot be functional

substitutes.

A value chain is a tool for identifying ways to create more customer value
because every rm is a synthesis of primary and support activities performed
to design, produce, market, deliver, and support to its product.

A rm delivers value to customers by performing a set of activities.

Strategy and Core Competency

Porter’s Generic Value Chain -

Primary activities:
• Inbound Logistics - raw material inside the organization.
• Operations - execute processes on inbound material and convert it to
the nished product.
• Outbound Logistics - taking the product from the manufacturing unit
to the customer’s nearest point.
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 • Marketing & Sales - creating, communicating and delivering value.
• Service - after sale service which is required for use of the product.
Support activities:
• Infrastructure.
• Human Resources Management.
• Technology Development.
• Procurement.
Each support activity supports the primary activities. The contribute in
increasing e ciency of the ve activities.

Strategy and Core Competency

5 core business processes
• Market-sensing process - You try to understand the requirements of
the customers.
• New-o ering realization process - By understanding customers’
needs you design and develop new products that cater to your
targeted customer.
• Customer acquisition process - How do you acquire customers.
• Customer relationship management process - Once a company
acquires a customer they try to manage the customer in a way that
they can retain them for a long time. Cost of retaining a customer is
less than cost of acquiring one.
• Ful lment management process - Logistics and delivery of products/
services to customer.
Core Competence: Capabilities that are critical to a business achieving
competitive advantage.

Characteristics of core competencies -

• A source of competitive advantage by a signi cant contribution to the
perceived customer value.
• Applications in a wide variety of markets.
• Di cult to imitate.

Strategy and Core Competency

Core Competencies:
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• Outsourcing and competencies - All the activities which are not part
of core competencies should be outsourced.
• Refer to special technical and production expertise.
• Distinctive capabilities refer to excellence in broader business
processes.
• Own and nurture the resources and competencies that make up the
essence of a business.