Competitor analysis

Analyzing competition and co-opetition in the market

Strategic Marketing
Term VI (MBA-BM 2023-25)

Prof. Nirali Shah

E-mail: [email protected]
“If you know your strength, it never becomes a weakness.

If the market knows your strength,…

it becomes a weakness.”

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“The ability to learn faster than your competitors may be

the only sustainable competitive advantage.”

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 “Induce your competitors

not to invest in those products, markets, and services

where you expect to invest the most…

that is fundamental rule of strategy.”

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 Competitive behavior

Conflict

Competition Collusion
Competitive
behavior

Coexistence Cooperation

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 Competitive behavior
Aggressively strives to push its
competitors out of the market
Conflict
Doing better, faster than competitors Mutually coordinate to impede
competition in the market

Competition Collusion
Competitive
behavior

Coexistence Cooperation
If it is unable to define a boundary of its market,
Join hands to overcome major problems and jointly
if it wrongly assess the market segment of the potential competitors,
benefit from new opportunities in the market
if it tries to acknowledge the boundary of its competitors 6
 Competitive analysis

• Define business

• Identify competitors

• Assess drivers of competitive forces

• Analyze future changes in the industry/market/sector

• Identify key aspects of market/industry/sector structure

• Evaluate the competitors

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 Identifying competitors:
Questions to structure competitor analysis
• Against whom do we usually compete? Who are our most intense competitors?
Who are our less intense but still serious competitors? Who amongst them are
makers or substitutes?

• Can these competitors be grouped into strategic groups on the basis of their
assets, resources, competencies, and/or strategies?

• Who are the potential competitive entrants? Are there any barriers to entry? Is
there anything that can be done to discourage their entry?

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 Identifying competitors

• Current competitors
• From the market perspective
• Brand-use or product-use association
• Indirect competitors
• From the industry structure perspective
• Strategic groups

• Potential competitors

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 Identifying competitors: Current competitors
• A strategic group is a set of firms that
• Over time pursue similar competitive strategies
• Has similar characteristics
• Has similar assets and competencies

• Member of strategic group faces

• Mobility barrier
• Entry barrier
• Exit barrier

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 Identifying competitors: Current competitors
Threat of
potential
entrants

Industry competitors
Bargaining Bargaining
=================
power of power of
Rivalry among existing
suppliers buyers
firms

Threat of
substitute
products
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 Identifying competitors: Potential competitors

• Entrants that might engage in retaliatory or defensive strategies

• Market expansion
• Product expansion
• Backward integration
• Forward integration
• Acquiring assets or competencies

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 Identifying competitors: Potential competitors

Products
Existing products New products
Existing Market penetration strategies Product-development strategies
markets • Increase market share • Product improvements
• Increase product usage • Product-line extension
• New products for same market

New Market development strategies Diversification strategies

Markets
markets • Vertical integration (backward & forward)
• Organizational relationships or networks

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 Selecting competitors to attack or to avoid

• Customer value analysis

▪ Identify the major attributes customers value
▪ Assess the quantitative importance of the different attributes
▪ Assess the company’s and competitors’ performances on the different customer
values against their rated importance
▪ Examine how customers in a specific segment rate the company’s performance
against a specific major competitor on an attribute-by-attribute basis
▪ Monitor customer values over time

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 Selecting competitors to attack or to avoid

• Classes of competitors
• Strong versus weak
• Assets and resources
• Close versus distant
• Industry classification
• Need satisfaction / solution provider
• Good versus bad
• Rules of the game

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 Competitive advantage

• Being better
• Being faster
• Being closer Strategic advantage
Uniqueness
Low cost
perceived by
position
the customer
Industry-wide Overall cost
Differentiation
(broad) leadership
Strategic
target Segment-wise
Focus
(narrow)
Porter’s generic strategies 17
 Domains of attractive opportunities
Market domains Industry domains

Market Industry
attractiveness attractiveness
Competitive
level Ability to
Mission, execute on
aspiration Team critical
and risk pedynamics
equation success
propensity factors
Connectedness
Company up, down & across
level Target segment value chain
benefits and Sustainable
attractiveness advantage
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 Understanding competitors

Size, growth Image &

Objective &
& profitability positioning
commitment

Strengths & Current &

Competitor’s
weaknesses past
actions
strategies

Organizational
Barriers Cost structure
culture
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 Key drivers that shape competition

Drivers Parameters Company A Company B Company C

Economies of scale
Economies of scope
Network effects
Capital requirements
Switching costs
Point of differentiation
Distribution channel
Substitutes
Technology
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 Key drivers that shape competition

Drivers Parameters Company A Company B Company C

Economies of scale
Economies of scope
Network effects Strong /weak
Capital requirements High / low
Switching costs High / low
Point of differentiation Differentiated / undifferentiated
Distribution channel
Substitutes Available / not
Technology
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 Analyzing competitor’s strengths and weaknesses

• What businesses have been successful over time? What assets or competencies
have contributed to their success?
• What business have had chronically low performance? Why? What assets or
competencies do they lack?
• What are the key customer motivations? What is needed to be preferred? What is
needed to be considered?
• What assets and competencies represent industry mobility (entry and exit) barriers?
• What are the significant value-added components in the value chain?

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 Analyzing competitor’s strengths and weaknesses

Critical value-
Industry mobility
added
barriers
components

Relevant assets
& competencies

Drivers of
Customer
business success
motivations
or failures
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 Analyzing competitor’s strengths and weaknesses

• Analyze their resources and capabilities

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 Flow chart to determine strategic significance of strengths & weaknesses

How does firm’s strength compare to accepted standard of excellence?

Favorable Unfavorable

Strengths Weaknesses

Can strengths be transferred to other How does the firm’s strengths – weaknesses
endeavors? compare to its competitor /industry / strategic group?

No Yes Provides edge Presence of necessary Absence of

(Core (Distinctive (Competitive skills necessary Skills
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competence) competence) advantage) (Business requirement) (Key vulnerability)
 Checklist of strengths and weaknesses

• Innovation
• Marketing
• Finance
• Customer base
• Management
• Operations

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 Competitive strength grid
Assets and competencies Your company Competitor A Competitor B Competitor C
Key for success

Secondary importance

3-point scale:
1=less than average
2=average 3=above

average
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 Competitive position in the market

• Dominant

• Strong

• Favorable

• Tenable

• Weak

• Nonviable

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 Competitive position in the market

• Dominant – controls the behavior of the other competitors and has wide choice of
strategic options
• Strong – can take independent action without endangering its long-term position
regardless of competitors’ actions
• Favorable – has an exploitable strength and more-than-average opportunity to
improve its position
• Tenable – performs at a sufficiently satisfactory level to warrant continuing in business
• Weak – has unsatisfactory performance, but an opportunity exists for improvement
• Nonviable – has unsatisfactory performance and no opportunity for improvement

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 Competitive position in the market

Independent Control other’s Availability of Opportunity for

action behavior strategic options improvement
Dominant

Strong

Favorable

Tenable

Weak

Nonviable
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 Variable to analyze the competitors

• Market share
• Mind share • Voice share
• Heart share
• Wallet share

• Are there any connection among mind share, heart share and market share?
Studies reveal that
• Companies that make steady gains in mind share and heart share will inevitably make
gains in market share and profitability.

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Marketing principle / Myth

All competitors react

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 Estimating the competitor’s reaction patterns

• Identify the competitors’ philosophy of doing business, internal culture and

guiding beliefs

• Type of competitors and their reaction pattern

1. The laid-back competitor
2. The selective competitor
3. The tiger competitor
4. The stochastic competitor

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 Type of competitors and their reaction pattern

• The laid-back competitor: a competitor that does not react quickly and strongly to
a rival’s move

• The selective competitor: a competitor that reacts only to certain types of attacks.

• The tiger competitor: a competitor that reacts swiftly and strongly to any assault.

• The stochastic competitor: a competitor that does not exhibit a predictable

reaction pattern

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 What makes the organization competitive?

• Out-think and out-perform the competition

• Proactive, offensive actions

▪ Reduce decisions uncertainty
▪ Spot new threats
▪ Monitor competitive initiating
▪ Exploit competitor’s vulnerability
▪ Be flexible to quickly respond even during uncertainty

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 Developing competitive marketing strategies

Attack strategies Defense strategies

• Frontal attack • Position defense
• Flanking • Flanking
• Encirclement • Mobile defense
• Bypass • Counter offensive
• Guerilla • Pre-emptive defense

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