Competition
• A business’s attempt to get customers in the face of other
businesses selling the same or similar products
• Forces companies to become more efficient
• Keeps prices down and quality up
Identifying Competitors
8-2
Five Forces Determining Segment
Structural Attractiveness
• Threat of intense segment rivalry—cellular phone
market
8-3
Five Forces Determining Segment
Structural Attractiveness
• Threat of new entrants—Can come from anywhere
8-4
Five Forces Determining Segment
Structural Attractiveness
• Threat of substitute products—Greyhound and
Amtrak profitability threatened by rise of air travel
8-5
Five Forces Determining Segment
Structural Attractiveness
• Threat of buyers’ growing bargaining power—
Wal-Mart buying power
8-6
Five Forces Determining Segment
Structural Attractiveness
• Threat of Suppliers’ growing bargaining power—
ExxonMobil, Shell, BP, and Chevron-Texaco are at
the mercy of oil-supplying cartels such as OPEC.
8-7
Analyzing Competitors
Share of market—target market
Share of mind--% of customers
who names companies
Share of heart--% of customers
who prefer a company
8-8
Five Forces Determining Segment
Structural Attractiveness
• Threat of intense segment rivalry—cellular phone
market
• Threat of new entrants—Can come from anywhere
• Threat of substitute products—Greyhound and
Amtrak profitability threatened by rise of air travel
• Threat of buyers’ growing bargaining power—
Wal-Mart buying power
• Threat of Suppliers’ growing bargaining power—
ExxonMobil, Shell, BP, and Chevron-Texaco are at
the mercy of oil-supplying cartels such as OPEC.
8-9
Five Forces Determining Segment
Structural Attractiveness
8-10
Price vs. Non-Price
Competition
• Price
• Established firms focus on keeping prices down
• Revenue lost to lower prices is made up through higher sales
• Non-price
• Factors such as quality service, and reputation
• Customers are willing to pay more
Who are your Competitors?
• First level
• Specific brands which are direct competitors to your product or
service, in your geographic locality
• Second level
• Competitors who offer similar products in a different business
category or who are more geographically remote
• Third level
• Competitors who compete for the “same-occasion” dollars
• Toots
• 1st Other sports bars
• 2nd Other sit down restaurants
• 3rd Fast food or convenience stores
Three Levels of Competition
1st, 2nd, 3rd Level Competitors
Chris and Ben's Bookstore
Phil ip's Bookstore
Hastings
HAS Bookstore
Corner Bookstore
Books-A-Mil ion
Lifeway Christian Shop
Barnes and Noble.com
Blue Raider Bookstore
Amazon.com
Wal-Mart
Hollywood Video
Linebaugh Public Library
Rhino Games
Electronics Boutique
CD Warehouse
Competitors
Competition Analysis
Colorado Bearcats
• 1st level competitors: Other professional sports teams
• Denver Broncos
• Denver Nuggets
• Colorado Avalanche
• 2nd level competitors: Collegiate sports and geographically remote
professional teams
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•
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•
Kansas City Chiefs
University of Colorado athletics
Air Force Academy athletics
Colorado Springs Sky Sox
• 3rd level competitors: Other businesses competing for money
• Rocky Mountain Motorcycle Museum
• Pro Rodeo Hall of Fame
• World Figure Skating Hall of Fame
Levels of Competition
WE Are
Boats
West Marine
Bass Pro
REI
Wal-Mart
Dick’s
Sporting
Goods
Academy
Sports and
Outdoors
Murfreesboro
Outdoors
Hibbett
Sports
EBay
Overtons
Boatown
ers.com
Kmart
Target
Sams Club
Boaterswor
ld.com
What Every Company Should Know
About Their Competitors
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•
•
•
Who is the price leader?
Who is the quality leader?
Who has the largest market share?
Why have certain companies recently entered or withdrawn
from the market?
Competition Analysis
• Buy your competitors’ products
• Frequent your competitors’ territory
• Read industry publications
• Don’t forget to focus on your own
business
Determine Competitors Strengths &
Weaknesses
• Why customers buy from them?
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•
•
•
•
Value
Service
Convenience
Reputation
“Perceived” or “Actual” Strengths
Competition: Common Mistakes to Avoid
• Assuming you have no competition!
• Demonstrates inexperience and minimal understanding of your
business
• Failing to identify both direct and indirect competitors
• Underestimating the power and strength of competitors
• Omitting the specific competitive advantages you hold
over your competition
• Demonstrating a lack of knowledge or strategy to combat
changing competitive conditions
• Failing to define and clarify you position, strength, and
market niche focus
Factors to Consider in Analyzing the
Competition
Product
Line
(Breadth)
Pricing
Advertising
Supplier
Advantage
Product Line
(Depth)
Financial
Resources
Employee
Morale
Sales Force
Uses of
Technology
Distribution
Advantage
Operational
Efficiency
Technology
Competence
Market Share Strengths
Weaknesses
Analyzing Consumer Perceptions of
Competitions
Quality
Product
Attributes
Reliability
Timely
Service
Friendly
Service
Knowledgeable
Staff
Convenient
Location
Store Hours
Delivery
Parking
Guarantees
Brand
Recognition
Credit
Cards
Image of
Competitor
Selection of
Products
Installation