University of Washington EMBA Program
Regional 20
Marketing Management
“Competitive Analysis”
Instructor: Elizabeth Stearns
Course Structure
The Marketing Framework/Concept
Analysis
5C’s Opportunity Analysis
Marketing Strategy & Customer Strategy
Goal Setting, Segmentation, Targeting, and Positioning
Implementation/Action Plans
Marketing Mix (4 P’s)
Marketing
Research
“How Competitive Forces Shape Strategy”
Industry Forces
Suppliers
New Directly
Competitive
Entrants
Foreign
Low Priced
Different Industries
Michael Porter
Direct
The
Firm
Competitors
Buyers
Indirect
Competitors
Substitute
Products
Technologies
Competitor, Collaborator,
and Company Analysis
Competitor: Any organization whose goods
and services could provide the same
benefits to your customers
Collaborator: Any organization who assists
your own in the delivery of benefits to
your customers
Company: Your organization
Competitor, Collaborator,
and Company Analysis
Key Questions
– Who are they?
– What capabilities/skills/assets do they have?
– How can/will they go to market?
•
•
•
•
Past behavior
Strategic signals
Optimal behavior, both strategies and reactions
Mission and objectives
Might organize your thoughts in a SWOT analysis.
Competitors: Definition
• Any organization whose goods and services could satisfy
the same needs or wants of your customers
– Define competition broadly
• Actual competitors (in the market now)
• Potential competitors (may enter the market)
• Direct competitors (offer similar products or
services)
• Indirect competitors (offer substitute products or
services)
• Business units within our firm
The Broad View of the Soft
Beverage Market*
Strong
Taste
Iced Tea
& Coffee
Club
Sodas
Sports
Bottled & Drinks
Mineral
Waters
Fruit
Juices
Fruit
Flavor
Bitter Tasting
*Roger Best
Noncola
Soft Drinks
Cola
Soft Drinks
Fruit
Drinks
Sweet Tasting
Competitors: Definition
– Anticipate future competition
– Consider not only product/market competition,
but also competition between organizations
Analyzing Competitors
Objectives
Strategies
Competitor
Actions
Reaction
Patterns
©2000 Prentice Hall
Strengths &
Weaknesses
Industry Competition
• Number of Sellers - Degree of
Differentiation
• Entry, Mobility, Exit barriers
• Cost Structure
• Degree of Vertical Integration
• Degree of Globalization
©2000 Prentice Hall
Structural Determinants of Entry
•
•
•
•
•
•
Economies of Scale and Scope
Capital Requirements
Government Regulations
Technology & Patents
Threat of Competitive Retaliation
Other Market-oriented Characteristics
“A pictorial view of the
Competitive Frame…
in the minds of the customer”
USA: BEER CATEGORY MAP
Miller Lite
Amstel Light
Light
Coors Lite
Bass
Samuel Adams
Corona
Pete’s
Wicked Ale
Rolling Rock
Becks
Molson Ice
Michelob
Specialty
Budweiser
Guinness
Red Dog
Foster’s
Source: Simmons
SMM 1998
Busch
Traditional
Positioning and Perceptual Maps
• Useful to provide pictorial view of
competitive situation.
• Information revealed:
– What are the major perceptual dimensions
underlying the map?
• e.g. When customers were judging the similarities
of ten brands, what were the most important
attributes underlying their perceptual decisions?
• Subjective/subject to argument
Positioning and Perceptual Maps
• What brands are perceived as similar to others?
– Deals with issue of substitutability.
– if customer’s brand is not available, what brand is
most likely to be purchased?
– Unique Position
» Or
– Easy switching
Positioning and Perceptual Maps
• What holes exist for repositioning an old, or
new product introduction? (Point on map where
no competitive brands exist)
– Opportunity or not?
• Ideal points = Preference maps
– If customer could have any product they
wished.
Brand Development Index &
Category Development Index
(or using sales information that most
companies have!)
Brand Development Index (BDI)
Market
(1) % U.S.
Population
(2) % Brand
Sales
A
10
11
B
15
15
C
20
18
D
25
30
E
30
26
Total
100
100
BDI (2 ÷ 1) *
100
100 (Average)
Brand Development Index (BDI)
Market
(1) % U.S.
Population
(2) % Brand
Sales
BDI (2 ÷ 1) *
100
A
10
11
110
B
15
15
100
C
20
18
90
D
25
30
120
E
30
26
87
Total
100
100
100 (Average)
Brand Development Index (BDI)
Market
(1) % U.S.
Population
(2) % Brand
Sales
BDI (2 ÷ 1) *
100
A
10
11
110
B
15
15
100
C
20
18
90
D
25
30
120
E
30
26
87
Total
100
100
100 (Average)
Markets “C” & “E need support, “A”, “B”, and “D” seem OK
BDI Compared to CDI
% Sales
Index
Index
(% Sales / % Population) (BDI/CDI)
Market
%
Population
Category
Brand Category
A
10
12
11
B
15
15
15
C
20
16
18
D
25
30
30
E
30
27
26
Total
100
100
100
Brand
BDI Compared to CDI
% Sales
Index
Index
(% Sales / % Population) (BDI/CDI)
Market
%
Population
Category
Brand Category
Brand
A
10
12
11
120
110
92
B
15
15
15
100
100
100
C
20
16
18
80
90
113
D
25
30
30
120
120
100
E
30
27
26
90
87
96
Total
100
100
100
BDI Compared to CDI
% Sales
Index
Index
(% Sales / % Population) (BDI/CDI)
Market
%
Population
Category
Brand Category
Brand
A
10
12
11
120
110
92
B
15
15
15
100
100
100
C
20
16
18
80
90
113
D
25
30
30
120
120
100
E
30
27
26
90
87
96
Total
100
100
100
Consider possible different conclusions: Market “D” is only average,
“C” & “E” probably don’t need support, “A” probably does.
Differential Advantage
Differential Advantage: Definition
• A Differential Advantage is a benefit or cluster of
benefits that customers value and believe they
cannot obtain elsewhere
• (Acid test: they are willing to pay more for your
product or service)
Designing Offers for Customers
Product
Delivery
Technical
Innovation
Services
Sales
Relationship
Brand
Equity
Value
Price
Time
Effort
Risk
Cost
Offer
Differential Advantage: Shift Over Time
Psychological
Functional
Economic
• Differential advantage sustained by focusing on
functional or psychological values
• Tends to erode over time in the direction of economic
advantages
• Competition drives offers from specialty to commodity
Differential Advantage: Discussion
• The question that is answered is “do we deliver that which
our customer/prospect values”, “by what means”, and
“how well” (is it superior to our competition).
it is NOT
• “what do we do well” as a stand alone question. This
concept is difficult for companies to integrate into the
selling mode especially when they pride themselves in what
they do well and/or are considered the gold standard.
Differential Advantage: Discussion
• While a company may have excellent strengths and assets,
these are only important if they satisfy a customer need.
(this is the Marketing concept)
• Differential Advantage analysis raises the bar for
understanding what a customer needs and the
priority/importance of that need to his/her organization.
– If a company does not know this, they proceed to sell
what they do well, and not what the customer values.
Sources of Differential Advantage
Business strengths, often defined as assets and skills,
provide the basis for differential advantage.
• An asset is something a firm possesses such as a
brand name, a retail location, human capital, a
philosophy, etc., which is superior to that of
competition.
• A skill is something that a firm does better than its
competitors, such as advertising, merchandising,
efficient manufacturing, etc.
Differential Advantage Matrix
• Tool for matching a segment’s required benefits with
our organization’s ability to deliver those benefits
more effectively than competitors
1. Identify the segment for which this matrix will apply
2. List the priority-ordered benefit requirements for this
segment as the row headings in the matrix
3. List the relevant business strengths that a “generic”
organization would require to deliver these benefits as the
column headings of the matrix
Differential Advantage Matrix
• Assessment Diagnostics (presuming that this
business strength is relevant to providing this
benefit—if not leave blank or use NA)
– Do we have the capability to deliver the required
customer benefit? (1 or Y)
– Do we have significantly greater capabilities than
competitors? (1 or Y)
– Would it be difficult for competitors to match us?
(1or Y)
– (if you get to 0, or No, you stop)
Differential Advantage Matrix
• Implications
– Do we have a differential advantage, i.e.,
(1,1,1) or (Y,Y,Y)?
• If so, where, and through what strengths?
Our organization has a differential advantage
in delivering benefit X to segment Y because
of business strengths A, B, and C.
Differential Advantage Matrix
Relevant Business Strengths
Segment
ID/Description
Opportunistic, solo,
weekend leisure
travelers
Priority
Benefit
Ranking
Low out-of-pocket
1
Price allows add ons
2
3
4
5
6
1,1,1
1,0
Thank you!