Competitor Analysis
Professor Chip Besio
Cox School of Business
Southern Methodist University
Review of the Marketing
Concept
Focus on needs and wants
customer
Orient activities of firm to
satisfy these needs
Achieve long-term firm goals
through customer satisfaction
The Marketing Concept and
Competition
Satisfaction of consumer needs implies that
... the firm must satisfy the needs of target customers better
than its competitors in order to be successful
Competitive Advantage
Customer vs. Competitor
Orientation
No
Yes
No
Product
Orientation
Customer
Orientation
Yes
Competitor-Centered
Customer-Centered
Competitor
Orientation
Market
Orientation
Competitor Analysis Process
Identifying Competitors
Assessing Competitors
Determining Objectives
Identifying Strategies
Assessing Strengths and
Weaknesses
Estimating Reaction
Patterns
Selecting Competitors to
Attack and to Avoid
Source: Prentice Hall
Identify and Assess the
Competition
I. Consider share of the target market and
market share growth
II. Side-by-side comparison against key
competitors
Emphasize relative standings
III. Benchmark against the best
Assess the Competition
STRATEGY
What is strategy? Activities across functions that
result in delivering superior value
What is value? Perceived benefits – Costs
What is a competitor’s core value proposition
for the customer?
Lowest customer costs (over time / for the same product or
service)?
Best performing product or service?
Most complete solution to customer’s wants and needs?
Assessing Competitors
SOURCES OF VALUE *
Operational
Excellence
Operational
Competence
Product
Differentiation
Customer
Responsiveness
Customer
Intimacy
Performance
Superiority
* Adapted from CSC Index
Sources of Value
OPERATIONAL EXCELLENCE
Strengths
Low price
Basic service convenience and reliability
Response to service problems
Weaknesses
Limited product variety
Less flexibility
Product is usually not state-of-the-art
Sources of Value
OPERATIONAL EXCELLENCE
Strategies: Price or convenience leadership
Examples: (Henry Ford), Price/Costco, Dell
computer, GE appliances, Wal-Mart
Execution:
Commitment to consistent, everyday low price
Reliable service
Often exploits process technologies
Sources of Value
PERFORMANCE SUPERIORITY
Strengths
Best products on the market
Innovative processes and/or products
Leads in new product technology, features
Weaknesses
High price
Low service response
Not as responsive to differences across individual
needs
Sources of Value
PERFORMANCE SUPERIORITY
Strategies: Offer leading-edge products and
services that define state-of-the-art or
enhance a customer’s use or application
Examples: Lexus, Apple, Microsoft, Sony
Execution: Focus on R&D in order to
develop products with better performance
Sources of Value
CUSTOMER INTIMACY
Strengths
Expert at identifying and satisfying customer
needs
Tailored/customized products/ service
Personalized communication
Weaknesses
Not usually an innovator, but a quick follower
Somewhat higher prices
Often serve smaller markets
Sources of Value
CUSTOMER INTIMACY
Strategies: Micromarketing; continually
surprising the customer with customized
products and services to fit an increasing finer
def’n. of “customer”
Examples: Cable and Wireless, Levis,
Neiman Marcus, Ritz Carlton, Southwest
Airlines
Execution: Exploit detailed databases,
consumer research and extensive customer
knowledge
Sources of Value and
Competitive Advantage
Aim to achieve leadership in one value
discipline and parity in the other two
Operational excellence
Performance superiority
Customer intimacy
How do you judge success?
Assess the Competition
PERFORMANCE MEASURES
Customer satisfaction
Market share
Profitability
Customer retention
Assess the Competition
COMPETITIVE RESPONSE
What are the defensive capabilities of
competitors? What would they be expected
to do in response to our initiatives?
What are possible offensive moves of
competitors?
Example: Dell Computer Direct
Pick the battleground, if you can
SUMMARY
Performance is driven by the ability to fulfill
customer needs and wants, relative to
competition
Therefore the company must monitor both
customers and competitors
Project what competitors will do in response to
company strategies and tactics
To stay ahead, you must continue to get better!