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Marketing Strategy for Management

MKT4010

Lecture 2

Competitor Analysis

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• Knowledge Refreshment– Marketing Strategy– Process of formulating it

• Competitor Analysis– Identifying Competitors– Understanding Competitors

Lecture Outline

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The Strategic Marketing Process..

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InternalEnvironment

InternalEnvironment

Competitors

Consumers

Macro- Environment

The Industry

TheFirm

Situation Analysis

Micro-Environment

As highlighted inLecture 5

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IdentifyingCompetitors

UnderstandingCompetitors

Competitor Analysis

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Look at competitors from the customers’perspective

– Customer Choices• What would you buy if Kit-Kat was not

available?• What would be substituted for coffee if price

is increased?• What other universities have you

considered?– Product Use Associations

• Identify list of use situations or applications• Name all products appropriate for each use

Identifying Competitors –Customer Approaches

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Are:Organisations within an industry withsimilar strategic characteristics,following similar strategies or competing on similar basis

Identifying Competitors –Strategic Groups

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IdentifyFactors

Differentiating

CompetitorsDevelo

pStrategi

cMaps

Piece

Together

Strategic

Maps

Fir m

Forming Strategic Groups…

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Sources: Based on M.E. Porter, Competitive Strategy, Free Press, 1980; and J. McGee and H. Thomas, ‘Strategic groups: theory, research and taxonomy’, Strategic Management Journal, vol. 7, no. 2 (1986), pp. 141–160.

Factors Differentiating Among Competitors …

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Services

Extent of Ro ute Sy stem

Broad

Narrow

Basic Many Added

GermanwingsBmibabyflybe

EasyjetRyanair

Aer LingusVirgin

Express

Example Strategic Map: Budget Airlines

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Are:– Factors which impede the ability of firms

to enter or exit an industryInclude:

– Entry Barriers• Cost Advantage• Product Differentiation• Capital Requirements• Customer Switching costs• Access to distribution Channels

– Exit Barriers• Specialised Assets• Fixed Costs• Government Policy

Strategic Groups:Mobility Barriers

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Assesscompetitors’current and

futureobjectives

Assesscompetitors’

currentstrategy

Assesscompetitors’capabilities

profile

Predict competitors’ futurestrategies

Components of Competitor Analysis

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Assesscompetitors’current and

futureobjectives

Ø What are they trying to achieve?Ø Why are they trying to achieve it?Ø Are they satisfied with their

achievements?

Key Indicators:

Stated goals Market assumptionsOwnership Investment priorities

Competitor Objectives…

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Comp

etitor

Challenger

FrontalAttach

Comp

etitor

FlankingAttack

Challenger

Competitor

Challenger

EncirclementAttack

Objective: Build Market Share…

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Purpose Choice:

Size: US$ 3bn Growth:+10% p.a (lower in UK butlarger market) Share:Kellogg’s 50-60% Head-on

againstKelloggs

Flankingvia

Segment

Totally newbreakfast

formatCP Resources: Brandname, Grocerynetworking, Uniqueproduct range, Low costmanufacture, Own label

’20%MarketShare’

Chosen strategies:1.Concentrate resources2.Econs of scale3.Tackle country-by-country

4.Kelloggs flanking attack viaproduct innovation

5.Acquire in UK

Example - European Breakfast Cereals:Cereal Partners

1990: buy Shredded Wheat, UK

1991-96: extend UK range

1991: launch France , Spain, Portugal

1992: launch Italy

1993: launch Germany etc

Environment:

Resources:

Purpose:

Implementation:

Options:

Options:

Options:

Lynch (2003) Corporate Strategy 3/ed

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Assesscompetitors’current

strategies

Ø What market targets are they pursuing?Ø What is their strategic focus?Ø What marketing mix do they use?Ø

How do they organise their marketing?

Key Indicators:Advertising media and messages Price levels charged

New product introduction rates Distribution channels used

Recruitment advertisements

Competitor Strategies…

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Assesscompetitors’capabilities

profile

Ø Marketing culture?Ø Marketing assets and competences?Ø Production and operation competencies?Ø Financial resources?Ø Human Resources?

Key Indicators:

Customer relationship strength Product availability New product success rates Promotional expenditure

Quality of the people

Competitor Capabilities…

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Porter’s Value Chain

SupportActivities

PrimaryActivities

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

InboundLogistics

Operat-ions

Out-boundLogis-tics

Market-ing &Sales

Service

MARGIN

M A R G I N

Value added defined as the market value of

its output minus the costs of its inputs

The Value Chain of an organisation…

Competitor Capabilities…

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• Importance of Competitor Analysis• Competitor identification• Competitor Analysis

– Strategies– Objectives– Capabilities

•

Summary