Competitor analysis

Competitor Analysis
Dr. Gopal Thapa
Tribhuvan University

Competitor Analysis
 Competitive analysis is the assessment of the
strengths and weaknesses of competing firms
 A competitor is a firm in the market selling a
product which is perceived as substitute by buyers
 Competitor analysis is the processing of
analyzing information about competitors and their
products in order to build up a picture of where
their strengths and weaknesses lie.
 - Dictionary of Marketing
7/13/2020 Copy right reserved 2

Competitor Analysis
 Competitor analysis is second phase of external
analysis.
 The analysis should focus on the identification of
threats, opportunities, or strategic uncertainties
created by emerging or potential competitor
moves, weaknesses or strengths.
 Competitor analysis starts with identifying current
and potential competitors.
 There are two different ways of identifying current
competitors.

Competitor Analysis
 The first examines the perspective of the customer
who must take choices among competitors.
 This approach groups competitors according to the
degree they compete for a buyer’s choice.
 The second approach attempts to place
competitors in strategic groups on the basis of
their competitive strategy.

Industry Concept of Competition
 An industry is a group of firms that offers a
product or class of products that are close
substitutes for each other.
 Industries are classified as follows:
 Number of sellers and degree of differentiation
 Entry, mobility and exit barriers
 Cost structure
 Degree of vertical integration
 Degree of globalization

Number of sellers and degree of
differentiation
 Pure monopoly – regulated and unregulated
monopoly
 Oligopoly – pure oligopoly (a few companies
produce same commodity), differentiated
oligopoly (a few companies produce partially
differentiated product)
 Monopolistic competition: Many Competitors
offer differentiated product
 Pure competition – many competitors offer
undifferentiated product

Entry, mobility and exit barriers
 Entry barrier: high capital requirement,
economies of scale, patent and licensing
requirement, scarce location, raw material or
distributor and reputation requirement
 Mobility barrier: shifting to more profitable
segments
 Exit barrier: legal or moral obligation to
consumers, creditors, and employees, government
restrictions, low asset salvage value, lack of
alternative opportunities, high vertical integration,
emotional barriers7/13/2020 Copy right reserved 7

Cost structure
 Certain cost burden that shapes much of its
strategic conduct such as heavy manufacturing and
raw material cost, heavy distribution and
marketing cost.

Degree of vertical integration
 Vertical integration often lowers cost and the firm
gains a large share of value-added stream.

Degree of globalization
 Some industries are highly local ;
 others are global.
 Companies in global industries need to compete
on a global basis if they are to achieve economies
of scale and keep up with the latest advances in
technology.

Market Concept of Competition
 Using the market approach, competitors are
companies that satisfy the same customer need.
 For example, a customer who buys word
processing software really want “writing ability” –
a need that can be satisfied by pencils, pens, or
typewriter.
 The market concept of competition reveals a
broader set of actual and potential competitors.

Competitor Analysis
 Helps to avoid surprises
 Helps to gain competitive advantages
 Helps to plan better

Market Position of Competitors
Market Leader – The firm in an industry with
the largest market share.
Market Challenger – A runner up firm that is
fighting hard to increase its market share in and
industry.
Market Follower - A runner-up firm that wants
to hold its share in an industry with out rocking
the boat.
Market Nicher – A firm that serves small
segments that the other firms in an industry
overlook or ignore.7/13/2020 Copy right reserved 13

Hypothetical Market Structure
Market
Leader
40%
Market
Challenger
30%
Market
Follower
20%
Market
Nicher
10%

Market-Leader
 Most industries contain an acknowledged market
leader
 The leader has the largest market share in the
relevant product market
 Usually leads the other firms in:
• Price changes
• New product introduction
• Distribution coverage
• Promotion spending

Market-Leader
 The leader may or may not be admired or
respected
 But other firms concede its dominance
 Competitors focus on the leader as a company to
challenge, imitate or avoid.

Market Leaders
Company Product Company Product
Wall-mart retailing Coca-cola Soft drinks
General
motors
Autos Gillette Razor
blades
IBM Computers Visa Credit card
Micro soft Software Surva
Nepal
Cigarettes

Market-Leader Strategies
 They can find ways to expand total demand.
 They can protect their current market share
through good offensive and defensive actions.
 They can try to expand their market share
further, even if market size remains constant.

Expanding the Total Demand
(Market)
 New users
 New uses
 More uses

New Users
 A company can search new users among three
groups:
 Those who might use it but do not – market
penetration strategy
 Those who have never used it – new market
segment strategy
 Those who live elsewhere – geographical
expansion strategy

New Uses
 Marketers can expand markets by
discovering and promoting new uses for the
product.
 Use of computer for:
 Desk top publishing
 Entertainment
 Communication
 Use of Dettol for :
 Antiseptic
 Anti dandruff

More Usage
 Market leaders can encourage more usage by
increasing the level or quantity of consumption or
increasing the frequency of consumption.
 Eg. Glucose twice a day,
 Dabur honey twice a day etc.

Market Defense Strategy
 Position defense
 Flank defense
 Preemptive defense
 Counteroffensive defense
 Mobile defense
 Contraction defense

Expanding Market Share
 Market leaders can improve their profitability by
increasing their market share. In many markets,
small market share increases mean very large sales
increases.
 For example: in US digital camera market, one
percent increase in market share is worth $60
million, in soft drinks $340 million.


Expanding Market Share
 Generally, profitability rises with the increasing
market share. Thus, many companies have sought
expanded market shares to improve profitability.
 Gaining increased share in the served market,
however, does not automatically produce higher
profit – especially for labor-intensive service
companies that may not experience many
economies of scale.

Market Challenger Strategies
 Attack to market leader
 Attack to own size firms
 Attack to small size firms

(Broad Strategies)
 Frontal Attack
 Flank Attack
 Encirclement Attack
 By pass Attack
 Guerrilla Attack

(Specific Strategies)
 Price cuts
 Cheaper products
 Prestige products
 Product innovation
 Better service
 Distribution innovation
 Aggressive promotion

Market Follower Strategies
 Counterfeiter Strategy
 Cloner Strategy
 Imitator Strategy
 Adaptor Strategy

Market Nicher Strategy
 Customer size specialist
 Specific customer specialist
 Geographic specialist
 Product-line specialist
 Job-shop specialist
 End-use specialist

Competitor analysis

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Competitor analysis

Similar to Competitor analysis (20)

More from Tribhuvan University

More from Tribhuvan University (20)

Recently uploaded

Recently uploaded (20)

Competitor analysis