i) Identifying competitors — who are my competitors and how many are they?
Their moves can easily be monitored and a marketing defense prepared. The danger is from emerging competitors and their numbers, e.g.
(a) Coca Cola greatest threat is not Pepsi Cola but proposed tablets that can be taken to quench thirst. It also sees tap water, tea, coffee, milk, uji, and e.t.c. as the greatest threats to their survival.
b) Eastman Kodak worried by Fuji (Japanese film maker) — the greatest threat to Kodak is the recent invention of a film-less camera by Canon and Sony.
(c) Unilever — greatest threat is not other detergent manufacturers but the ultrasonic washing machine that would wash clothes in water with little or no detergent. Currently, it can wash certain kinds of fabrics. -
ii) What are the competitor’s goals and objectives?
This involves determining the competitors’ goals and objectives. The question is what is each competitor seeking in the market place? What drives each competitor’s beliefs? The assumption here is that many competitors strive to maximize their profits. The difference is the weights companies put on short-term versus long-term profits. Alternatively we can assume that competitors pursue a mix of objectives, i.e. profitability, market share growth, cash flow, technological leadership, service leadership, e.t.c. The important thing is to know how a
competitor weighs each objective as this can help companies figure out how they are likely to react to different types of competitive attacks, e.g. competitors pursuing low-cost leadership will react more strongly to a competitor who has reduced cost significantly, e.g. US firms have short- run profit maximization as their objective. Japanese firms have market share maximization and borrow from banks at low interests.
iii) What are the competitors’ strategies?
This involves identifying competitors’ strategies among those competing in the same target market with the same strategy. A strategic group is the same group of firms following the same market with the same strategy. Firms can differ in a number of dimensions, quality, cost structure, advertisements on services, price policy etc.
Competition is intense within a strategic group but rivalry between the groups exists as well. A strategic group may appeal to overlapping customer groups. Therefore, companies need detailed information about its competition, business, marketing, research and development, financial, human resource strategies, pricing policy, distribution, advertising, e.t.c.
Competitor’s strategies must be monitored overtime. Example: Motor Vehicle Industry. Ford was the first winner because it produced vehicles at low cost. GM surpassed Ford because they responded to the market conditions with a variety of vehicles. Later Japanese companies took the lead because they supplied vehicles with fuel economy. Japanese moved to producing cars with high reliability when US Auto Industry caught up in quality, Japanese shifted to sensory quality, e.g. the look, the feel of the car and its various components and attributes/benefits, i.e. speed of the window up and down and the feel of a climate control knob.
iv) What are the competitor’s strengths and weaknesses?
The success of competitors in carrying out their strategies and reaching their goals depends on their resources and capabilities. It is important to identify the competitors’ strengths and weakness by gathering information on each competitor’s business, i.e. data on sales levels, market share, profit margin, return on investment and utilization of resources, e.t.c. The information can be gathered from secondary data sources, personal experiences, and hearsay or even by conducting primary research. The information will help the company to decide on whom to attack and how to attack. Mostly weak companies should be targeted and companies point of weakness.
Competitors can be analyzed on basis of three variables:
(a) Share of Market — competitors share of the target market.
(b) Share of Mind — Percentage of customer who named the competitors as the first in their mind in that industry.
(c) Share of Heart — Percentage of customer who would prefer to buy the competitors products.
In searching for competitors’ weaknesses, marketers should identify any assumption they make about their business, i.e. some companies believe they make the best quality (complacency). Others subscribe to the conventional wisdom like “the sales force is the only important marketing tool”, “Customer value service than price.” Marketers therefore can advantage of companies operating in the market pursuing such poor assumptions.
v) Competitors’ reactions and responses
This can be predicted from the company’s philosophy of doing business, the internal culture, and the guiding beliefs. One needs a deep understanding of the competitor’s mind—set so as to anticipate their likely reactions.
Titany answered the question on October 6, 2021 at 12:40