Amity Business School

PBM
Module 1
Competitor Analysis
Competitor Analysis System Amity Business School

Secondary data Primary data

Key questions:
- Who are they?
- What are the competing
product features?
- What do they want?
- What is their current
strategy?

Differential competitor
advantage analysis i.e. Who has
the competitive product
advantage?

What are they going to do?

 Secondary Sources of Competitor
Information Amity Business School

Customer Internal
Communications Sources Local
Consultants Newspapers

Annual
Trade Press Reports

Patent
Internet Secondary data Filings

Promotional 10Ks
Literature

Business
Trade
Press
Associations
News Electronic Government
Releases Databases
Primary Sources of Competitor
Information Amity Business School

Investment
Bankers
Consultants/
Specialized
Firms Sales Force

Primary
Data

Suppliers
Employees

Customers
Other Sources of Competitor
Information Amity Business School

Help-Wanted
Advertisements
Hiring Key
Employees Trade Shows

Primary
Data

Monitoring Plant Tours

Test Markets

Reverse
Engineering
 Sources with Ethical
Considerations Amity Business School

• Aerial reconnaissance
• Buying/stealing trash
• Bribing printers
• Running phony want ads
• Snooping on airplanes
Product Features Matrix Amity Business School
 Assessing Competitors’ Strategies
Amity Business School

• Marketing strategy
–Comparing value chains
–Marketing mix
• Pricing
• Promotion
• Distribution
• Product/Service capabilities
 Value Chain Amity Business School

Firm Infrastructure

Margi
Support Human Resource Management
Activities Technology Development

n
Procurement

Inbound Marketin

Margin
Operations Outbound
Logistics g and Service
Logistics
Sales

Primary Activities
 Criteria to Assess Technological
Strategy Amity Business School

1. Technology selection or specialization

2. Level of competence
3. Sources of capability: internal versus external
4. R&D investment level
5. Competitive timing: initiate versus respond
6. R&D organization and policies
Competitor Information to Collect Amity Business School

• Ability to conceive and design

• Ability to produce
• Ability to market
• Ability to finance
• Ability to manage
Differential Competitor Advantage Analysis
Amity Business School
A Competitive Conjecture Process Amity Business School

Customer
First period response

Our unit sales Our profit

Their expected
price
Our
We lower our total
price outcome
Their price
reaction

Our unit sales Our profit

Customer
Second period response
Should we cut price?
 Amity Business School

Customer Analysis
 What We Need to Know
about Current and Potential Customers
Amity Business School

• Who buys and uses the product

• What customers buy and how they use it
• Where customers buy
• When customers buy
Who Buys and Uses the Products Amity Business School

• Initiator -who identifies the need for product

• Influencer -who has informational or
preference input to the decision
•
Buying Roles and Needs/Benefits
Sought Amity Business School
Categories for Describing Consumers Amity Business School

1. Demographic
2. Socioeconomic
3. Personality
4. Psychographics and values
Major Segmentation Variables for
Consumer Markets Amity Business School
Major Segmentation Variables for
Consumer Markets (cont.) Amity Business School
Major Segmentation Variables for
Consumer Markets (cont.) Amity Business School
Lifestyle Typologies Amity Business School
 List of Values Amity Business School

1. Self-respect
2. Security
3. Warm relationship with others
4. Sense of Accomplishment
5. Self-fulfillment
6. Sense of belonging
7. Respect from others
8. Fun and enjoyment
9. Excitement
 Amity Business School

Major Segmentation Variables

for Business Markets

• Demographic
• Operating variables
• Purchasing approaches
• Situational factors
• Personal characteristics
 Amity Business School

Major Segmentation Variables

for Business Markets: Demographic
• Industry:
– Which industries should we focus on?
• Company size:
– What size companies should we focus on?
• Location:
– What geographic areas should we focus
on?
 Amity Business School
Major Segmentation Variables
for Business Markets: Operating
Variables
• Technology:
– What customer technologies should we
focus on?
• User/Nonuser status:
– Should we focus on heavy, medium, light
users or nonusers?
• Customer capabilities:
– Should we focus on customers needing
many or few services?
 Major Segmentation Variables
for Business Markets: PurchasingAmity Business School
Approaches
• Purchasing-function organizations:
– Should we focus on companies with highly centralized or
decentralized purchasing organizations?
• Power structure:
– Should we focus on companies that are engineering
dominated, financially dominated, etc.?
• Nature of existing relationships:
– Should we focus on companies with which we have strong
relationships or simply go after the most desirable
companies?
• General purchase policies:
– Should we focus on companies that prefer leasing? Service
contracts? Systems purchases? Sealed bidding?
• Purchasing criteria:
– Should we focus on companies that are seeking quality?
Service? Price?
 Major Segmentation Variables Amity Business School

for Business Markets: Situational

Factors
• Urgency:
– Should we focus on companies that need
quick and sudden delivery or service?
• Specific application:
– Should we focus on certain applications of
our product rather than all applications?
• Size of order:
– Should we focus on large or small orders?
 Major Segmentation Variables Amity Business School

for Business Markets: Personal

Characteristics
• Buyer-Seller similarity:
– Should we focus on companies whose
people and values are similar to ours?
• Attitudes toward risk:
– Should we focus on risk-taking or risk
avoiding customers?
• Loyalty:
– Should we focus on companies that show
high loyalty to their suppliers?
Manifestations
• Price.
of Customer Value
– Price is the company’s assessment of the product’s value. Amity Business School

• Price sensitivity.
– A product with constant sales when prices increase
generally is of greater value than one for which demand
slumps.
• Satisfaction.
– Survey-based satisfaction measures are standard practice
in my business.
• Complaints and compliments.
– The number of complaints or compliments the company
receives indicates the product’s value.
• Word-of-mouth.
– Although often difficult to track, spoken and written
comments provide a useful subjective assessment of a
product’s value.
Manifestations of Customer Value cont. Amity Business School
• Margin/profit contribution.
– Generally, higher margins indicates partially monopolistic
positions due to greater communicated value.
• Dollar sales.
– Total dollar sales provide an aggregate measure of the
value of a product as assessed by the market.
• Competitive activity.
– Competitive activity such as new-product introductions
indicates that the total gap between customer value and
company costs is sufficiently large to allow for profits even
when more companies divide the market.
• Repeat purchase rate.
– High loyalty indicates high brand value.
 Amity Business School
Assessing the Value of the Product
Category

1. Determine the uses of the product

2. Estimate the importance of the uses
3. List competing products for the uses
4. Determine the relative effectiveness of
the product category in each usage
situation
Desirable Criteria for Segments
Amity Business School

• Sizeable
• Identifiable
• Reachable
• Respond differently
• Coherent
• Stable
 Amity Business School

Developing Product Strategy

A Successful Strategy: Amity Business School

• Helps achieve coordination among

functional areas of the organization.
1. Statement of the objective(s) the
Elements of a attain
product should Product Strategy Amity Business School

2. Selection of strategic alternative(s)

3. Selection of customer targets
4. Choice of competitor targets
5. Statement of the core strategy
6. Description of supporting marketing
mix.
7. Description of supporting functional
programs
 Hierarchy of Objectives Amity Business School

Company Mission/Vision
Level 0
Corporate objectives
Level I
Corporate strategies

Divisional objectives
Level II
Divisional strategies

Product/brand objectives
Level III
Brand strategies

Program objectives
Level IV
Tactics
 Strategic Alternatives Amity Business School

Long-term
profits

Efficiency,
Growth in sales
short-run
or market share
profits

Market Market Decrease Increase

development penetration inputs outputs

Existing Increase
New segments Reduce costs
customers price

Improve
Convert Competitors’ Improve
asset
nonusers customers sales mix
utilization

New product
development
Criteria for Evaluating Strategic Amity Business School
Alternative Options
• Size/growth of the segment
• Opportunities for obtaining
competitive advantage
• Resources available to penetrate
the segment
 Positioning Decision Steps Amity Business School

1. Identify alternative positioning themes by

consulting the advertising account team, the
product team, and past marketing plans.
2. Screen the alternatives according to
whether each is (a) meaningful to
customers, (b) feasible given the firm and
product resources and customer
perceptions, (c) competitively sensible, or
(d) helpful for meeting the product objective
3. Select the position that best satisfies these
criteria and can be sold to the marketing
organization
4. Implement programs (e.g., advertising)
consistent with the product position selected
Five Areas for Differentiation Amity Business School

1. Quality
2. Status and Image
3. Branding
4. Convenience and Service
5. Distribution
 Brand Equity Amity Business School

Reduced marketing
costs
Trade leverage
Brand Attracting new
Brand
loyalty customers
loyalty • Create awareness Provides value to
• Reassurance
customer by
Time to respond to enhancing
competitive threats customer’s:
• Interpretation/
processing of
Anchor to which information
other associations • Confidence in
can be attached the purchase
Familiarity-liking decision
Brand
Brand
awareness • Use satisfaction
loyalty Signal of substance/
commitment
Brand to be
considered
Brand
Brand
equity
loyalty
 Brand Equity cont. Amity Business School

Brand
Brand Reason-to-buy
equity
loyalty Differentiate/
position Provides value to
Perceived
Brand firm by
quality
loyalty Price
enhancing:
Channel member • Efficiency and
interest effectiveness of
Extensions marketing
programs
• Brand loyalty
Help process/ • Prices/margins
retrieve • Brand extensions
information
• Trade leverage
Brand
Brand Reason-to-buy
associations • Competitive
loyalty advantage
Create positive
attitude/feelings
Extensions

Other
Brand
proprietary Competitive
loyaltyassets
brand advantage
 Some Brand Attribute
and Image Dimensions Amity Business School

Attributes Image Dimensions

• Flavor/taste • Color Reliable—unreliable

• Caffeine • Style Old—young
content Technical—nontechnical
• Comfort
• Price Sensible—rash
• Packaging • Freshness Interesting—boring
• Size • Construction Creative—noncreative
• Calories material Sentimental—nonsentimental
• Brand name • Availability Impulsive—deliberate
• Sweetness • Serviceability Trustworthy—untrustworthy
• Weight • Compatibility Conforming—rebellious
• Warranty • Energy efficiency Daring—cautious
• Durability • Instructions Forceful—submissive
• Convenience • Automation Bold—timid
• Ease of Use Sociable-unsociable
Ten Guidelines for Building Strong
Brands Amity Business School

1. Brand Identity
– Each brand should have an identity, a personality. It can
be modified for different segments.
2. Value Proposition
– Each brand should have a unique value proposition.
3. Brand Position
– The brand’s position should provide clear guidance to
those implementing a communications program.
4. Execution
– The communications program needs to implement the
identity and position, and it should be durable as well.
5. Consistency Over Time
– Product managers should have a goal of maintaining a
consistent identity, position, and execution over time.
Changes should be resisted.
Ten Guidelines for Building Strong Brands
(cont.) Amity Business School

6. Brand System
– The brands in the portfolio should be consistent and
synergistic.
7. Brand Leverage
– Extend brands and develop co-branding opportunities only
if the brand identity will be both used and reinforced
8. Tracking
– The brand’s equity should be tracked over time, including
awareness, perceived quality, brand loyalty, and brand
associations.
9. Brand Responsibility
– Someone should be in charge of the brand who will create
the identity and positions and coordinate the execution.
10. Invest
– Continue investing in brands even when the financial
goals are not being met.
 Basic Customer Strategies Amity Business School

1. Customer acquisition
2. Customer retention
3. Customer expansion
4. Customer deletion
Strategy Over the Life Cycle
Amity Business School
Linked Strategy Issues Amity Business School