COMPETITORS ANALYSIS

To win in today's marketplace, companies must become adept not just in managing products, but in managing customer relationships in the face of determine competition. Understanding customer is crucial, but its not enough. Building profitable customer relationships and gaining Competitive advantage requires delivering more value and satisfaction to target consumers than competitors do.

COMPETITVE FORCES
Competitive Advantage: An advantage over competitors gained by offering consumers greater value than competitors do.

Creating and Sustaining superior performance, Michael E. Porter has identified Five Forces that determined the intrinsic long term attractiveness of a market or a specific market segment.

The Five Forces Are:

Industry Competitors Potential Entrants Substitutes Buyers Suppliers

Industry competitors
An industry is a group of firms that offer a product or class of products that are close substitutes for one another. Industry are classified according to number of sellers, degree of product differentiation, presence or absence of entry, mobility and exit barriers, cost structure, degree of vertical integration and degree of globalization. For e.g.. Mobile Phone Market is good example for fierce competition due to segment rivalry

Potential Entrants
The Entry and Exit barriers affect a segments attractiveness. The most attractive segment is one in which entry barriers are high and exit barriers are low i.e. few new firms can enter the industry and poor performing firms can easily exit. If the entry and exit barriers are low, firms easily enter and leave the industry and the returns are stable or low.

Conti.
The worst case is when the entry barriers are low and exit barriers are high. Here firms enter during good times but hard to leave during bad times.

For E.g.. Air Line Industry

Substitutes
A substitute product is a product that appears to be different but can satisfy the same need as another product. A segment is unattractive when there are actual or potential substitutes for the product. Substitutes place a limit on price and profits.

Buyers
A segment is unattractive if buyers possess strong or growing bargaining power. Buyers bargaining power grows when they become more concentrated, when the buyer switching costs are low, when buyers are price sensitive. To protect themselves, sellers might select buyers who have the least power to negotiate or switch suppliers.

Suppliers growing bargaining power

Suppliers affect an industry through their ability to raise prices or reduce the quality of purchasing goods and services. A supplier or supplier group is powerful if some of the following factors are apply: The supplier industry is dominated by a few companies, but it sells to many (petroleum industry)

Conti..
Its product or service is unique and/or it has built up switching costs( word processing software)

Competitors Analysis
Steps In Analyzing Competitors

Identifying the Companys Competitors

Assessing Competitors Objectives, Strategies, Strengths & weaknesses

Selecting which Competitors to attack Or avoid

Identifying Competitors
A Company can define its competitors as other companies offering similar products and services to the same customers at similar prices. For E.g.. Jet airways might see Kingfisher or other premium as a major competitors, but not Spice jet or IndiGo.

Ritz-Carlton might see Taj or Oberoi hotels as a major competitors.

Conti
The Company can identify their competitors from Industry Point of View. From an industry point of view, Pepsi might see its Competitors as Coca Cola and makers of other soft drink brands.

From a Market Point of view, the Customer really wants Thirst Quenching. This need Can be Satisfied by bottle water, Energy drinks, Fruit juice or many other fluids.

Assessing Competitors
Determining Competitors Objectives: Once the company has identified its competitors, it musk ask: what is each competitor seeking in the marketplace. Many factors shape a competitors objectives, including size, history, current management and financial situation. Also a company must monitor competitors expansion plans.

Identifying Competitors Strategies

In most industries, the competitors can be stored into groups that pursue different strategies. A group of firms following the same strategy in a given target market is called strategic group. For E.g. in the major appliance industry, videocon and Godrej belong to the same strategic group. Each produce a full line of medium price appliances supported by good service.

Conti
For E.g.. Siemens and Hitachi Home &
Life Solutions (India) ltd Belong to a Different Strategic group.

They produce a narrower line of higher quality appliances, offer a higher level of services and change a premium price

Assessing Competitors Strengths & Weaknesses

A company should monitor three variables when analyzing competitors:-- Share of market- The competitors share of the target market. Share of mind- The percentage of customers who named the competitor in responding to the statement, Name the first company that comes to mind in this industry

Conti
Share of heart- The percentage of customers who named the competitor in responding to the statement, Name the company from which you would prefer to buy the product. Companies normally learn about their competitors strength and weakness through secondary data, personal experience and word of mouth. They can also conduct primary market research with customers, suppliers and dealers.

Conti..
To improve market share, many companies benchmark their most successful competitors.
Or they can Benchmark themselves against other firms, comparing the companys products and processes to those of competitors or leading firms in other Industries to identify Best Practices and find ways to improve quality and performance.

Estimating Competitors reaction

Each competitors reacts differently. Some do not react quickly or strongly to a competitors move because they feel their customers are loyal, they may be slow in noticing or they lack the funds to react. Other Competitors react swiftly and strongly to any action. For E.G.. Hindustan unilever ltd. Does not let a new detergent come easily into the market, because HUL will react fiercely if challenged.

Selecting Competitors to Attack & Avoid

Strong or Weak Competitors
Close or Distant Competitors Close Competitors that resemble them most For E.g.. Nike Competes more against Adidas and Reebok than against Bata.

Competitive Strategies
Market leaders------ 40% (Microsoft, McDonalds, Tata Motors, Google, Future group in Retailing) Market challenger 30% Market follower------20% Market nichers-------10% Market leader should be vigilant. (A product innovation may come along and hurt the leader.) The dominant firm might look old fashioned against new rivals.

Competitive strategies for market leadersExpanding the total market

New customers 1. A company can search for 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) or those who live elsewhere (geographical-expansion strategy). More usage 1. Usage can be increased by increasing the level or quantity of consumption or increase the frequency of consumption. 2. The amount of consumption can be increased through packaging or product design.

Conti..
Help of advertisement for communicating the advantages of using brand. Increasing frequency involves identifying additional opportunities to use the brand in the same basic way.
Defending market share 1. While trying to expand total market size, the dominant firm must continuously defend its current business.

For E.g.. Tropicana constantly guard against

minute maid orange juice ,Kodak against Fuji. The company should go for continuous innovation. Here the distinguish can be made between responsive marketer, creative marketer, anticipative marketer. Responsive marketer- it finds a stated need and fills it. Anticipative marketer- It looks ahead into what needs customers may have in the near future. Creative marketer- It discovers and produces solutions customers did not ask for but to which they enthusiastically respond.

Defending market share

1.Position defense
It means occupying the most desirable market space in the minds of the consumers.

2.Flank defense
Here the market leader should erect outposts to protect a weak front or possibly serve as an invasion base for counterattack. For e.g. matching the competitors product, advertising, price.

3.Counteroffensive defense
When attacked, most market leaders will respond with a counterattack. Here the leader can meet the attacker frontally. 4. Mobile defense

Here the leader stretches over new territories that can serve as future centers for defense and offense through market diversification and market broadening. In business this would entail introducing new products, introducing replacement products, modifying existing products, changing market segments, changing target markets, repositioning products,

or changing promotional focus. This defense requires a very flexible organization with strong marketing, entrepreneurial, product development, and marketing research skills.

Expanding Market Share

1 Market leader can increase their market share. GE declared that it wants to be at least number one or two in each of its markets or else get out.

Market challenger strategy

Now a days many market challengers have gained ground or even overtaken the leaders for e.g. Toyota today produces more cars than General Motors. 1. Defining the strategic objective and opponents Focus on increase market share and attack the market leader. It can attack firms of its own size that are not doing the job and are underfinanced. It can attack small local and regional firms.

Choosing a general attack strategy

1. Frontal attack- Here the attacker matches its opponents product, advertising, price and distribution. Here attack is on the strength of the market leader. 2. Flank attack- An enemys weak spots are natural targets. A flank attack can be directed along two strategic dimensions- geographic and segmental. e.g. segmental- Japanese automaker put stress on the development of fuel efficient cars.

Conti..
3 Encirclement attack- The encirclement attack is an attempt to capture a wide slice of enemys territory for e.g. Sun Microsystems licensed its java software to hundreds of companies. 4 By pass attack- It means bypassing the enemy and attacking easier markets to broaden ones resource base. For e.g. Pepsi used a bypass strategy against coke by purchasing orange juice giant Tropicana.

Market Follower Strategies

A strategy of product imitation might be profitable as a strategy of product innovation.

A innovator bears the expense of developing the new product , getting it into distribution and informing and educating the market. Another firm can come along and copy or improve market leadership.

Conti..
A market follower must know how to hold a current customer and win fair share of new customers. As there is a risk to be attacked by the market challengers, the market follower should keep its manufacturing cost low and quality high.

Conti..
Counterfeiter 1. The counterfeiter duplicates the leaders product and packages and sells it. Music record firms, apple computers and Rolex have been facing a counterfeiter problem, especially in Asia. 2. Cloner- The cloner copy the leaders products, name and packaging with slight variations.

Conti
3.Imitator- The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing. 4.Adapter- The adapter takes the leaders products and adapts or improves them. The adapter may chose to sell to different markets

Market Nicher strategies

An alternative to being a follower in a large market is to be a leader in a small market, or niche. Nichers have three tasks: creating niches expanding niches and protecting niches. For e.g. Computer mouse maker Logitech is only a fraction the size of giant Microsoft, yet through skillful niching, it dominates the PC mouse market with Microsoft as its runner up. e.g. Restaurants offering all food are example of Mass Marketing. White Pizza Hut has targeted Pizza Market out of thousands of food products. It is called Niche Marketing.