Competition Analysis

Bases and selection

• Who are our competitors?
• What threats do they pose?
• What is the profile of our competitors?
• What are the objectives of our
competitors?
• What strategies are our competitors

pursuing and how successful are these

strategies?
• What are the strengths and

weaknesses of our competitors?

• How are our competitors likely to

respond to any changes to the way we

do business?
 Sources of information for competitor analysis
Recorded data:
This is easily available in published form


either internally or externally.

• Annual report & accounts
• Press releases
• Newspaper articles
• Analysts reports
• Regulatory reports
• Government reports
• Presentations / speeches
•
 Observable data
This has to be actively sought and


often assembled from several

sources.
• Pricing / price lists
• Advertising campaigns
• Promotions
• Tenders
• Patent applications
•
 Opportunistic Data
To get hold of this kind of data requires a lot


of planning and organization. Much of it is

“anecdotal”, coming from discussions with
suppliers, customers and, perhaps, previous
management of competitors.
• Meetings with suppliers
• Trade shows
• Sales force meetings
• Seminars / conferences
• Recruiting ex-employees
• Discussion with shared distributors
• Social contacts with competitors
•
 Evaluating competition & response 1

• Overall sales and profits

• Sales and profits by market
• Sales by main brand
• Cost structure
• Market shares (revenues and volumes)
• Organisation structure
• Distribution system
• Identity / profile of senior management
• Advertising strategy and spending
• Customer / consumer profile & attitudes
• Customer retention levels
•
 Evaluating competition & response 2

• Sales and profits by product

• Relative costs
• Customer satisfaction and service levels
• Customer retention levels
• Distribution costs
• New product strategies
• Size and quality of customer databases
• Advertising effectiveness
• Future investment strategy
• Contractual terms with key suppliers
• Terms of strategic partnerships
•
 The Marketing Environment
and Competitor Analysis

•SWOT analysis
•PEST analysis
•Five forces analysis
 SWOT analysis
• Strengths (internal)
• Weaknesses (internal)
• Opportunities (external)
• Threats (external)
 PEST analysis

• Political factors
• Economic factors
• Socio-cultural factors
• Technological factors
 Political/legal
• Monopolies legislation
• Environmental protection laws
• Taxation policy
• Employment laws
• Government policy
• Legislation
• Others?
•
 Economic Factors
• Inflation
• Employment
• Disposable income
• Business cycles
• Energy availability and cost
• Others?
 Sociocultural factors
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
• Others?
 Technological
• New discoveries and
innovations
• Speed of technology transfer
• Rates of obsolescence
• Internet
• Information technology
• Others?
 Five forces analysis
Potential
entrants

Threat of
entrants

Suppliers COMPETITIVE Buyers

RIVALRY
Bargaining Bargaining
power power

Threat of
substitutes

Substitutes
Source: Adapted from M. E. Porter,
Competitive Strategy, Free Press,
1980, p. 4.
 Five Forces Analysis: Key
Questions and Implications
•What are the key forces at work in the competitive environment?
•Are there underlying forces driving competitive forces?
•Will competitive forces change?
•What are the strengths and weaknesses of competitors in relation to the
competitive forces?
•Can competitive strategy influence competitive forces (eg by building
barriers to entry or reducing competitive rivalry)?