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Strategic Market Management

Global Perspectives

David A. Aaker and Damien McLoughlin


ISBN: 978-0-470-68975-2
www.wileyeurope.com/college/aaker

© Copyright 2010 John Wiley & Sons Ltd


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Chapter Three

Competitor Analysis

© Copyright 2010 John Wiley & Sons Ltd


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“Competition is always a fantastic thing, and the
computer industry is intensely competitive. Whether
it’s Google or Apple or free software, we’ve got some
fantastic competitors and it keeps us on our toes.”

Bill Gates
“If you know your strength it never becomes a
weakness. If the market knows your strength then
it becomes a weakness.”

Shailendra Singh
“The ability to learn faster than your competitors
may be the only sustainable competitive
advantage.”

Arie de Geus
Competition
 The American Car Market (1970)
 The European Airline Industry-Rynair Easy jet (1990)
 Napster (2000)
 Microsoft vs. Google
 BRIC (Brazil-Russia-India-China)
 Fortune 500: The Chinese companies:
24-2007,
37-2009,
109-2017
© Copyright 2010 John Wiley & Sons Ltd
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Identifying competitiors
 Perspective of customers (alternatives) (Ford vs. Fiat)
 Product –use associations (Carrefour vs. Bauhaus)
(concept of appropriateness) ( For vs. Taxi)
 Indirect competitors (Nokia vs. Apple) (Coke vs. Didi)
(Nescafe vs. Starbucks vs. Moda kahvecileri)
 Understanding the positioning of new product strategies
and positioning of new comers is important) (Taxi vs.
Uber)

© Copyright 2010 John Wiley & Sons Ltd


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Competitor Analysis
 Strategic Groups
– Pursue similar competitive strategies (similar communication
strategies, the same price-quality position)
– Have similar characteristics (size, aggressiveness)
– Have similar assets and competencies (logistics capabilities,
brand associations, R&D)
– Star Alliance vs. Oneworld)
– Private Label manufacturers.
– Dell vs. HP
– Use strategic groups (Coffee producers filter coffee producers,
South American coffee producers)
Competitor Analysis
 Potential Competitors

– Market expansion (Global companies, Unilever, P&G)


– Product expansion (Uludağ limon, CC meyva suyu)
– Backward integration (Ülker milk production)
– Forward integration(Kaaahve dünyası)
– The export assets or competencies (Kerevitas purchased by
Ulker)
– Retaliatory or defensive strategies (Microsoft?)
Understanding the Competitors
Image and
Positioning Objectives and
Size, Growth Commitment
& Profitability

Strengths and Competitor Current and


Weaknesses Past Strategies
Actions
Exit Barriers Organization
and Culture
Cost Structure Figure 3.2

© Copyright 2010 John Wiley & Sons Ltd


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Figure 4.3
Size, growth and profitability
Estimations,
Market Research,

Image and Positioning strategy


What is the image of the competitor? Ülker, Gillette, Volvo ?
What are their weaknesses?
Do consumer research. Start with qualitative research!
What a competitor means to customers? What are the
associations?
What is the weakness of Turkcell? Vodafone?

© Copyright 2010 John Wiley & Sons Ltd


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The number of subscriptions in Turkey (mio.)
80.00

77.88
78.00
76.62
76.00 75.72
75.06
74.46
74.00 73.64 73.81 73.65

71.89
72.00

70.00 69.66

68.00

66.00

64.00
2013 2014 2015 2016 1 2016 2 2016 3 2016 4 2017 1 2017 2 2017 3
Year

© Copyright 2010 John Wiley & Sons Ltd


Source: BTK
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Objectives and commitment
What are the competitior’s objectives with respect to market share?
Sales growth? Profitability?
The objectives of the parent company are also important. Koç, Sabancı?

Current and Past strategies


The failures in the past? Doğuş Garanti Bankası
What is the new strategy of BIM? What are they trying to do?

Organization and Culture


What is going on in Sabancı Group? The GM of Pegasus!
A cost oriented , highly structured organization relying on tight controls to achieve
objectives and motivate employees may have difficulty innovating an aggressive13
marketing-oriented strategy!
Cost Structure
• The number of employees, labor costs, overhead?
• The relative cost of raw materials, purchased components?
• The investment in inventory, plant, equipment?
• Sales levels,
• Outsourcing strategies

Exit Barriers
• Specialized assets, (Kavaklıdere)
• Fixed costs, (Erdemir)
• Relationships with other companies, (Migros)
• Government and social barriers, (?????)
•© Copyright
Managerial pride and emotional attachment (İş Bank)
2010 John Wiley & Sons Ltd
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Assessing strenghts and weaknesses
Learn where to hit!
Honda:
Product recalls. In 2014 Honda has recalled some14.4 million vehicles
equipped with suspect airbag inflators more than any other automaker.
Honda holds a very weak position in the Europe’s automotive market
and has dipped to 1% market share in 2015.
Rising raw material prices. Metals are the main raw materials used in
vehicle and motorcycle manufacturing and the rising price of the raw
metals raises overall production costs for Honda.
Natural disasters. Honda has manufacturing facilities in Japan,
Thailand, China and Malaysia. These countries, including others, are
often subject to natural disasters that disrupt manufacturing in the
facilities and decrease Honda’s production volumes.
© Copyright 2010 John Wiley & Sons Ltd
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Relevant Assets and Competencies
1) What businesses have been successful over time?

What assets or competencies contributed to their


success? Location of Lacivert?
(Global image-CocaCola, Superior driving technology,
R&D, credibility-BMW)
What businesses have had chronically low
performance?
Why?
What assets or competencies do they lack?
Figure 4.4
Relevant Assets and Competencies
2) What are the key customer motivations?
What is needed to be preferred? What is needed to be
considered? (Caterpillar-24 hour part service in the USA)
(Hyundai’s awards of best car of the year)

3) What assets and competencies represent industry mobility


(entry and exit) barriers? (Oil refinery Aksa Akrilik, 315.000 ton/yıl
kurulu kapasitesiyle Türkiye’nin tek yerel akrilik elyaf üreticisidir. Dünya pazarındaki ihtiyacın %17’sini
karşılayan şirket, hizmetleriyle beş kıtada 50’den fazla ülkenin tekstil ve endüstriyel tekstil sanayisine
ulaşmaktadır. Aksa Akrilik, 2009 yılında teknolojik altyapısını geliştirerek, 21. yüzyılın en önemli
hammaddelerinden biri sayılan karbon elyaf üretimini hayata geçirmiştir.

4) What are the significant value-added components in the


value chain? A firm that can excel on a critical value added
component can have a sustainable advantage (Amazon,
DHL, eBay, Ulker, BIM)
Figure 4.4
A checklist of strenghts and weaknesses
 Innovation (Google) (Technical product superiority, new product capability,
R&D, Technologies, Patents)
 Manufacturing/Operations (Zara, BIM) (cost structure, effective &
flexible operations, efficient operations, vertical integration, workforce attitude &
motivation, capacity, outsourcing)
 Finance-Access to capital (From operations, from short term asets, ability
to use debt&equity financing, parent’s will to finance)
 Management (GE, Nestle) culture (Quality of top&middle mngt.,
knowledge of business, culture, entrepreneurial thurst, planning/operations systems,
loyalty/turnover, quality of strategic decision making)
 Marketing (Puma, Mercedes, Nike, Caterpillar) (Product quality
reputation, product differentiation, brans name recognition, breadht of the product-
line systems capability, customer orientation, segmentation, destribution, retailer
relationships, advertising skills, sales force, customer suppport)
© Copyright 2010 John Wiley & Sons Ltd

 Customer base (loyalty, İŞ Bank) 18


Key Learnings
 Competitors can be identified by customer choice (the set from which
customers select) or by clustering them into strategic groups, (firms that pursue
similar strategies and have similar assets, competencies, and other
characteristics). In either case, competitors will vary in terms of how intensely
they compete.

 Competitors should be analysed along several dimensions, including their size,


growth and profitability, image, objectives, business strategies, organisational
culture, cost structure, exit barriers, and strengths and weaknesses.

 Potential strengths and weaknesses can be identified by considering the


characteristics of successful and unsuccessful businesses, key customer
motivations, and value-added components.

 The competitive strength grid, which arrays competitors or strategic groups on


each of the relevant assets and competencies, provides a compact summary of
key strategic information.
“There is one rule for industrialists and that is:
Make the best quality of goods possible at the
lowest cost possible, paying the highest wages
possible.”

Henry Ford
“We often give our enemies the means for our own
destruction.”

Aesop
“In business, the competition will bite you if you keep
running, if you stand still, they will swallow you.”

William Knudsen

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