Assessing Competitors
Having identified the main competitors, marketing management now asks: What are competitors' objectives—what does each seek in the marketplace? What is each competitor's strategy? What are various competitor's strengths and weaknesses, and how will each react to actions the company might take?
Determining Competitors' Objectives
Each competitor has a mix of objectives. The company wants to know the relative importance that a competitor places on current profitability, market share growth, cash flow, technological leadership, service leadership, and other goals. Knowing a competitor's mix of objectives reveals whether the competitor is satisfied with its current situation and how it might react to different competitive actions. For example, a company that pursues low-cost leadership will react much more strongly to a competitor's cost-reducing manufacturing breakthrough than to the same competitor's advertising increase.
A company also must monitor its competitors' objectives for various segments. If the company finds that a competitor has discovered a new segment, this might be an opportunity. If it finds that competitors plan new moves into segments now served by the company, it will be forewarned and, hopefully, forearmed.
Strategic group
A group of firms in an industry following the same or a similar strategy.
Identifying Competitors' Strategies
The more that one firm's strategy resembles another firm's strategy, the more the two firms compete. In most industries, the competitors can be sorted into groups that pursue different strategies. A strategic group is a group of firms in an industry following the same or a similar strategy in a given target market. For example, in the major appliance industry, GE, and Whirlpool belong to the same strategic group. Each produces a full line of medium-price appliances supported by good service. A In contrast, Sub-Zero and Viking belong to a different strategic group. They produce a narrower line of higher-quality appliances, offer a higher level of service, and charge a premium price.
Some important insights emerge from identifying strategic groups. For example, if a company enters one of the groups, the members of that group become its key competitors. Thus, if the company enters the first group, against GE and Whirlpool, it can succeed only if it develops strategic advantages over these competitors.
Although competition is most intense within a strategic group, there is also rivalry among groups. First, some of the strategic groups may appeal to overlapping customer segments. For example, no matter what their strategy, all major appliance manufacturers will go after the apartment and home-builders segment. Second, the customers may not see much difference in the offers of different groups—they may see little difference in quality between GE and Whirlpool. Finally, members of one strategic group might expand into new strategy segments. Thus, GE's Monogram and Profile lines of appliances compete in the premium-quality, premium-price line with Viking and Sub-Zero.
The company needs to look at all of the dimensions that identify strategic groups within the industry. It must understand how each competitor delivers value to its customers. It needs to know each competitor's product quality, features, and mix; customer services; pricing policy; distribution coverage; sales force strategy; and advertising and sales promotion programs. And it must study the details of each competitor's R&D, manufacturing, purchasing, financial, and other strategies.
Strategic groups: Viking belongs to the appliance industry strategic group offering a narrow line of higher-quality appliances supported by good service.
Assessing Competitors' Strengths and Weaknesses
Marketers need to assess each competitor's strengths and weaknesses carefully in order to answer a critical question: What can our competitors do? As a first step, companies can gather data on each competitor's goals, strategies, and performance over the past few years. Admittedly, some of
Strategic groups: Viking belongs to the appliance industry strategic group offering a narrow line of higher-quality appliances supported by good service.
Benchmarking
The process of comparing the company's products and processes to those of competitors or leading firms in other industries to identify "best practices" and find ways to improve guality and performance.
Customer value analysis
Analysis conducted to determine what benefits target customers value and how they rate the relative value of various competitors' offers.
this information will be hard to obtain. For example, business-to-business marketers find it hard to estimate competitors' market shares because they do not have the same syndicated data services that are available to consumer packaged-goods companies.
Companies normally learn about their competitors' strengths and weaknesses through secondary data, personal experience, and word of mouth. They can also conduct primary marketing research with customers, suppliers, and dealers. Or they can benchmark themselves against other firms, comparing the company's 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. Benchmarking has become a powerful tool for increasing a company's competitiveness.
Continue reading here: Strong or Weak Competitors
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