Identification by market and by product
A competitive analysis must first analyze all the existing competitors who meet the same needs that the company currently meets or plans to meet. For example, a new resin based on polybutarene that can be used in manufacturing fire-resistant material has not only similar resins as a competitor, but also other fire-resistant components, such as asbestos and ceramics. What the customer buys is not a resin but a "resistance to fire" that will be integrated into his or her own product.
The marketing manager must identify his or her main competitors on the basis of market/product combinations by trying to identify possible future uses of these products by customers in different markets. Such a guideline has proven to be very effective. Indeed, though the technology, the products, and even the producers are changing rapidly in the high-tech sector, at least the customers do not vary that drastically, so it is very useful to anchor the competitive analysis to the primary markets and to the industry's responses to the needs of these markets (i.e., the products). Figure 4.1 illustrates this method with an example of identifying who the main players in the computer industry were in 2003.
Figure 4.1 is an interesting illustration because the computer industry has experienced many dramatic changes in the recent years. On one side, the range of products has expanded considerably. In the 1970s only mainframe and mini computers existed;then in the 1980s came desktop PCs and workstations; after that, in the 1990s came laptops and PDAs; now new categories such as mobile phones are functioning more and more as computers. On the other side, the leading firms for each category of products have changed enormously. Interestingly some companies who had the biggest market share in one category were able to expand their product line and gain market share in other categories by dislodging less effective competitors.
For instance, Sun Microsystems started out manufacturing workstations for university researchers. However, a workstation is really a large local computation capacity for the user who is connected to a standard operating
Market segments
+ Small offices/
Corporate Education Government home offices Healthcare Personal
Minis (servers)
Desktop PCs
Laptop
Pocket handheld
PCs/PDAs
Market segments
+ Small offices/
Corporate Education Government home offices Healthcare Personal
Minis (servers)
Desktop PCs
Pocket handheld
PCs/PDAs
|
IBM |
HP |
IBM |
HP | ||
|
Unisys |
Silicon |
HP |
Silicon | ||
|
Silicon |
Graphics |
Silicon |
Graphics | ||
|
Graphics |
NEC |
Graphics | |||
|
HP |
HP |
IBM |
Dell |
HP | |
|
IBM |
Sun |
HP |
HP |
Dell | |
|
Sun |
IBM |
Dell |
IBM |
IBM | |
|
Dell |
Dell |
Sun |
Fujitsu | ||
|
Fujitsu |
Fujitsu | ||||
|
Dell |
IBM |
IBM |
Dell |
Dell | |
|
HP |
HP |
HP |
HP |
IBM | |
|
IBM |
Sun |
Sun |
IBM |
HP | |
|
Sun |
Dell |
Dell | |||
|
Dell |
IBM |
IBM |
Dell |
IBM |
Gateway |
|
HP |
HP |
HP |
IBM |
Compaq |
Compaq |
|
IBM |
Dell |
Dell |
HP |
HP |
HP |
|
Gateway |
Siemens/ Fujitsu |
Gateway |
Dell |
Dell | |
|
Siemens Fujitsu |
Apple | ||||
|
HP |
HP |
IBM |
HP |
HP |
Dell |
|
IBM |
IBM |
HP |
IBM |
IBM |
HP |
|
NEC |
Toshiba |
Toshiba |
Dell |
NEC |
Toshiba |
|
Toshiba |
Toshiba |
Toshiba | |||
|
HP |
Palm |
Palm |
Palm |
HP |
Palm |
|
Dell |
Dell |
HP |
HP |
Dell |
HP |
|
Palm |
HP |
Dell |
Dell |
Palm |
Sony |
|
Toshiba |
Toshiba |
Dell |
Corporates includes: Manufacturing, insurance, and financial sector
Corporates includes: Manufacturing, insurance, and financial sector
Figure 4.1 Product/market segments in the computer industry (manufacturers with largest market share).
system such as UNIX. This system corresponds exactly to the needs of banks for their trading rooms. Sun Microsystems was able to respond to the banks' demands and became one of the leading suppliers of this industry. Later on, when the majority of mini-computers turned out to be dedicated mostly to be telecommunication servers, Sun managed to be one of the leading companies in providing servers for large and small companies running Internet applications. In the very recent years however, Sun lost significant market share by sticking to its own proprietary operating system, while its main competitors were pushing Linux-based servers.
Silicon Graphics (SG) had a similar story. The vendor of the most powerful workstation, SG first achieved fame as the favorite tool for computer-aided design in the manufacturing industry, before successfully entering the financial market, as well as governmental agencies. Building on its sophisticated technology and computing power, SG offered a more powerful computer and entered the mainframe market, namely, worldwide Fortune 500 companies, major universities, and big government agencies. Ultimately, SG bought Cray, the scientific supercomputer vendor, and secured almost half of the market. Its biggest competitor emerged as Compaq, which bought Tandem Computer to complete its product line in the mainframe business.
Originally Compaq began in the PC business. It started as an IBM PC clone vendor, the smartest in its category. Then in 1989 it introduced its first server, the system Pro, which could run up to five different operating systems, before launching in 1992 the successful Prosignia server, a low-price, high-performance solution, and then, in 1993, the Proliant 1000, an easy-to-install, easy-to-use server. Ultimately, Compaq bought Tandem, the leading fault-tolerant minicomputer vendor, and DEC, which gave Compaq access to mainframe customers, mostly in banks, education, and government offices. Finally, Hewlett-Packard acquired Compaq in 2002, and today, Tandem, DEC, and even Compaq's organization and expertise are buried within the HP structure.
Previously, Dell followed the path of Compaq to overtake it. Started as a PC vendor, Dell sold only through direct marketing, first to consumers, then to small businesses, and finally to larger organizations. Then Dell managed to move successfully up-market by offering workstations first and then servers, storage, and networking to its corporate customers. But Dell is also expanding in other markets. First, in March 2003, Dell made the decision to challenge HP and IBM by rolling out inkjet printers. Then, in September 2003, it announced it was entering the consumer electronics market, selling MP3 players and flat-panel TVs on its popular Web site. Dell was not the first computer firm to go into this new business dominated by Asian companies, such as Sony, Samsung, and Matsushita. Gateway was the first to act in 2002 when it started marketing large-screen plasma TV monitors and took the biggest market share in the United States in less than 1 year;now Gateway is also selling digital cameras.
Finally IBM, the oldest player in the computer industry today, is still the leading mainframe vendor for financial and nonscientific applications. It also has the biggest relative market share with its AS400 minicomputer family, which is a winner with all kinds of organizations—big and small, private or governmental. The RISC workstation family is also helping IBM gain a strong position in all those market. In the PC business, IBM covers all the market segments with its different PC brands, but is the second vendor behind Compaq and ahead of HP, the minicomputer specialist whose solutions are appreciated by various types of business customers and governmental organizations. In 2003, IBM grew revenue share in UNIX, Linux, and Intel Servers to 30.7% revenue share worldwide, according to Gartner.
These various examples clearly indicate that competitors may migrate from one market segment to another. Consequently, a firm that wants to match its competitors' capabilities must be ready to extend its technology base.
A similar analysis can be done for the electronic commerce industry, which encompasses all of the firms that are trading information, goods, services, and payments, by electronic means. This industry has two chief markets—businesses and consumers—and offers three broad types of solutions: on-line information services;messaging, including XML and other Web services [3] for business customers;and market transactions.
If for the same product, several brands can compete with each other on similar or different price levels, it is also important to identify close-substitute products that can take a product's place. For example, for a long time, the ultrasound market consisted of only two-dimensional ultrasound echographs, but they are now beginning to be replaced by three-dimensional ultrasound echographs.
Continue reading here: Managing distributors of hightech products
Was this article helpful?