Lecture 4: Competitor Analysis Ms. Faith moono simwami Mo.simwami@gmail.com 11/10/2018

Announcement FULL TIME STUDENTS PART TIME STUDENTS ON TUESDAY SEPTEMBER 24TH 2015, YOU WILL HAVE YOUR IN-CLASS TEST THIS ASSESSMENT FORMS 10% OF YOUR C.A. THE TEST WILL BE BASED ON EVERYTHING WE HAVE COVERED. ON THURSDAY, SEPTEMBER 24TH 2015, YOU WILL HAVE YOUR IN-CLASS TEST THIS ASSESSMENT FORMS 10% OF YOUR C.A. THE TEST WILL BE BASED ON EVERYTHING WE HAVE COVERED. 11/10/2018

Who is your competitor? A Competitor is: Any person or entity which is a rival against another. In business, a company in the same industry or a similar industry which offers a similar product or service. The presence of one or more competitors can reduce the prices of goods and services as the companies attempt to gain a larger market share. Competition also requires companies to become more efficient in order to reduce costs. Fast-food restaurants McDonald's and Burger King are competitors, as are Coca-Cola and Pepsi, and Wal-Mart and Target. 11/10/2018

Competitor analysis is crucial to the successful implementation of marketing strategy. How to dig up dirt? Competitive information can be obtained from: Marketing Research Surveys Recruiting competitor's employees Secondary sources Distributors Gathering competitor's sales literature 11/10/2018

What Do We Want to Know? Competitor analysis seeks to answer five key questions: Who are our competitors? What are their strengths and weaknesses? What are their strategic objectives and thrust? What are their strategies? What are their response patterns? 11/10/2018

1. Who are our competitors? Competitors are those companies who are producing technically similar products or services. They can also be potential entrants into the industry. These can take two forms: Entrants with technically similar products and Those invading the market with substitutes. Competitors include: Product form competitors - technically similar products and services Product substitutes - those who produce substitute products/services that perform a similar function. Generic competitors - those that solve the problem or eliminate in a dissimilar way. 11/10/2018

2. What are their strengths and weaknesses? As much information as practicable should be gathered. For example Financial data concerning profitability Profit margins Sales and investment levels Market data relating to price levels Market share and distribution channels used, and Customer data concerning awareness of brand names; product and service quality, and selling ability may be relevant A three-stage data gathering process can be used as follows: Identify key factors for success in the industry – Ability to respond quickly to customer needs, innovativeness, or the capability to provide other sales service. Rate the company and competitors on each key success factor using a rating scale – This may be a scale ranging from 1 (very poor) to 5 (very good). Consider the implications for competitive strategy – The competitive profile analysis is then used to identify possible competitive strategies. 11/10/2018

3. What are the strategic objectives and thrust? Define their strategic objectives which include: A built objective - concerned with increasing sales and/or market share A harvest objective - emphasis is on maximizing short-term cash flow through cost reduction and price increase. A hold objective - focus on maintaining sales and/or market share. Knowing strategic thrust of competitors can help in strategic decision-making. For example, knowing that competitors are considering expansion in Lusaka but not in Kitwe will make expansion into Kitwe a more attractive strategic option for a company. 11/10/2018

4. What are their strategies? Competitor analysis attempts to deduce positioning strategy by assessing a competitor's product's target market and differential advantage. Companies and products/services need to be continuously monitored for changes in positioning strategy. Strategies can also be defined in terms of competitive scope. For example, are competitors attempting to serve the whole market, a few segments or a particular niche? If a niche player, is it likely that they will be content to stay in the segment or use as springboards for market segment expansion in the future? Competitors may be playing the cost leadership game, focusing on cost reducing measures rather than expensive product development and promotional strategies. 11/10/2018

5. What are their response patterns? A major objective of competitor analysis is to be able to predict competitor response to market and competitive changes. Competitors fall under five categories depending on their response to market changes. Retaliatory competitors - market leaders who respond aggressively to competitive challenges. Complacent competitors - react slowly to new challenges. These competitors often operate in stable markets with little serious strategic challenges to any of the incumbents. Hemmed-in competitors - competitors who are unlikely to respond because their strategies have restricted their scope of retaliation. Selective competitors - are competitors who respond to some competitive, moves but not others. 11/10/2018

TASK IN GROUPS OF FIVE, YOU WILL BE ALLOCATED A RIVAL COMPANY. WITH THE USE OF THE INTERNET AND ALL OTHER RESOURCES, YOU WILL HAVE TO: IDENTIFY 3 OTHER COMPETITORS DEFINE THEIR STRENGTHS HIGHLIGHT THEIR THREATS & WEAKNESSES STATE THEIR MAIN STRATEGIES IDENTIFY THEIR RESPONSE PATTERNS WHY DO YOU THINK THEY ARE MORE OR LESS SUCCESSFUL THAN THEIR COMPETITORS? P.S. GET ACQUAINTED WITH THE GROUP YOU’RE IN, THIS IS THE GROUP YOU WILL BE IN FOR YOUR FINAL ASSIGNMENTS 11/10/2018

Competitor Analysis UNILUS vs UNZA Debonairs vs Pizza Hut Nike vs Addidas Apple vs Samsung BAA vs SAA KFC vs Hungry Lion Toyota vs Jeep 11/10/2018

Questions? 11/10/2018