Situational Analysis Industry & Competitor Analysis

Industry Analysis  Why is industry analysis an essential component of marketing planning?

Market Attractiveness  Size, growth, & competitive intensity of a market  Is the industry sufficiently attractive to warrant investment in it?

What are the Bases for Industry Analysis?  Aggregate market factors  Competitive factors  Environmental factors

High AttractivenessLow Attractiveness Market Factors Size Growth Stage in life cycle Cyclicity Seasonality Market spending Profits Financial ratios Competitive Factors Concentration Power of Buyers Power of Suppliers Rivalry Pressure from substitutes Capacity utilization Threat of entry Large High Early Low High Low High Low Small Slow Late High Low High Low High Attractiveness to Entrants

Why should marketers know the competition?

Competitor Analysis  Assess current objectives  Assess current strategies  Assess capabilities  Assess commitment

Future Goals CapabilitiesAssumptions Current Strategy Competitor’s Response Profile Is the competitor satisfied with its current position? What likely moves or strategy shifts will the competitor make? Where is the competitor vulnerable? What will provide the greatest and most effective retaliation by the competitor? What drives the competitor Held about itself and the industry Both strengths and weaknesses

Goals  Should fit with corporate goals and objectives  Indicates level of aggressiveness –Growth –Profitability –Cash flow

Current Strategies  Positioning –Target market selection –Core strategy –implementation

Capabilities  Ability to conceive/design  Ability to produce  Marketing abilities  Financial resources  Ability to manage

Tools for Evaluating Capabilities  Competitive Grid  Compares your firm and major competitors on assets and skills most relevant to competitive strength.

Competitive Grid of American and Japanese Luxury Cars in U.S. Market

Competitive Profile Analysis Product uniqueness Relative product quality Price Service Availability/convenience Reputation/image Location Advertising and promotional policies/ effectiveness Product design Caliber of personnel Raw material cost Financial condition Production capability R&D position Variety/selection Competitive FactorCo. ACo. BCo. CYour Co.

Benefits of Tools  Identifies competitors’ strengths and weaknesses relative to your own.  Identifies windows of opportunity.  Identifies positioning strategies