1. SUMS/MGT347/DO’Reilly COMPETITOR ANALYSIS Marketing Strategy Session 3 Daragh O’Reilly

2. THE STRATEGIC TRIANGLE CompanyCustomersCompetitors

3. A systematic attempt to identify and understand key elements of a competitor’s strategy in terms of objectives, strategies, resource allocation and implementation through the marketing mix. COMPETITOR ANALYSIS

4. The targets of competitor analysis New Entrants or Substitutes Companies seeking to diversify, or with new skills to exploit in the industry Industry Competition Willing, able and encouraged to overcome entry barriers to the strategic group Strategic Group

5. The components of competitor analysis Assess competitors’ current and future objectives Assess competitors’ current strategy Assess competitors’ resource profile Predict competitors’ future strategies

6. Competitor Objectives Assess competitors’ current and future objectives  What are they trying to achieve?  Why are they trying to achieve it?  Are they satisfied with their achievements? Key Indicators: Stated goalsMarket assumptions OwnershipInvestment priorities

7. Competitor Strategies Assess competitors’ current strategies  What market targets are they pursuing?  What is their strategic focus?  What marketing mix do they use?  How do they organise their marketing? Key Indicators: Advertising media and messagesPrice levels charged New product introduction ratesDistribution channels used Recruitment advertisements

8. VALUE CHAIN “A concept which recognises that there is a continuous link or chain right the way through from the extraction of raw materials to the provision of post- purchase services. Value is added at each stage of the value chain and a major consideration in strategy formulation is to identify where and how value is added as this constitutes a potential source of competitive advantage.” The Marketing Dictionary

9. © Advance Consulting VALUE CHAIN

10. Value chain and direct product costing Inbound logistics Operations Outbound logistics Marketing & sales Service Added Value Support Primary activities activities *Procurement *Human resource development *Technical development *Infrastructure Direct product cost Allocated product cost

11. Competitor Resources Assess competitors’ resource profile  Marketing culture?  Marketing assets and capabilities?  Production and operation capabilities?  Financial resources? Key Indicators: Customer relationship strengthProduct availability New product success ratesPromotional expenditure Quality of the people

12. Competitor Capabilities -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 -2012 Financial strength Staying power Strong R&D Technological breadth Quick response capability European marketing Financial strength Staying power Strong R&D Technological breadth Quick response capability European marketing Self: total 5Competitor A: total 6 Competitor B: total 4Competitor C: total -2 Key success factors

13. Future Competitor Strategies Predict competitors’ future strategies  What might the competition do?  What under-utilised resources do they have?  How will they react to our actions? Key Indicators: Past strategiesPast successes and failures Past reactionsChanges in ownership Recent resource acquisitions

14. Sources of competitor information What they say about themselves Advertisements (media and message) Recruitment ads Promotional material Technical reports Press releases What others say about them Newspapers and magazines Trade sources Customers

15. Learning from competitors Analyse successful competitors Analyse unsuccessful competitors Look to other industries and markets WHY ARE THEY SUCCESSFUL? WHY ARE THEY NOT SUCCESSFUL? WHAT CAN YOU ADAPT AND USE? Copy and improve on them Avoid and overcome these pitfalls Adopt and adapt best practice from elsewhere

16. ANALYSING DIFFERENTIAL ADVANTAGE Differential Advantage ProductPricePlacePromotionPeopleProcess Physical Evidence

17. Five forces driving competition Rivalry among existing firms in the industry Threat of new entrants Threat of substitutes Bargaining power of buyers Bargaining power of suppliers Source: Adapted from Porter (1986, 1988)

18. Map of strategic groups in the US automobile market Degree of Specialisation Broad line Narrow line Local Content HighLow The Big Three GM, Ford, Chrysler The Samurai Toyota, Nissan, Honda, Mazda The Faded Champions VW Audi, Rover Group Luxury cars Mercedes, BMW, Volvo*, Saab* Jaguar* Specialists Rolls-Royce*, Ferrari*, Aston Martin*, Lamborghini*, Lotus*, Morgan, McLaren (*brands now owned by large-scale American or European manufacturers)

19. Industry Evolution StageIssuesStrategies Emergence Technological uncertainty Commercial uncertainty Customer uncertainty Channel uncertainty Locate innovators and early adopters Establish standard Reduce switching cost risk Encourage trial Transition to Maturity Slow growth, falling profits Excess capacity, intense competition Increased customer power Extended product line Marketing mix marketing Customer retention, segmentation Efficiency focus Co-ordination Decline Substitution by newer technologies Demographic change Focus or divest Source: Adapted from O’Shaughnessy (1988)

20. Environmental Turbulence Marketing Turbulence Innovation Turbulence Environmental Turbulence Strategic Thrust Capability Repetitive Stable Custodial Developing Reactive Adaptive Changing Anticipatory Synergistic Discontinuous Exploring Global Surpriseful Creative Discontinuous Developing Changing Surpriseful Repetitive Surpriseful Discontinuous Changing Developing Repetitive Source: Based on Ansoff (1984) Figure 3.4.5, p222 Grocers (Tesco, Sainsbury etc) Convenience Stores (7/11, SPAR etc)

21. SPACE analysis map Financial Strength Environmental Stability Industry Strength Competitive Disadvantage INDUSTRY DIMENSIONS COMPANY DIMENSIONS ConservativeAggressive CompetitiveDefensive a b B A Strategic postures Source: Based on Rowe et al (1989) Exhibit 6.10, p145

22. The Advantage Matrix... ….................. Fragmented Specialised VolumeStalemate Potential size advantage Number of ways to achieve advantage Many Few Small Large ROA – Return on Assets RS – Relative Size ROA RS Source: Based on unpublished material from the Boston Consulting Group,