1. University of Washington EMBA Program Regional 20
Marketing Management
“Competitive Analysis”
Instructor: Elizabeth Stearns

2. MARKETING MANAGEMENT Marketing Framework
Course Structure
The Marketing Framework/Concept
Analysis
5C’s Opportunity Analysis
Marketing
Research
Marketing Strategy & Customer Strategy
Goal Setting, Segmentation, Targeting, and Positioning
Put stuff about how future marketing courses delve into one or more of these topics in detail, I.e., Consumer Marketing takes a long hard look at the human consumer, the human mind, and human decision making as well as what that implies for businesses who are trying to communicate and trade with these individuals
Implementation/Action Plans
Marketing Mix (4 P’s)
Professor Stearns, University of Washington
Page 10

3. “How Competitive Forces Shape Strategy” Industry Forces
MARKETING MANAGEMENT Marketing Framework
“How Competitive Forces Shape Strategy” Industry Forces
Suppliers
New Directly
Competitive
Entrants
Direct
The
Firm
Competitors
Indirect
Competitors
Foreign
Low Priced
Different Industries
Substitute
Products
Technologies
When Michael Porter developed this famous model, he did so at a time (’70’s) when there was not a lot of cooperation or collaboration between the forces above. Because of that McKinsey has argued that this model is no longer as meaningful (see……). It is important nevertheless, because it identifies a structure for you to consider when doing a thorough competitive analysis and assessing your opportunities for success.
Buyers
Michael Porter
Professor Stearns, University of Washington

4. Competitor, Collaborator, and Company Analysis
Competitor: Any organization whose goods and services could provide the same benefits to your customers
Collaborator: Any organization who assists your own in the delivery of benefits to your customers
Company: Your organization

5. Competitor, Collaborator, and Company Analysis
MARKETING MANAGEMENT Marketing Framework
Competitor, Collaborator, and Company Analysis
Key Questions
Who are they?
What capabilities/skills/assets do they have?
How can/will they go to market?
Past behavior
Strategic signals
Optimal behavior, both strategies and reactions
Mission and objectives
Might organize your thoughts in a SWOT analysis.
Professor Stearns, University of Washington

6. Competitors: Definition
MARKETING MANAGEMENT Marketing Framework
Competitors: Definition
Any organization whose goods and services could satisfy the same needs or wants of your customers
Define competition broadly
Actual competitors (in the market now)
Potential competitors (may enter the market)
Direct competitors (offer similar products or services)
Indirect competitors (offer substitute products or services)
Business units within our firm
Professor Stearns, University of Washington

7. The Broad View of the Soft Beverage Market*
Strong
Taste
Iced Tea
& Coffee
Cola
Soft Drinks
Club
Sodas
Sports
Drinks
Bottled &
Mineral
Waters
Noncola
Soft Drinks
Fruit
Juices
Fruit
Drinks
Fruit
Flavor
Bitter Tasting
Sweet Tasting
*Roger Best

8. Competitors: Definition
MARKETING MANAGEMENT Marketing Framework
Anticipate future competition
Consider not only product/market competition, but also competition between organizations
Professor Stearns, University of Washington

9. Analyzing Competitors
Objectives
Competitor
Actions
Strategies
Strengths &
Weaknesses
Reaction
Patterns
©2000 Prentice Hall

10. Industry Competition Number of Sellers - Degree of Differentiation
Entry, Mobility, Exit barriers
Cost Structure
Degree of Vertical Integration
Degree of Globalization
©2000 Prentice Hall

11. Structural Determinants of Entry
MARKETING MANAGEMENT Marketing Framework
Structural Determinants of Entry
Economies of Scale and Scope
Capital Requirements
Government Regulations
Technology & Patents
Threat of Competitive Retaliation
Other Market-oriented Characteristics
Professor Stearns, University of Washington

12. “A pictorial view of the Competitive Frame…
in the minds of the customer”

15. Positioning and Perceptual Maps
Useful to provide pictorial view of competitive situation.
Information revealed:
What are the major perceptual dimensions underlying the map?
e.g. When customers were judging the similarities of ten brands, what were the most important attributes underlying their perceptual decisions?
Subjective/subject to argument

16. Positioning and Perceptual Maps
What brands are perceived as similar to others?
Deals with issue of substitutability.
if customer’s brand is not available, what brand is most likely to be purchased?
Unique Position Or
Easy switching

17. Positioning and Perceptual Maps
What holes exist for repositioning an old, or new product introduction? (Point on map where no competitive brands exist)
Opportunity or not?
Ideal points = Preference maps
If customer could have any product they wished.

18. Brand Development Index & Category Development Index (or using sales information that most companies have!)

19. Brand Development Index (BDI)
Market
(1) % U.S. Population
(2) % Brand Sales
BDI (2 ÷ 1) * 100 A 10 11 B 15 C 20 18 D 25 30 E 26
Total
100
100 (Average)

20. Brand Development Index (BDI)
Market
(1) % U.S. Population
(2) % Brand Sales
BDI (2 ÷ 1) * 100 A 10 11
110 B 15
100 C 20 18 90 D 25 30
120 E 26 87
Total
100 (Average)

21. Brand Development Index (BDI)
Market
(1) % U.S. Population
(2) % Brand Sales
BDI (2 ÷ 1) * 100 A 10 11
110 B 15
100 C 20 18 90 D 25 30
120 E 26 87
Total
100 (Average)
Markets “C” & “E need support, “A”, “B”, and “D” seem OK

22. (% Sales / % Population)
BDI Compared to CDI
% Sales
Index
(% Sales / % Population)
Index (BDI/CDI)
Market
% Population
Category
Brand A 10 12 11 B 15 C 20 16 18 D 25 30 E 27 26
Total
100

23. (% Sales / % Population)
BDI Compared to CDI
% Sales
Index
(% Sales / % Population)
Index (BDI/CDI)
Market
% Population
Category
Brand A 10 12 11
120
110 92 B 15
100 C 20 16 18 80 90
113 D 25 30 E 27 26 87 96
Total

24. (% Sales / % Population)
BDI Compared to CDI
% Sales
Index
(% Sales / % Population)
Index (BDI/CDI)
Market
% Population
Category
Brand A 10 12 11
120
110 92 B 15
100 C 20 16 18 80 90
113 D 25 30 E 27 26 87 96
Total
Consider possible different conclusions: Market “D” is only average,
“C” & “E” probably don’t need support, “A” probably does.

25. Differential Advantage

26. Differential Advantage: Definition
MARKETING MANAGEMENT Marketing Framework
A Differential Advantage is a benefit or cluster of benefits that customers value and believe they cannot obtain elsewhere
(Acid test: they are willing to pay more for your product or service)
Professor Stearns, University of Washington

27. Designing Offers for Customers
MARKETING MANAGEMENT Marketing Framework
Designing Offers for Customers
Product
Price
Time
Effort
Risk
Delivery
Services
Sales
Relation-
ship
Technical
Innovation
Brand
Equity
Value
Cost
Offer
Professor Stearns, University of Washington

28. Differential Advantage: Shift Over Time
Psychological
Differential advantage sustained by focusing on functional or psychological values
Tends to erode over time in the direction of economic advantages
Competition drives offers from specialty to commodity
Functional
Economic

29. Differential Advantage: Discussion
MARKETING MANAGEMENT Marketing Framework
The question that is answered is “do we deliver that which our customer/prospect values”, “by what means”, and “how well” (is it superior to our competition).
it is NOT
“what do we do well” as a stand alone question. This concept is difficult for companies to integrate into the selling mode especially when they pride themselves in what they do well and/or are considered the gold standard.
Professor Stearns, University of Washington

30. Differential Advantage: Discussion
MARKETING MANAGEMENT Marketing Framework
Differential Advantage: Discussion
While a company may have excellent strengths and assets, these are only important if they satisfy a customer need. (this is the Marketing concept)
Differential Advantage analysis raises the bar for understanding what a customer needs and the priority/importance of that need to his/her organization.
If a company does not know this, they proceed to sell what they do well, and not what the customer values.
Professor Stearns, University of Washington

31. Sources of Differential Advantage
MARKETING MANAGEMENT Marketing Framework
Sources of Differential Advantage
Business strengths, often defined as assets and skills, provide the basis for differential advantage.
An asset is something a firm possesses such as a brand name, a retail location, human capital, a philosophy, etc., which is superior to that of competition.
A skill is something that a firm does better than its competitors, such as advertising, merchandising, efficient manufacturing, etc.
Professor Stearns, University of Washington

32. Differential Advantage Matrix
Tool for matching a segment’s required benefits with our organization’s ability to deliver those benefits more effectively than competitors
1. Identify the segment for which this matrix will apply
2. List the priority-ordered benefit requirements for this segment as the row headings in the matrix
3. List the relevant business strengths that a “generic” organization would require to deliver these benefits as the column headings of the matrix

33. Differential Advantage Matrix
Assessment Diagnostics (presuming that this business strength is relevant to providing this benefit—if not leave blank or use NA)
Do we have the capability to deliver the required customer benefit? (1 or Y)
Do we have significantly greater capabilities than competitors? (1 or Y)
Would it be difficult for competitors to match us? (1or Y)
(if you get to 0, or No, you stop)

34. Differential Advantage Matrix
MARKETING MANAGEMENT Marketing Framework
Differential Advantage Matrix
Implications
Do we have a differential advantage, i.e., (1,1,1) or (Y,Y,Y)?
If so, where, and through what strengths?
Our organization has a differential advantage in delivering benefit X to segment Y because of business strengths A, B, and C.
Professor Stearns, University of Washington

35. Differential Advantage Matrix
Relevant Business Strengths
Segment
ID/Description
Opportunistic, solo,
weekend leisure
travelers
Patented reverse auction business
Patented reverse auction business
High brand awareness among end-
High brand awareness among end-
Broad collaborator-provider network
Broad collaborator-provider network
Demonstrable track record with
Demonstrable track record with
adaptive marketing affiliates
adaptive marketing affiliates
Priority
model
model
users
users
Benefit
Ranking
Low out-of-pocket
1,1,1
1,0
Price allows add ons 1 2 3 4 5 6

36. Thank you!