marketing strategy

1. Competitor analysis
At the end of this module the learning outcomes
are:
- Importance of understanding competition
- Approaches to competitor analysis
- Identifying competitors likely response
1

2. Competitor analysis
Suggested Readings
• Strategic Marketing Management by Wilson &
Gilligan (chapter 4)
• Strategic Marketing by: David Cravens (chapter 7)
2

3. Competitor analysis
Who are the competitors of
• Brooke Bond Red Label Tea
• Samsung fax machine
• Titan Watch
• Rajdhani express
3

4. Competitor analysis
Think again
• Have the sales of Samsung fax machines
gone down because of e-mail?
• Who is your competitor?
4

5. Competitor analysis
Are they
• Water
• E-mail
• Arrow shirt
• Spice Jet
5

6. Competitor analysis
Harley Davidson perception of competition
• Last American motorcycle
• Symbol of freedom and adventure
• Technically antiquated
• Not seen as form of transport
• Social statements
• Compete against various recreations
6

7. Competitor analysis
ASIAN PAINTS
• Indian paint industry
• Highly concentrated
• Top four players
• 95% of the market share
• Asian Paints
• Market leader
7

8. Competitor analysis
ASIAN PAINTS
• Next player has less than half market share
• How it has maintained
• Strong value proposition
• Higher customer perceived benefits
• Lower costs
8

9. Competitor analysis
ASIAN PAINTS
Higher customer perceived benefits
• Initial foray in semi-urban and rural market
• Required extensive distribution network
• Bypasses wholesaler arrangement
• Appointed retailers in semi-urban areas all
over India
9

10. Competitor analysis
ASIAN PAINTS
Higher customer perceived benefits
• Rural areas
• Smaller size paint products
• Risk of inventory build up
• Invested in IT to ensure strict inventory control
• Networking of offices and depots
10

11. Competitor analysis
Higher customer perceived benefits
• Urban areas
• Paints for every price points
• Competitively priced thus encouraging
economies of scale
• Launch of premium paints
• Launch of color world tinting system
• Customers mix shade before buying 11

12. Competitor analysis
Higher customer perceived benefits
• Entry into painting solutions
• Dominated by unorganized sector
• Offer solutions
• Higher margins in services
12

13. Competitor analysis
Lower costs
• Color world tinting
• Means lower stocks
• Reducing inventory and working capital
• Tight control on receivables
• Inventory in number of days and
receivables lower than industry average
13

14. Competitor analysis
These initiatives have helped Asian Paints
to maintain its competitive advantage
and distinct edge over competitors
14

15. Competitor analysis
Importance
- Provides an understanding of your competitive
advantage / disadvantage relative to your
competitor’s position.
- Insights into competitors strategies
- Developing future strategies to sustain/establish
advantages over your competitors.
15

16. Competitor analysis
Seeking competitive advantage
Two types of analysis
• Industry analysis
• Comparative analysis
16

17. Competitor analysis
Industry analysis
• Every industry
• Peculiar characteristics
• Porter’s five-force model
17

18. Competitor analysis
Porter's approach to competitive structure
analysis
Nature and intensity of competition within any
industry is determined by the interaction of five key
forces:
1. The threat of new entrants
2. Power of buyers
3. Threat of substitutes
4. Extent of competitive rivalry 18
5. Power of suppliers

19. Competitor analysis
1. Threat of new entrants
- Depends on barriers to entry
- How heavy is the capital investment
Intel's huge investment into research
- Strong brand image to overcome
Coke investments required to build brands
- Cost incurred to create distribution channels
Hindustan Lever’s huge investments
in distribution in rural areas
19

20. Competitor analysis
2. Power of buyers
- Is likely to be higher if:
1. There are large number of suppliers
2. Alternative sources of supply
3. Threat of backward integration
Example
Reliance Industries
1. Started as textiles company
2. Makes raw materials to produce textiles
3. Vertically integrated
4. Bargains on price for huge quantities it picks20up.

21. Competitor analysis
3. Threat of substitutes
- Will be more prevalent if:
- Customers perceive other offers to perform
the same function as ours
- Substitute products offer higher value for
money
- Substitute products earn higher profits
21

22. Competitor analysis
– Onion versus ready to make paste
» Dabur Hommade pastes
– Tomato versus tomato puree
– Scooters versus Motorcycles
» Hero Honda sales at the expense of Bajaj
– Vanaspati versus edible oils
22

23. Competitor analysis
4. Extent of competitive rivalry
Intensity of rivalry will be greater if:
- Competitors are of equal size and are seeking
dominance
- High fixed costs provoke price wars to maintain
capacity. E.g: Airlines industry
23

24. Competitor analysis
– New addition of capacity have created excess
capacity
Hotel industry
Automobile industry
– Product homogeneity necessitates activity to
maintain share.
» Coke versus Pepsi
24

25. Competitor analysis
5.Power of suppliers
Is likely to be higher if:
- There are few suppliers
- Cost of switching from one supplier to another is
high
E.g: Intel
Suppliers are likely to integrate forward
Kirloskar compressors into airconditioners.
Reliance entry into petroleum products retailing
25

26. Competitor analysis
Comparative analysis
• Specific advantage of competitors within a
given market
Two types
• Structural advantage
• Responsive advantage
26

27. Competitor analysis
Structural advantage
• Built into business
• A manufacturing plant at Chennai for
Hyundai to carry out exports
27

28. Competitor analysis
Responsive advantage
• Position of comparative advantage that have
accrued to business over time
• Leveraging strategic phenomena at work in
the business
• Either cost or unique value
• Indigo over Air India
28

29. Competitor analysis
Intensity and Degree of competition
Factors
• Opportunity potential
• Ease of entry
• Nature of product
• Exit barriers
• Homogeneity of market
29

30. Competitor analysis
Intensity and Degree of competition
Factors
• Industry structure or competitive position of firms
• Commitment to the industry
• Feasibility of technological innovations
• Scale economies
• Economic climate
• Diversity of firms
30

31. Competitor analysis
Opportunity potential
• Promising industry attracts rivals
• Telecom service operators
31

32. Competitor analysis
Ease of entry
• Easy entry
• Attracts marginal players
• Committed players discourage potential
entrants
• Colgate trying to thwart Anchor with
Brands
32

33. Competitor analysis
Nature of product
• Offerings perceived to be similar
• Tends to go on price
• Severe competition
33

34. Competitor analysis
Exit barriers
• Regulated
• Exit difficult
Mobile services
34

35. Competitor analysis
Homogeneity of market
• Intensity is higher than segmented
Telecom services versus Telecom handset
players
35

36. Competitor analysis
Industry structure or competitive position
of firms
• Large number of firms
• Intensity higher
• Aggression leads to retaliation
• Fewer players leads to less retaliation
36

37. Competitor analysis
Commitment to the industry
• Contribution to overall sales
• Maintain position at any cost
Wipro versus Infosys
37

38. Competitor analysis
Feasibility of technological innovations
• Frequent innovations
• Do their best in short time
• Intensity is higher
38

39. Competitor analysis
Scale economies
• Economies of scale benefits are high
• Will do everything to get volume
• Aggressive competition for market share
• Escalates pressure
Airlines industry
39

40. Competitor analysis
Economic climate
• Boom times
• Relatively moderate
• Recession
• Companies bite each other
• Intensity is higher
40

41. Competitor analysis
Diversity of firms
• Old players in the industry
• Display a predictable behavior
• New participants
• Can do many unconventional behavior to
upset existing players
Dell’s model
41

42. Competitor analysis
Marketing Myopia
• Theodore Levitt
• Marketing Guru
• How business is defined
• Why American rail business a massive
decline
• Onslaught of airlines
42

43. Competitor analysis
THE COURIER MARKET
• came in 70s
• Launch of fax
• Later email
• How players handled competition
43

44. Competitor analysis
Two approaches
• Adopt new products
• Strengthen existing business
44

45. Competitor analysis
Adopt new products
IBM
• Hardware in 70s
• Threat from low-cost producers
• Shifted focus to software
45

46. Competitor analysis
Strength existing business
FED EX
• Earlier couriers
• Competition from fax, email
• Shifted focus on parcel market
• Physical distribution required
• Offered door-to-door delivery
46

47. Competitor analysis
FED EX
• Offer complete logistics solutions
• Found existing players not offering these
solutions
• Gradually left the space for document
courier to smaller companies
47

48. Competitor analysis
MOSQUITO REPELLANT DEVICES
BALSARA
• Launched ODOMOS in 1964
• Unattended need
• Cream based product
• Inhouse R & D
• Earlier smoke sensing devices were used
48

49. Competitor analysis
MOSQUITO REPELLANT DEVICES
• Now creams
• Held 97% share of the cream market
• What are the concerns
• Later Tortoise was launched
• Used ‘smoke’ concept
• Economical
• Gained 70% market share
• Odomos 20% share
49

50. Competitor analysis
MOSQUITO REPELLANT DEVICES
• 1984
• Goodknight brand
• No use of cream or coil
• Value proposition
– Cleaner
– Less messy
– Convenient
50

51. Competitor analysis
MOSQUITO REPELLANT DEVICES
By late 90s
• Mats/liquid-70%
• Coils-22%
• Creams-9%
• Balsara tried to launch mats/liquid
BALSARA lost the market which it created
in 1964
51

52. Competitor analysis
Poor understanding of the competition
• Decline
– Air coolers
– Mopeds
– Soya-based drinks
52

53. Competitor analysis
Competition happens at four levels
1.Companies offering only similar products
- Kitkat versus Perk
- Nescafe versus Bru
53

54. Competitor analysis
Competition happens at four levels
2 Companies consisting of all companies operating
in the same category
- Cadbury's Eclairs versus. Nestle Kitkat
- Canada Dry versus Pepsi Cola
54

55. Competitor analysis
Competition at four levels
3. Competitor consists of all companies manufacturing
or supplying products which deliver the same service
- Airlines versus Railways
- Second hand cars versus scooters versus Tata Nano
55

56. Competitor analysis
Competition happens at four levels
4. Competition consists of all companies competing
for the same spending power
- Dishwasher versus Microwave oven
- Designer jewelry versus Ritu Beri's fabrics
- Debeer’s versus Nokia mobile phones
56

57. Competitor analysis
COMPETITIVE EQUILIBRIUM
Five scenarios
If competitors are nearly identical and make their
living in the same way, then the competitive
equilibrium is unstable.
• Identical products
• Commodity industries
• Competitive equilibrium gets upset if one cuts
prices
57

58. Competitor analysis
If a single major factor is the critical factor, then
competitive equilibrium is unstable
• Differentiation is possible
• Breakthrough in technologies
• Cut costs
• Change habits of consumers
• Apple’s Iphone
• Amazon.com
58

59. Competitor analysis
• If multiple factors may be critical factors, then
it is possible for each competitor to have some
advantage and be differentially attractive to
some customers. The more the multiple factors
that may provide an advantage, the more the
number of competitors who can coexist. Each
competitor has his competitive segment defined
by the preference for the factor trade-offs that
he offers.
• Retailing industry in India
59

60. Competitor analysis
• The fewer the number of competitive
variables that are critical, the fewer the
number of competitors.
• If one factor is critical, fewer competitors.
• More variables, larger number of
competitors, but smaller in size.
60

61. Competitor analysis
• Is it always prudent to increase your market
share?
61

62. Competitor analysis
• A ratio of 2 in 1 in market share between
two competitors seems to be the
equilibrium point at which it is neither
practical nor advantageous for other
competitor to increase or decrease share.
62

63. Competitor analysis
Marketing Myopia
• Traditional way of looking competition
• Narrow definition
• Identify direct and indirect competition

64. Competitor analysis
Red-Ocean thinking
• Seeking bloody
• Head-to-head battles with competitor
• Based on improvements in costs, quality or
both

65. Competitor analysis
Blue-Ocean thinking
• Creating products and services
• There are no direct competitors
• Go beyond conventional boundaries
• Find unoccupied competitions
• Represent real value innovation

66. Competitor analysis
Blue-Ocean thinking
EASYJET
• Low-cost carrier
• European carrier
• Quite successful
• ‘Fly to Scotland for a pair of jeans.’
• Competitor to full-price carriers like British
Airways, Lufthansa
• How 3Vs were used?
66

67. Competitor analysis
Valued customer-who to serve
• Traditional carriers targeted everyone
• Mainly business travelers
• Travel mostly on company expenses
EasyJet
• Target those customers who pay from their own
pocket,
• Predominantly entrepreneurs, small business
owners 67

68. Competitor analysis
EasyJet
• Target those customers who pay from their own
pocket
• Predominantly entrepreneurs, small business
owners
• Large segment in Europe
• Were unhappy with offerings of full-price carriers
Two strategic segments identified
68

69. Competitor analysis
Valued-proposition-what to offer?
• Major differences between two segments
• Business segment
– Demanding
– Freebies such as newspaper, meals
– Want seamless connections
– Less waiting
69

70. Competitor analysis
• Small business travel
• Willing to forgo these services
• Lower prices
• EasyJet’s value proposition answers four
issues
70

71. Competitor analysis
Which attributes that our industry takes
for granted should be eliminated?
• Free meals and travel agents to be
eliminated.
• Sells food on aircraft
• Eliminated travel agents
• Tickets sold on internet
71

72. Competitor analysis
Which attributes should be reduced to below
industry standards?
• Have the offering been overdesigned?
• What can be reduced
• Flexibility in flight changes and seat selection
• Non-refundable fares
• Seat on first-come, first-served basis
• Incentive for passengers to board earlier
72

73. Competitor analysis
Which attributes should be increased to
above industry standards?
• Lower prices
• Punctuality
• Younger fleet of aircraft
73

74. Competitor analysis
Which new attributes should be created
that the industry has never offered?
• New sources of value creation
• One-way fares refund if the flight is delayed
beyond four hours
74

75. Competitor analysis
Value curve
• Compare the value proposition of various
players in the industry
• Full-price carriers are superior on every
dimension
• Which attributes are most important to air
travelers?
• Reach safely
• Low prices a concern
75

76. Competitor analysis
Easy Jet
• Streamlined operations
• Fast turnaround
• Greater utilization
• single type of aircraft (Boeing 737)
• Reduces spare parts inventory
• Increases bargaining power with vendors
• Lower pilot training costs
• Elimination of business class means more seats can be
accommodated
76

77. Competitor analysis
FIVE PRINCIPLES OF EASYJET VALUE
NETWORK
1. Avoid fixed costs wherever possible
No secretarial staff
1. Cover fixed costs quickly
Aircrafts remain in air for 11 hours
1. Eliminate variable costs wherever possible
Avoid use of travel agents
1. Keep variable costs low
Avoid landing at major ports
1. Convert fixed costs into revenue generators
Sell food items in aircraft
77

78. Customer and Competitor
Orientations
Competitor-Centered Companies
Example
• Competitor launching a new product next
brand of soap in Delhi region
• Float a scheme for retailers for our existing
soap

79. Customer and Competitor
Orientations
Competitor-Centered Companies
Advantages
• Organization develops a fighter orientation
• Trained to be on constant alert
Disadvantages
• Too reactive
• Too much dependent on competitor moves

80. Customer and Competitor
Orientations
Customer-Centered Companies
• Focus on customer developments
• The market of children is getting saturated
• Let us reposition the product to widen the
market to include youth.

81. Customer and Competitor
Orientations
Customer-Centered Companies
Advantages
• Better position to identify new opportunities
• Choose a course which delivers long-term
growth and profits
• Monitoring customer needs
• Amazon.com

82. Customer and Competitor
Orientations
Customer-Centered Companies
Disadvantages
• Counter attack by competitors
• Odomos by Good Knight mosquito
repellant
• Good Knight became the leader