Welcome to my Competitive analysis definition. The direction of research for the major competitors: the scope of activities, profitability, features, and characteristics of the offered goods, markets and major customers, system promotion.
Information about competitors is important because it allows you to determine their satisfaction with the current market position, the alleged acts to change the current balance of power, the nature of their investment policy, the main projects. The idea of the strengths and weaknesses of competitors, the tools that they will use in the competition (price, advertising, the new incentive system suppliers, etc.), - a necessary condition for the development of effective countermeasures and the desired change of the competitive environment.
Information for competitor analysis:
target competitors (increase market share in the movement of the group leaders, etc.);
the current position of competitors (strategic position in the group, etc.);
potential competitors' strategies (growth, expansion through acquisition, and others.);
potential competitors.
The objectives of the competition are formed under the influence of factors: the size of the company, its history, qualifications of management, financial situation.
Assessing the strengths and weaknesses of competitors. Will competitors to implement its strategy and achieve its goals, depending on their resources and capabilities. The first stage of the assessment of the strengths and weaknesses of competitors - to provide information on sales volumes, market share, profits, cash flow, new investment and capacity utilization. Get some of the data is very difficult. Companies receive information on the strengths and weaknesses of competitors through the sides of the secondary data, from personal experience, and according to rumors. Enlarge its volume allows the carrying out of primary marketing research of consumers. suppliers and dealers.
Evaluation models of the reaction of competitors. Determination competitor goals, its strengths, and weaknesses - a first step towards building an adequate model of its possible reaction to rivals strategy. Most of the competitors fall under one of the four definitions.
1. A leisurely different competitor delayed reaction or ignores the steps taken contenders. Reasons for slow response companies are different. Leisurely competitors can rely on the loyalty of their customers; competitors do not notice changes tactics: they may not have enough money for an adequate response. It is therefore important to know the reasons for a leisurely competitor behavior.
2. Coherent competitor responds only to certain types of attacks, such as a decline in prices. but not to increase the advertising costs.
3. competitive "tiger" respond to any active actions of rivals; depending on the situation varies and the power of retaliation.
4. The unpredictable competitor has a certain pattern of behavior. In one case, he replies blow for blow, at other times a similar effect does not cause him any response; its solution is impossible to predict, on the basis of its economic situation, history or any other factors. Many small companies are totally unpredictable, they are counter-fight when they can afford it, and behave with restraint if they find that competition is costing them too much.
An important source of information is the Internet. Studying competitor website, you can gather information about his assets, plans and priorities of action, types of business, trademarks, financial condition, and others. In addition, to collect the necessary information fails, tracking publication in specialized publications, public speaking CEOs, studying advertising materials, participating in conferences, from conversations with experts and others.
Analyzing the competition, it is imperative to consider three variables:
market share: the share of its competitors in the target market.
share "of the mind": the percentage of consumers who, answering the question: "What are the company that first comes to mind at the mention of the industry" - remember your competitors.
the share of the "heart": the percentage of consumers who are just in response to the question: "What are the companies whose products you'd prefer to buy" - nominal competitors.
Among these three ingredients, there is an interesting relationship. Companies, the share of "mind" and "heart" of which increases, and inevitably increase their market share and revenues.
Information about competitors is important because it allows you to determine their satisfaction with the current market position, the alleged acts to change the current balance of power, the nature of their investment policy, the main projects. The idea of the strengths and weaknesses of competitors, the tools that they will use in the competition (price, advertising, the new incentive system suppliers, etc.), - a necessary condition for the development of effective countermeasures and the desired change of the competitive environment.
Information for competitor analysis:
target competitors (increase market share in the movement of the group leaders, etc.);
the current position of competitors (strategic position in the group, etc.);
potential competitors' strategies (growth, expansion through acquisition, and others.);
potential competitors.
The objectives of the competition are formed under the influence of factors: the size of the company, its history, qualifications of management, financial situation.
Assessing the strengths and weaknesses of competitors. Will competitors to implement its strategy and achieve its goals, depending on their resources and capabilities. The first stage of the assessment of the strengths and weaknesses of competitors - to provide information on sales volumes, market share, profits, cash flow, new investment and capacity utilization. Get some of the data is very difficult. Companies receive information on the strengths and weaknesses of competitors through the sides of the secondary data, from personal experience, and according to rumors. Enlarge its volume allows the carrying out of primary marketing research of consumers. suppliers and dealers.
Evaluation models of the reaction of competitors. Determination competitor goals, its strengths, and weaknesses - a first step towards building an adequate model of its possible reaction to rivals strategy. Most of the competitors fall under one of the four definitions.
1. A leisurely different competitor delayed reaction or ignores the steps taken contenders. Reasons for slow response companies are different. Leisurely competitors can rely on the loyalty of their customers; competitors do not notice changes tactics: they may not have enough money for an adequate response. It is therefore important to know the reasons for a leisurely competitor behavior.
2. Coherent competitor responds only to certain types of attacks, such as a decline in prices. but not to increase the advertising costs.
3. competitive "tiger" respond to any active actions of rivals; depending on the situation varies and the power of retaliation.
4. The unpredictable competitor has a certain pattern of behavior. In one case, he replies blow for blow, at other times a similar effect does not cause him any response; its solution is impossible to predict, on the basis of its economic situation, history or any other factors. Many small companies are totally unpredictable, they are counter-fight when they can afford it, and behave with restraint if they find that competition is costing them too much.
An important source of information is the Internet. Studying competitor website, you can gather information about his assets, plans and priorities of action, types of business, trademarks, financial condition, and others. In addition, to collect the necessary information fails, tracking publication in specialized publications, public speaking CEOs, studying advertising materials, participating in conferences, from conversations with experts and others.
Analyzing the competition, it is imperative to consider three variables:
market share: the share of its competitors in the target market.
share "of the mind": the percentage of consumers who, answering the question: "What are the company that first comes to mind at the mention of the industry" - remember your competitors.
the share of the "heart": the percentage of consumers who are just in response to the question: "What are the companies whose products you'd prefer to buy" - nominal competitors.
Among these three ingredients, there is an interesting relationship. Companies, the share of "mind" and "heart" of which increases, and inevitably increase their market share and revenues.
Competitive analysis - an understanding of competitors.
Understanding competitors and their activities can provide many benefits. Knowledge of current strengths and weaknesses of competitors can help to identify opportunities and risks, which will serve as a basis for decision-making and action. Understanding the future strategies of competitors will allow predicting the future threat or the possibility of its occurrence. The decision on the strategic alternatives to a large extent depends on the ability to correctly predict the reaction of the main competitors. The competitive analysis may lead to the formulation of some of the strategic issues which should be considered in the future.
The actions of competitors are influenced by the following factors:
1. Financial results (volume, growth, and profitability)
Level and sales growth and market share are indicators of the viability of the business strategy.
Maintaining a strong market position and rapid growth are generally considered signs of a strong competitor (or strategy group) and a good strategy.
The company that receives significant revenue usually has access to capital for investments.
The company, carrying the losses over a significant period of time, or whose profitability has fallen sharply, may have difficulties in obtaining capital resources, both from internal and external sources.
2. The strategy of image and positioning:
The cornerstone of the strategy is the business association of this kind, as the most durable truck, most durable car, the most miniature consumer electronic equipment, or the most effective cleanser.
Most often used to look beyond product attributes classification and pay attention to such "intangible" elements, such as quality, innovation, and environmental protection.
Another problem - the perception of the company as the "personality" and its relation to other market participants.
In order to develop an alternative position, it is useful to define the image of the main competitors and how their brands are perceived.
Weakness competitors with regard to the attributes or perception, it may be a chance to create a differentiation and advantage.
Strong competitors on important parameters may be difficulties to be overcome.
The image of a competitor and position information can be partially determined by examining its products, advertising, packaging, and action, but often consumer research to help ensure obtaining an objective picture.
The traditional approach - start with high-quality customer research to find out how they perceive the company's trademark. What are their associations? And what if the firm was a man? What it would be a man? What he would look, what books, animals, trees, or activities associated with the company? What is its essence?
3. The objectives and the degree of involvement of the competition:
Knowledge of competitor objectives is the basis to make a prediction as to whether its performance satisfactory or may follow strategic changes.
Financial goals competitor may serve as an indication of his desire to invest in a particular business, even if the prospects for profits are relatively long-term. In particular, what goals competitor regard market share, sales, and profitability.
Non-financial targets may also be a good indicator. Whether a competitor wishing to become a leader in the technology? Or he prefers to create a service organization? Or expand the distribution network? Such goals are a good indicator of future potential competitor strategies.
Objectives rival holding company (if any) are also important. What are the current level of performance and financial objectives of the holding company?
Of key importance is playing the role assigned to the branch. Is the company an important from the standpoint of long-term planning? Is it in the growth zone and it is expected that it will serve as a source of funds for investment in other areas? Does the branch successfully together with other departments? Does it, for whatever reasons, the holding company of "emotion" in relation to a branch?
4. Current and past strategies of competitors:
present and past competitors' strategies should be considered. In particular, it should be noted the strategy failed in the past, as this kind of experience can keep a competitor from trying to take similar steps again.
Knowledge of the range of new products by competitors or new marketing activities can help to predict the future direction of growth. If the differentiation strategy has been detected, to determine the extent to which it refers to a range of products, quality, service, distribution channels type or brand.
It is necessary to determine the type of strategy, on which it is based (on the experience, production capacity and access to raw materials). What is the cost structure? If viewed concentration strategy, describe the scope of business.
5. The organization and culture of a competitor:
Knowledge of history and senior competitor management experience can help to predict future actions.
Whether involved in marketing management, engineering, production? Whether they came for the most part from another industry or another company?
Organizational Culture, with the support of the infrastructure, systems, and personnel, often have a significant impact on the strategy.
It focused on cost reduction organization with a rigid structure, which is to achieve its goals using strict management techniques may have difficulty if it decides to do pioneering work or take an aggressive strategy with a focus on the market.
Less tightly organized the company, which focuses on innovation and risk-taking, may equally have difficulty in carrying out a formalized program to reduce costs.
These organizational elements such as culture, structure, system, and personnel, limit the number of strategies that can be considered.
6. Cost structure:
Knowing a competitor's cost structure, especially if a competitor relies on a low-cost strategy that could form the basis of future pricing policies. The aim should be a representation of the direct and indirect costs, which determine the point of "break-even". Such information is easily obtained, and it will serve as an indicator of the cost structure.
Number of employees, with an estimated breakdown by directly employed in production (variable costs of labor) and the staff (these costs can be part of the fixed costs).
The relative cost of raw materials purchased.
Investments in current inventory, plant, and equipment (as the fixed costs).
The level of wages and the number of production sites.
7. Legal barriers:
Legal barriers may be of great importance for the existence of an alternative to "exit" from the company. They are an indication of the degree of involvement of the company.
Among them can be mentioned:
Understanding competitors and their activities can provide many benefits. Knowledge of current strengths and weaknesses of competitors can help to identify opportunities and risks, which will serve as a basis for decision-making and action. Understanding the future strategies of competitors will allow predicting the future threat or the possibility of its occurrence. The decision on the strategic alternatives to a large extent depends on the ability to correctly predict the reaction of the main competitors. The competitive analysis may lead to the formulation of some of the strategic issues which should be considered in the future.
The actions of competitors are influenced by the following factors:
1. Financial results (volume, growth, and profitability)
Level and sales growth and market share are indicators of the viability of the business strategy.
Maintaining a strong market position and rapid growth are generally considered signs of a strong competitor (or strategy group) and a good strategy.
The company that receives significant revenue usually has access to capital for investments.
The company, carrying the losses over a significant period of time, or whose profitability has fallen sharply, may have difficulties in obtaining capital resources, both from internal and external sources.
2. The strategy of image and positioning:
The cornerstone of the strategy is the business association of this kind, as the most durable truck, most durable car, the most miniature consumer electronic equipment, or the most effective cleanser.
Most often used to look beyond product attributes classification and pay attention to such "intangible" elements, such as quality, innovation, and environmental protection.
Another problem - the perception of the company as the "personality" and its relation to other market participants.
In order to develop an alternative position, it is useful to define the image of the main competitors and how their brands are perceived.
Weakness competitors with regard to the attributes or perception, it may be a chance to create a differentiation and advantage.
Strong competitors on important parameters may be difficulties to be overcome.
The image of a competitor and position information can be partially determined by examining its products, advertising, packaging, and action, but often consumer research to help ensure obtaining an objective picture.
The traditional approach - start with high-quality customer research to find out how they perceive the company's trademark. What are their associations? And what if the firm was a man? What it would be a man? What he would look, what books, animals, trees, or activities associated with the company? What is its essence?
3. The objectives and the degree of involvement of the competition:
Knowledge of competitor objectives is the basis to make a prediction as to whether its performance satisfactory or may follow strategic changes.
Financial goals competitor may serve as an indication of his desire to invest in a particular business, even if the prospects for profits are relatively long-term. In particular, what goals competitor regard market share, sales, and profitability.
Non-financial targets may also be a good indicator. Whether a competitor wishing to become a leader in the technology? Or he prefers to create a service organization? Or expand the distribution network? Such goals are a good indicator of future potential competitor strategies.
Objectives rival holding company (if any) are also important. What are the current level of performance and financial objectives of the holding company?
Of key importance is playing the role assigned to the branch. Is the company an important from the standpoint of long-term planning? Is it in the growth zone and it is expected that it will serve as a source of funds for investment in other areas? Does the branch successfully together with other departments? Does it, for whatever reasons, the holding company of "emotion" in relation to a branch?
4. Current and past strategies of competitors:
present and past competitors' strategies should be considered. In particular, it should be noted the strategy failed in the past, as this kind of experience can keep a competitor from trying to take similar steps again.
Knowledge of the range of new products by competitors or new marketing activities can help to predict the future direction of growth. If the differentiation strategy has been detected, to determine the extent to which it refers to a range of products, quality, service, distribution channels type or brand.
It is necessary to determine the type of strategy, on which it is based (on the experience, production capacity and access to raw materials). What is the cost structure? If viewed concentration strategy, describe the scope of business.
5. The organization and culture of a competitor:
Knowledge of history and senior competitor management experience can help to predict future actions.
Whether involved in marketing management, engineering, production? Whether they came for the most part from another industry or another company?
Organizational Culture, with the support of the infrastructure, systems, and personnel, often have a significant impact on the strategy.
It focused on cost reduction organization with a rigid structure, which is to achieve its goals using strict management techniques may have difficulty if it decides to do pioneering work or take an aggressive strategy with a focus on the market.
Less tightly organized the company, which focuses on innovation and risk-taking, may equally have difficulty in carrying out a formalized program to reduce costs.
These organizational elements such as culture, structure, system, and personnel, limit the number of strategies that can be considered.
6. Cost structure:
Knowing a competitor's cost structure, especially if a competitor relies on a low-cost strategy that could form the basis of future pricing policies. The aim should be a representation of the direct and indirect costs, which determine the point of "break-even". Such information is easily obtained, and it will serve as an indicator of the cost structure.
Number of employees, with an estimated breakdown by directly employed in production (variable costs of labor) and the staff (these costs can be part of the fixed costs).
The relative cost of raw materials purchased.
Investments in current inventory, plant, and equipment (as the fixed costs).
The level of wages and the number of production sites.
7. Legal barriers:
Legal barriers may be of great importance for the existence of an alternative to "exit" from the company. They are an indication of the degree of involvement of the company.
Among them can be mentioned:
special machines and equipment and other assets that are not economical to transfer to other operations, and which therefore have low-cost write-offs;
fixed costs, such as labor contracts, rent and the need to maintain existing equipment in good condition;
relationships with other departments of the company in terms of corporate image or shared resources, distribution channels or sales;
governmental and social barriers, for example, the government can determine whether the railway could cease to serve passengers; the company may feel responsible towards employees, and this limits the strategic maneuvers;
the pride of the staff or the emotional attachment to the business or to staff that affects the economic decisions.
8. Assessment of the strengths and weaknesses of competitors:
Knowing the strengths and weaknesses of competitors allows the company to adhere to a variety of strategies based on awareness. It is also an important contribution to the process of identifying and selecting certain strategic alternatives.
One approach could be an attempt to use a competitor's weakness at the site where the company already has or acquires an advantage. It is desirable to develop a strategy that will allow opposing the existing advantage of competitor weaknesses.
Assessing the strengths and weaknesses of competitors begins with the definition of assets and qualifications relevant to the industry, followed by evaluation of the competitor on the basis of these assets and qualifications.
9. The system of distribution:
What are the trends? Which channels are becoming increasingly important? What channels have appeared or will appear in the near future?
Who has the greatest influence on the channels and how this influence can be displaced?
The chance of an effective and efficient distribution system is often a key factor. Distribution alternative may differ from each other by several parameters. One of the options - as will the direct channel. Many retailers sell through distributors or other intermediaries or use any combination of channel types. Companies that are directly attributable to the end user, have the greatest opportunities for marketing management, they also assume the greatest risk.
Sometimes a new type of distribution channel can lead to the long-term competitive advantage.
On the market impact the profitability of both consumers and the channels themselves. In sectors where there are no strong brands, such as the production of furniture, retail trade organizations usually have greater influence and can force manufacturers to reduce prices. Influence of supermarkets, thanks largely to a significant increase in the amount of information available about trading operations, forcing manufacturers to change their product marketing.
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