Michael John Gonzales

Competition Analysis In general, Competition Analysis can be divided into four important profiles: Competitor Profile History Overview & Profile Competitive advantage Marketing Profile Target market Market share Marketing strategies Product/ Service Profile Product/Service offerings Pricing and costs Channels SWOT Profile Strengths Weaknesses Opportunities Threats Analysis Your Company Competitor 1 Competitor 2 Competitor 3 History Overview Competitive Advantage Target Market Market Share Marketing Strategies Products & Services Pricing & Costs Distribution Channels Strengths Weaknesses Opportunities Threats Part 1. Business Competitor Profile **History – includes incorporation date, capital, and reason for establishing business. You may also add important profile of key individuals working for the company like CEO, EVP, AVP, CFO. ***Overview – Michael Porter’s framework based on 4 key aspects: 1.1. Objectives: are not always financial. It may be related to company’s growth rate and market share. This sector involves the basics of planning to counter your competitor’s strategies. E.g. Competitor is for long term revenue, they will more likely invest on research and development to roll out upgrades or even new products. 1.2. Assumptions: made by management based on past experience, but may also include current business positions, regional factors, industry trends and rules of thumb. 1.3. Strategy: a competitor will never directly inform you their business strategy, but there are ways to determine these: annual shareholder reports, interviews with analysts, press statement by managers and press releases. Another way to determine their strategy is through cash flow. Try looking up for their personnel hiring activity, Research and Development projects, capital investments, promotional campaigns, partnership, mergers and acquisitions. 1.4. Capabilities: once you have a better understanding of the above three aspects, you can make better and informed decisions about competitor’s capabilities. It will help you make decisions that would prevent competitor attacks and provide you make strategic attacks based on competitor’s abilities to respond quickly. Finding information for your competitor profile: Davidson (1997) believes the sources of competitor can be grouped into 3 categories: Recorded Data Observable Data Opportunistic Data Annual report & accounts Pricing / Price List Meetings w/ suppliers Press releases Advertising Campaigns Trade shows Newspaper articles Promotions Sales force meetings Analysts reports and interviews Tenders Conferences / seminars Regulatory and/or Gov’t reports Patent Applications Social contacts w/ competitors Presentations / speeches Recruiting ex-employees **** Competitive Advantage Jim Riley defines it as an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher price. In simple definition, it is something that makes you different from your competitors. Think about the things that make you different than your competitors. Do the same thing for your competitors. If you are having a hard time, pick up the phone and give your competitors a call – just ask them. You may also go one step further by actually talking to their known customers – ask them why they stopped with the competitor company. Part 2. Marketing Profile: Target Market In this step, you need to define your primary target market. Primary target market is the group of customers that you service the most. Example, you are an IT company that targets accounting firms in California. That’s a very specific target market, but for demonstration purposes – your competitors are the one competing with you for a share in that target market. Note: You may widen your scope by choosing a number of different verticals in California, but it is highly recommendable that you try to keep things targeted as possible to ensure you find the most relevant competitors to compare against. Identify who your target market is and then do some research on your competitors to see who their target is. You may refer to their website and marketing communications. If possible, determine their existing clients. Marketing Profile: Market Share It is defined as the percentage of the market you account for. How to determine your market share? Simply divide your share to the total number of shares in the market. Example: You have a $50,000 share in a $645,000 market. Your market share is 7.75% It is important in competitive analysis because it would let provide information on how you stack up against competitors. It would ensure you can make better decisions. This would help you set goals and objectives for the future to ensure you grow your business and take a bigger piece of the revenue available. Marketing Profile: Marketing Strategies It would certainly be nice to know your competitors next move. Unless you have some overfriendly competitors that love sharing their next promotional campaign, chances are probably you won’t. But it doesn’t mean you can’t strategically predict what your competitors might do. It is advisable to do some research and observe what they are doing – good sources to be looking at include their advertising campaigns and promotions. Try to look for patterns in their promotions. The goal here is to try and predict what they might have planned for the future and how it will affect you. Write down your current marketing strategies and anything you have in the pipeline. Now find out what your competitors are doing. Do whatever you can to become more familiar with their strategies. Part 3. Product/Service Profile: This part includes your range of products and services. It involves comparing your offerings to those of your competitor. It is important to take a look at your product range, product quality and brand credibility. It is advisable you take a look at your product range first and see where your strengths lie. Next, be honest with yourself and rank your quality standard on a scale of 1 to 10. Lastly, rank your brand credibility and if you hold any. Now do the same for your competitors, using the same judging scale. Look out for areas where your product or service differs from your competitors. Judging Scales may be, but not limited to, the following: Reliability Responsiveness Assurance Personal Interaction Physical Aspects This should give you opportunity to identify new viable markets that can be exploited with a new product, or make product variations to fill a gap in an existing market. Product/Service Profile: Pricing and Costs Key questions to be asking about yourself and your competitors include: Am I a low-cost or high-cost provider? What are my mark-ups? Are these reasonable to cover expenses and will give me favorable profit? Do I work off volume sales or once off purchases? Do my prices differentiate depending on the volume? Am I using a cost-based, customer-based or competitor-based pricing strategy? Product/Service Profile: Distribution Channels First, start with your company – how do you get your products or services into your customers’ hands? It is recommended you break down your distribution channels as percentage. Now look at your competitor’s distribution channels. Are they more automated? Do they use more middle men? Do they spend more time in front of the clients? Questions you need to ask yourself: 1. Does there strategy resonate better with customers than yours? 2. Do they have better customer satisfaction metrics than you? SWOT Profile: Strengths, Weaknesses, Opportunities, Threats This is traditionally used by companies to audit their current business processes and monitor competitors. Strengths and Weaknesses are internal factors because you have control over these. Examples of strengths include brand and perceived quality, while weaknesses could be your lack in product range. Opportunities and Threats are external factors because you have limited/no control over these – but must be aware of and monitored closely. Examples of opportunities might be government strategy that opens up doors to new markets, while threats might be a new competitor deciding to enter your market By understanding this dynamic, you can put strategies in place that aim to convert your weaknesses and threats into strengths and opportunities. This will allow your company to find new competitive advantage that will help you venture new markets and fend off attacks from competitors. In conclusion… Competitor Analysis can help your business form strategies that will capitalize on opportunities and minimize the impact of threats from competitors. It will enable you to do the right thing under specific circumstances because you are equipped with the required information. 1