Competition Analysis

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Competition Analysis Bases and selection • • • •

Who are our competitors? What threats do they pose? What is the profile of our competitors? What are the objectives of our competitors? • What strategies are our competitors pursuing and how successful are these strategies? • What are the strengths and weaknesses of our competitors? • How are our competitors likely to respond to any changes to the way we do business? 

Sources of information for competitor analysis

Recorded data:

This is easily available in published form either internally or externally. • Annual report & accounts • Press releases • Newspaper articles • Analysts reports • Regulatory reports • Government reports • Presentations / speeches 



Observable data This has to be actively sought and often assembled from several sources. • Pricing / price lists • Advertising campaigns • Promotions • Tenders • Patent applications • 

Opportunistic Data To get hold of this kind of data requires a lot of planning and organization. Much of it is “anecdotal”, coming from discussions with suppliers, customers and, perhaps, previous management of competitors. • Meetings with suppliers • Trade shows • Sales force meetings • Seminars / conferences • Recruiting ex-employees • Discussion with shared distributors • Social contacts with competitors 



Evaluating competition & response 1 • • • • • • • • • • •



Overall sales and profits Sales and profits by market Sales by main brand Cost structure Market shares (revenues and volumes) Organisation structure Distribution system Identity / profile of senior management Advertising strategy and spending Customer / consumer profile & attitudes Customer retention levels

Evaluating competition & response 2 • • • • • • • • • • •



Sales and profits by product Relative costs Customer satisfaction and service levels Customer retention levels Distribution costs New product strategies Size and quality of customer databases Advertising effectiveness Future investment strategy Contractual terms with key suppliers Terms of strategic partnerships

The Marketing Environment and Competitor Analysis

•SWOT analysis •PEST analysis •Five forces analysis

SWOT analysis • • • •

Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external)

PEST analysis • Political factors • Economic factors • Socio-cultural factors • Technological factors

Political/legal • • • • • • • •

Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others?

Economic Factors • • • • • •

Inflation Employment Disposable income Business cycles Energy availability and cost Others?

Sociocultural factors • • • • • • •

Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others?

Technological • New discoveries and innovations • Speed of technology transfer • Rates of obsolescence • Internet • Information technology • Others?

Five forces analysis Potential entrants Threat of entrants

Suppliers

COMPETITIVE RIVALRY

Buyers Bargaining power

Bargaining power

Threat of substitutes

Substitutes

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

Five Forces Analysis: Key Questions and Implications •What are the key forces at work in the competitive environment? •Are there underlying forces driving competitive forces? •Will competitive forces change? •What are the strengths and weaknesses of competitors in relation to the competitive forces? •Can competitive strategy influence competitive forces (eg by building barriers to entry or reducing competitive rivalry)?

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