CHAPTER 09 Competitor Analysis and Competitor Marketing Strategy

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Transcript of CHAPTER 09 Competitor Analysis and Competitor Marketing Strategy

Spring Air Freshener Business Plan 2012.

CHAPTER 09Competitor Analysis and Competitor Marketing Strategy

1Introduction and Agenda of the ChapterUnderstanding customers through customer analysis is very crucial but it is not enough in marketing. Strategic marketing is all about having a game plan to outperform competitors by providing better customer value and satisfaction in the process of gaining a competitive advantage. In this chapter I will teach you first how to analyze (understand) competitors (competitor analysis) and then I will teach you how to formulate a strategy to outperform competitors in the marketplace in order to create a competitive advantage (competitive marketing strategies).

22Presentation OutlineCompetitor Analysis Competitive Marketing Strategies

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3Competitor AnalysisIn order to win in the marketplace, and create a competitive advantage, a company needs to know everything about its competitors. Competitor analysis is the process of identifying, assessing, and selecting key competitors.

4Who are our competitors? What is their game plan? Are they having a cost leadership strategy? A differentiated strategy? A focus strategy? What are their strengths and weaknesses? What is the marketing mix strategy? And then you have to select the competitors you want to attack and the competitors you want to avoid. 4Competitor Analysis Identifying CompetitorsDirect Competitors: comprises of all the brands within the same product category addressing the same need.Indirect Competitors: for example the indirect competition for shaving cream is shaving foam and shaving gel (substitute products). The trick to understand indirect competition is to find out all the products/services from different categories addressing the same need.Strategic group is composed of firms within an industry following similar strategies aimed at similar customers or customer groups. Example1: Rolls Royce, Aston Martin, Lamborghini fall under the same strategic group. Competitors in a strategic group are the closest rivals that fall under direct competitors. Example2: Kool Body Spray does not belong to the same strategic group as AXE.

5Strategic group is a group of direct competitors who are your closeset rivals because the follow a similar strategy like you and they target the same customer group. 5For more than 200 years, Encyclopedia Britannica saw itself as competing with other publishers of printed reference books and encyclopedia sets selling for as much as $2,200 per set. However, it learned a hard lesson when the world went digital in the 1990s. Microsoft introduced Encarta, a CD-ROM encyclopedia that sold for only $50. Encarta and other digital encyclopedias took the market by storm, followed quickly by web based encyclopedias and reference resources. As a result, Britannicas sales plunged 50% during the next seven years. Hence, Britannicas real competitors were not only the other print publishers, they were the internet, computer, and other digital contents. Britannica still publishes its flagship 32 volume Britannica Encyclopedia. However, it also offers popular DVD and web versions of its information services. Britannica recognizes its competitors ranging from World Book to Microsoft, to Wikipedia. 667A presentation by Varqa Shamsi Bahar

Kool Original falls under the same strategic group. 7Competitor Analysis Assessing CompetitorsWhile assessing competitors, a company needs to analyze the following parameters of a competitor:Competitors target marketCompetitors strategy(cost leadership, differentiation or focus)Marketing mix strategy analysis (strengths, weaknesses, and gaps). Competitors strengths and weaknesses.

88Competitor Analysis Selecting CompetitorsCustomer value analysis is conducted to determine what benefits target customers value and how they rate the relative value of various competitors offers this concept is similar to multi-attribute approach. In performing customer value analysis, a company first identifies the major attributes that customers value and the importance the customers places on these attributes. Next, it assesses the companys and competitors performance on the valued attributes. Hence, a comparative analysis is done through this process. A company needs to score higher than competitors on these important attributes in order to have a competitive advantage. However, if the companys performance is lower, then it must invest in strengthening those attributes in order to survive in the marketplace. 9Customer value analysis is an evaluation process where you can understand on which parameters your are stronger and on which parameters your are weaker than your competitors as far as product performance is concerned. 910

Furthermore, a company has to provide a benefit that addresses the customers needs in a way that rivals cannot deliver. Also terms as the strategic sweet spot which is also referred to as a benefit which is completely unique. 10Competitor Analysis finding untapped market spaces Rather than competing head to head with established competitors, many companies seek out markets where they create products or services where there exists no close rivals. Called Blue Ocean Strategy, the goal is to make competition irrelevant.In most cases, Innovation is at the heart of blue ocean strategy.Example1: the manufacture of mobile phones, made lan phones obsolete. Example2: the manufacture of digital cameras made camera films obsolete. Example3: Home delivery in Dhaka. 111112

12Competitive Marketing Strategies1310% Market Nichers20% Market Follower30% Market Challenger40% Market Leader13Competitive Marketing Strategies For Market Leaders (Expanding Total Market)A market leader should strive to Expand the total market demand. As a result when the total market expands, the dominant firm usually gains the most. A market can be expanded by finding new customers to use the product: through new market segment strategy (attracting consumers who have never used the product before example: Meril Shiter Champion Campaign) and geographical expansion strategy (consumers who live elsewhere). 14New market segment strategy and geographical expansion strategy can occur together. Example Horlicks sachet packs for the rural market on Bangladesh. 1415

Show TVC. 15Competitive Marketing Strategies For Market Leaders (Expanding Total Market)A market can be expanded by finding new opportunities to use the brand to enhance consumption rate:By tieing a brand to a specific event: Example 1: the repainting of houses (berger), Example 2: watch brand. By reminding consumers that they need to replace their current product: Example 1: Gillette, Batteries. By finding more ways to use the product: example 1: Meril, Example 2 cheese. Example 3: Spring. By making consumers increase the frequency of usage: Example 1: brush your teeth twice a day, Example 2: use Harpic everyday.

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Say you are managing a watch brand, and you are a market leader. How will you increase the market demand for your brand by tieing it to a specific event?1718

Say you are managing a Berger, and you are a market leader. How will you increase the market demand for your brand by tieing it to a specific event?18Competitive Marketing Strategies For Market Leaders (Protecting Market Share)While trying to expand total market size, the leading firm also must protect its current business against competitors attacks. First it must fix weaknesses that provide opportunities for competitors.Its must always fulfill its value promise in order to cultivate satisfaction.Its price must be consistent with the value that customers see in the brand. It must work tirelessly to keep strong relationships with valued customers. It must continuously GET BETTER when it comes down to product quality, new product launches, customer services, distribution effectiveness, cost cutting, promotional effectiveness. If the aforementioned parameters are not addressed, consumers will eventually switch to competing brands. 1919Competitive Marketing Strategies For Market Leaders (Protecting Market Share)Staying the market leader through defensive marketing strategies:

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20Competitive Marketing Strategies For Market Leaders (Protecting Market Share through defensive marketing strategies)Position defense strategy signifies owning the category in the customer mindset. If not, then owning a specific benefit. Example 1: Fair and lovely owns fairness benefit, Example 2: Colgate owns the benefit protection. Example 3: Bkash owns the category mobile money transfer Example 4: Kool owns shaving cream category. Flank defense strategy is when you strategize to protect your flagship profitable brand by launching fighter brands to compete with low priced competitors. Example 1: Kool shaving cream losing market share because of low priced competitors in the saloon market. Kohinoor launched a fighter brand Genstar to protect Tibet Lather Shaving Cream. Example 2: Gold Leaf is a fighter brand of B & H. Example 3: Luvs is a fighter brand of Pampers.

21Position defense strategy has a lot to do with brand management. Flank defence strategy is when your flagship profitable brand has a body guard. And this bodyguards name is fighter brand. 21Competitive Marketing Strategies For Market Leaders (Protecting Market Share through defensive marketing strategies)Preemptive Defense strategy signifies attacking the competitors before they start their offense on the market leader. Example 1: State Bank of Indias focus on expanding their network in the vast rural market of over 100,000 villages by setting up ATMs in these areas provide steep competition for regional banks and large commercial banks who mostly focus on urban areas. Example 2: Introduce new services, new products which are better than competitors and by the time they launch a new product/ser