Competitive Analysis / Differential Analysis SOA/SOM BDI/CDI
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Transcript of Competitive Analysis / Differential Analysis SOA/SOM BDI/CDI
University of Washington EMBA ProgramRegional 20
Marketing Management
“Competitive Analysis”
Instructor: Elizabeth Stearns
Course Structure
The Marketing Framework/Concept
Analysis5C’s Opportunity Analysis
Marketing Strategy & Customer StrategyGoal Setting, Segmentation, Targeting, and Positioning
Implementation/Action PlansMarketing Mix (4 P’s)
MarketingResearch
“How Competitive Forces Shape Strategy”Industry Forces
Suppliers
New DirectlyCompetitive
Entrants
Direct
TheFirm
Competitors
Buyers
IndirectCompetitors
SubstituteProductsTechnologies
ForeignLow PricedDifferent Industries
Michael Porter
Competitor, Collaborator,and Company Analysis
Competitor:Competitor: Any organization whose goods and services could provide the same benefits to your customers
Collaborator:Collaborator: Any organization who assists your own in the delivery of benefits to your customers
Company:Company: Your organization
Competitor, Collaborator,and Company Analysis
Key QuestionsKey Questions– Who are they?
– What capabilities/skills/assets do they have?
– How can/will they go to market?• Past behavior• Strategic signals• Optimal behavior, both strategies and reactions• Mission and objectives
Might organize your thoughts in a SWOT analysis.
Competitors: Definition
• Any organization whose goods and services could satisfy the same needs or wants of your customers
– Define competition broadly
• Actual competitors (in the market now)• Potential competitors (may enter the market)• Direct competitors (offer similar products or
services)• Indirect competitors (offer substitute products or
services)• Business units within our firm
The Broad View of the Soft Beverage Market*
Bitter Tasting Sweet Tasting
FruitFlavor
StrongTaste
FruitJuices
NoncolaSoft Drinks
FruitDrinks
ColaSoft DrinksSports
DrinksBottled &MineralWaters
ClubSodas
Iced Tea& Coffee
*Roger Best
Competitors: Definition
– Anticipate future competition
– Consider not only product/market competition,
but also competition between organizations
Analyzing Competitors
CompetitorCompetitorActionsActions
ObjectivesObjectives
Strengths &Strengths &WeaknessesWeaknesses
ReactionReactionPatternsPatterns
StrategiesStrategies
©2000 Prentice Hall
Industry Competition
• Number of Sellers - Degree of Differentiation
• Entry, Mobility, Exit barriers
• Cost Structure
• Degree of Vertical Integration
• Degree of Globalization
©2000 Prentice Hall
Structural Determinants of Entry
• Economies of Scale and Scope
• Capital Requirements
• Government Regulations
• Technology & Patents
• Threat of Competitive Retaliation
• Other Market-oriented Characteristics
“A pictorial view of the Competitive Frame…
in the minds of the customer”
Ready-to-Eat Cereal
Apple Jacks
Trix
Cocoa Crispies
Special K
TotalProduct 19
Shredded Wheat
Frosted FlakesLucky Charms
Raisin Bran
Life
Corn Chex
Cheerios
Sun Country Granola
Fruit Loops
Hearty Granola
Wheaties
High Sugar Content
No Sugar
$$$$
USA: BEER CATEGORY MAP
Miller Lite
Coors Lite
Amstel Light
Light
Bass
Pete’s Wicked Ale Rolling Rock
Guinness
Foster’s
Becks
Corona Samuel Adams
Molson Ice
Budweiser Michelob
Red Dog
Busch
Specialty
Traditional
Source: Simmons SMM 1998
Positioning and Perceptual Maps
• Useful to provide pictorial view of competitive situation.
• Information revealed:– What are the major perceptual dimensions
underlying the map?
• e.g. When customers were judging the similarities
of ten brands, what were the most important
attributes underlying their perceptual decisions?
• Subjective/subject to argument
Positioning and Perceptual Maps
• What brands are perceived as similar to others?
– Deals with issue of substitutability.
– if customer’s brand is not available, what brand is
most likely to be purchased?
– Unique Position
» Or
– Easy switching
Positioning and Perceptual Maps
• What holes exist for repositioning an old, or new product introduction? (Point on map where no competitive brands exist)– Opportunity or not?
• Ideal points = Preference maps
– If customer could have any product they wished.
Brand Development Index & Category Development Index
(or using sales information that most companies have!)
Brand Development Index (BDI)
Market (1) % U.S. Population
(2) % Brand Sales
BDI (2 ÷ 1) * 100
A 10 11
B 15 15
C 20 18
D 25 30
E 30 26
Total 100 100 100 (Average)
Brand Development Index (BDI)
Market (1) % U.S. Population
(2) % Brand Sales
BDI (2 ÷ 1) * 100
A 10 11 110
B 15 15 100
C 20 18 90
D 25 30 120
E 30 26 87
Total 100 100 100 (Average)
Brand Development Index (BDI)
Market (1) % U.S. Population
(2) % Brand Sales
BDI (2 ÷ 1) * 100
A 10 11 110
B 15 15 100
C 20 18 90
D 25 30 120
E 30 26 87
Total 100 100 100 (Average)
Markets “C” & “E need support, “A”, “B”, and “D” seem OK
BDI Compared to CDI% Sales Index
(% Sales / % Population)
Index (BDI/CDI)
Market % Population
Category Brand Category Brand
A 10 12 11
B 15 15 15
C 20 16 18
D 25 30 30
E 30 27 26
Total 100 100 100
BDI Compared to CDI% Sales Index
(% Sales / % Population)
Index (BDI/CDI)
Market % Population
Category Brand Category Brand
A 10 12 11 120 110 92
B 15 15 15 100 100 100
C 20 16 18 80 90 113
D 25 30 30 120 120 100
E 30 27 26 90 87 96
Total 100 100 100
BDI Compared to CDI% Sales Index
(% Sales / % Population)
Index (BDI/CDI)
Market % Population
Category Brand Category Brand
A 10 12 11 120 110 92
B 15 15 15 100 100 100
C 20 16 18 80 90 113
D 25 30 30 120 120 100
E 30 27 26 90 87 96
Total 100 100 100
Consider possible different conclusions: Market “D” is only average,“C” & “E” probably don’t need support, “A” probably does.
Differential Advantage
Differential Advantage: Definition
• A Differential Advantage is a benefit or cluster of benefits that customers value and believe they cannot obtain elsewhere
• (Acid test: they are willing to pay more for your product or service)
Designing Offers for Customers
Offer
CostValue
PriceTimeEffortRisk
TechnicalInnovation
SalesRelation-ship
BrandEquity
Delivery Services
Product
Differential Advantage: Shift Over Time
• Differential advantage sustained by focusing on functional or psychological values
• Tends to erode over time in the direction of economic advantages
• Competition drives offers from specialty to commodity
Psychological
EconomicFunctional
Differential Advantage: Discussion
• The question that is answered is “do we deliver that which
our customer/prospect values”, “by what means”, and
“how well” (is it superior to our competition).
it is NOT
• “what do we do well” as a stand alone question. This
concept is difficult for companies to integrate into the
selling mode especially when they pride themselves in what
they do well and/or are considered the gold standard.
Differential Advantage: Discussion
• While a company may have excellent strengths and assets, these are only important if they satisfy a customer need. (this is the Marketing concept)
• Differential Advantage analysis raises the bar for understanding what a customer needs and the priority/importance of that need to his/her organization.
– If a company does not know this, they proceed to sell what they do well, and not what the customer values.
Sources of Differential Advantage
Business strengths, often defined as assets and skills, provide the basis for differential advantage.
• An asset is something a firm possesses such as a brand name, a retail location, human capital, a philosophy, etc., which is superior to that of competition.
• A skill is something that a firm does better than its competitors, such as advertising, merchandising, efficient manufacturing, etc.
Differential Advantage Matrix
• Tool for matching a segment’s required benefits with our organization’s ability to deliver those benefits more effectively than competitors
1. Identify the segment for which this matrix will apply
2. List the priority-ordered benefit requirements for this segment as the row headings in the matrix
3. List the relevant business strengths that a “generic” organization would require to deliver these benefits as the column headings of the matrix
Differential Advantage Matrix
• Assessment Diagnostics (presuming that this business strength is relevant to providing this benefit—if not leave blank or use NA)– Do we have the capability to deliver the required
customer benefit? (1 or Y)– Do we have significantly greater capabilities than
competitors? (1 or Y)– Would it be difficult for competitors to match us?
(1or Y)– (if you get to 0, or No, you stop)
Differential Advantage Matrix
• Implications– Do we have a differential advantage, i.e.,
(1,1,1) or (Y,Y,Y)?• If so, where, and through what strengths?
Our organization has a differential advantage in delivering benefit X to segment Y because of business strengths A, B, and C.
Differential Advantage Matrix
Segment ID/Description
Dem
onst
rabl
e tr
ack
reco
rd w
ith
adap
tive
mar
ketin
g af
filia
tes
Pat
ente
d re
vers
e au
ctio
n bu
sine
ss
mod
el
Relevant Business Strengths
Hig
h br
and
awar
enes
s am
ong
end-
user
s
Bro
ad c
olla
bora
tor-
prov
ider
net
wor
k
Opportunistic, solo, weekend leisure
travelers
BenefitPriority Ranking
Low out-of-pocket Price allows add ons 1
1,1,1 1,0
2
3
4
5
6
Dem
onst
rabl
e tr
ack
reco
rd w
ith
adap
tive
mar
ketin
g af
filia
tes
Pat
ente
d re
vers
e au
ctio
n bu
sine
ss
mod
el
Hig
h br
and
awar
enes
s am
ong
end-
user
s
Bro
ad c
olla
bora
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prov
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net
wor
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Thank you!