Analysis of Competitors

Competitor analysis is absolutely essential if you have to grow in a competitive market. It is becoming increasingly important because of rise in competition in each and every sector. Whether electronics, automobiles or FMCG, each sector today is facing immense competition affecting margins and sales. Thus there are some critical steps to be followed by these organizations to outperform their competition. However, they will be able to stand out only when they KNOW their competition. This is where the step by step competition analysis comes in the picture. Here are the 7 steps for competitor analysis:

1) Identify current and future competitors in the market –  The best way to identify current and future competitors is to target products. Supposing you are currently selling hair oil. You need to know how many branded and unbranded players are there in the market. You need to know if any new company is starting to sell Hair oil or if any current company might stop selling the same. Furthermore, you also need to know how many of your customers prefer some other product over Hair oil. Thus by doing this you know your direct and indirect competition. This is the first step in competition analysis.

Market Situation Analysis

Introduction

A marketing plan guides businesses on how to communicate the benefits of their products to potential customers.

The situation analysis, the 2nd step in a marketing plan, is critical in establishing a long-term relationship with customers. Managers use it to analyze the internal and external environment of an organization and the firm’s own capabilities, customers, and business environment.

Balancing Customer and Competitor Orientation

In our earlier articles we have stressed the importance of a company's positioning itself competitively as a market leader, challenger, follower, or nicher. Yet a company must not spend all its time focusing on competitors.

1. Competitors-Centered companies

A competitor-centered company sets its course as follows:

Situation

· Competitor W is going all out to crush us in Miami.
· Competitor X is improving its distribution coverage in Houston and hurting our sales.
· Competitor Y has cut its price in Denver, and we lost three share points.
· Competitor Z has introduced a new service feature in New Orleans, and we are losing sales.

Market Nicher Strategies

There's been a lot of buzz about the long-tail phenomenon—the strategy of selling smaller quantities of a wider range of goods that are designed to resonate with consumers' preferences and earn higher margins. And a quick scan of everyday products seems to confirm the long tail's merit: Where once we wore jeans from Levi, Wrangler or Lee, we now have scores of options from design houses. If you're looking for a nutrition bar, there's one exactly right for you, whether you're a triathlete, a dieter or a weight lifter. Hundreds of brewers offer thousands of craft beers suited to every conceivable taste.

Market Follower Strategies

This is not to say that market followers lack strategies. A market follower must know how to hold current customers and win a fair share of new customers. Each follower tries to bring distinctive advantages to its target market >> location, services, financing. Because the follower is often a major target of attack by challengers, it must keep its manufacturing costs low and its product quality and services high. It must also enter new markets as they open up. The follower has to define a growth path, but one that does not invite competitive retaliation. 

Four broad strategies can be distinguished.

1. Counterfeiter: The counterfeiter duplicates the leader's product and package and sells it on the black market or through disreputable dealers. Music record firms, Apple Computer, and Rolex have been plagued with the counterfeiter problem, especially in Asia.

Marketing Challenger Strategies

The Marketing Leader uses following Choosing & Attack strategies: 
1.Frontal attack
In a pure frontal attack, the attacker matches its opponent’s product, advertising, price, and distribution. A modified frontal attack, such as cutting price vis-a-vis convinces the market that it’s product is equal to the leaders product.

Market Leader Strategies

There are Three Main Strategies of a Market Leader (explained with examples) are:

1. EXPAND TOTAL MARKET

• New Users
E.g.: perfume:--> non-users (mkt-penetration strat)
 --> men (new market strat)
 --> other countries (geo-expan strat)
E.g.: J&J Baby shampoo: birthrate declining
--> ads target adults --> leading brand

• New uses
Cereals: as snacks --> increase frequency of use
OJ: “not for breakfast anymore”
Du Pont nylon: parachute-->pantyhose-->blouses & shirts --> auto tires -->seat belts -->
carpeting