Competition-Analysis

Carlson©CompetitionAnalysisMarketingManagement(Marketing360)ProfessorKurtCarlsonCarlson©Henderson’sFundamentalRuleofStrategy“Induceyourcompetitorsnottoinvestinthoseproducts,marketsandserviceswhereyouexpecttoinvestthemost…thatisthefundamentalruleofstrategy.”BruceHenderson,FounderofBCGCarlson©AgendaIntroductionCompetitiveAnalysis–StrengthsandWeaknesses–IntelligenceCompetitiveStrategy–GameTheory–Porter’s5ForcesFrameworkCarlson©IndustryCompetitionAnindustryis…–GroupoffirmswhoseofferingsareclosesubstitutesforeachotherCompetitioninanindustry...–Drivesdownrateofreturnoninvestedcapitaltowardthatearnedin“perfectcompetition”Carlson©WhyDoCompetitiveAnalysis?Competitiveanalysisanswers…–Whatisdrivingcompetitioninthisindustryorindustriesthefirmmayconsiderjoining?–Whatactionsarecompetitorslikelytotake,andwhatarethebestresponses?–Howwilltheindustryevolve?…inordertosetstrategy,whichanswers–Howshouldthefirmbepositionedtocompeteinthelong-run?Carlson©CompetitiveAnalysisCurrentpositionandstrategy–Marketshareandsales–Targetmarketandpositioning–Marketingmix(4P’s)–ManufacturingandR&D–FinancialstrengthAbilityto–Designnewproducts–Manufacture–Market–Finance–ManageFutureGoals–Productportfolio–Shareorprofit–ProductDifferentiationorCostLeadershipCarlson©StrengthsandWeaknessesMarketing1.Companyreputation------------------------------------------------------2.Marketshare------------------------------------------------------3.Customersatisfaction------------------------------------------------------4.Customerretention------------------------------------------------------5.Productquality------------------------------------------------------6.Servicequality-------------------------------------------------------7.Pricingeffectiveness------------------------------------------------------8.Distributioneffectiveness------------------------------------------------------9.Promotioneffectiveness------------------------------------------------------10.Salesforceeffectiveness------------------------------------------------------11.Innovationeffectiveness------------------------------------------------------12.Geographicalcoverage------------------------------------------------------Finance13.Cost/availabilityofcapital-------------------------------------------------------14.Cashflow-------------------------------------------------------15.Financialstability-------------------------------------------------------Manufacturing16.Facilities---------------------------------------------------------17.Economiesofscale---------------------------------------------------------18.Capacity--------------------------------------------------------19.Able,dedicatedworkforce--------------------------------------------------------20.Abilitytoproduceontime--------------------------------------------------------21.Technicalmanufacturingskill--------------------------------------------------------Organization22.Visionary,capableleadership--------------------------------------------------------23.Dedicatedemployees--------------------------------------------------------24.Entrepreneurialorientation--------------------------------------------------------25.Flexibleorresponsive--------------------------------------------------------PerformanceImportanceMAJORMINORNEUTRALMINORMAJORHIMEDLOWSTRENGTHSTRENGTHWEAKNESSWEAKNESSCarlson©GatheringIntelligenceWheretogetinformationoncompetitors?–Salesliterature–Publisheddocuments(AnnualReports,SECfilings,Patents)–Stockmarketanalystreports–CEO/CFO/VPinterviews–Internet(companywebsite,hiringtrends-–Usenetgroups-…nowGoogle_groups–Onlinedatabases-)Carlson©ProtectingYourSecretsAvoidinginformationoutflow:Restrictinformationaccessto“temps”Avoidlaxprocedures(datastorage,wastestream,passwords)MonitoranycompanymaterialthatismadeavailabletopublicEnsureemployeestravelcarefullyInculcate“paranoia”amongworkforceCarlson©ElectronicDataBases:OneSourceCarlson©DowJonesInteractiveCarlson©Porter’sFiveForcesModelIndustryCompetitorsRivalryamongexistingfirmsSuppliersPotentialEntrantsCustomersSubstitutesThreatofnewentrantsBargainingpowerofsuppliersBargainingpowerofcustomersEachforceisapotentialthreat.ThreatofsubstituteofferingsCarlson©RivalryAmongExistingFirmsIndustryCompetitorsRivalryamongexistingfirmsSuppliersPotentialEntrantsCustomersSubstitutesThreatofnewentrantsThreatofsubstituteofferingsBargainingpowerofsuppliersBargainingpowerofcustomersCarlson©RivalryMoreIntenseIf:NumerousorequallybalancedcompetitorsSlowindustrygrowthHighfixedcostsLowcustomerloyaltiesorswitchingcostsAddedcapacitycomesinlargeincrementsDiversecompetitorsHighstrategicstakesHighexitbarriers–Specializedassets,emotionalbarriers,governmentandsocialrestrictions(e.g.,concernsforjoblosses,etc)Carlson©GameTheory:Prisoner’sDilemmaRegularPriceAmericanDiscountPriceRegularPriceUnitedDiscountPriceAA=$100MUA=$100MAA=$110MUA=$60MAA=$60MUA=$110MAA=$70MUA=$70MCarlson©PredictingReactionsContemporaneouscorrel