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Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. Marketing is a social and managerial function that attempts to create, expand and maintain a collection of customers. ... Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation. ... Competition characterises a biochemical, ecologic, economic, political, or sporting activity whereby two or more individuals or groups strive antagonistically against one another for some reward. ...

Competitor array

One common and useful technique is constructing a competitor array. The steps include:

• define your industry - scope and nature of the industry
• determine who your competitors are
• determine who your customers are and what benefits they expect
• determine what the key success factors are in your industry
• rank the key success factors by giving each one a weighting - The sum of all the weightings must add up to one.
• rate each competitor on each of the key success factors - this can best be displayed on a two dimensional matrix - competitors along the top and key success factors down the side.
• multiply each cell in the matrix by the factor weighting.
• sum columns for a weighted assessment of the overall strength of each competitor relative to each other.

An example of a competitor array follows:

Based on material presented in "Beat the Competition: How to Use Competitive Intelligence to Develop Winning Business Strategies", Ian Gordon, Basil Blackwell Publishers, Oxford, UK, 1989.

In this example competitor #1 is rated higher than competitor #2 on product innovation ability (7 out of 10, compared to 4 out of 10) and distribution networks (6 out of 10), but competitor #2 is rated higher on customer focus (5 out of 10). Overall, competitor #1 is rated slightly higher than competitor #2 (20 out of 40 compared to 18 out of 40). When the success factors are weighted according to their importance, competitor #1 gets a far better rating (4.9 compared to 3.7).

Two additional columns can be added. In one column you can rate your own company on each of the key success factors (try to be objective and honest). In another column you can list benchmarks. They are the ideal standards of comparisons on each of the factors. They reflect the workings of a company using all the industry's best practices. Benchmarking (also best practice benchmarking or process benchmarking) is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. ...

Competitor profiling

Another common technique is to create detailed profiles on each of your major competitors. These profiles give an in-depth description of the competitor's background, finances, products, markets, facilities, personnel, and strategies. This involves:

• Background
  • location of offices, plants, and online presences
  • history - key personalities, dates, events, and trends
  • ownership, corporate governance, and organizational structure
• Financials
  • P-E ratios, dividend policy, and profitability** various financial ratios, liquidity, and cash flow
  • Profit growth profile; method of growth (organic or acquisitive)
• Products
  • products offered, depth and breadth of product line, and product portfolio balance
  • new products developed, new product success rate, and R&D strengths
  • brands, strength of brand portfolio, brand loyalty and brand awareness
  • patents and licenses
  • quality control conformance
  • reverse engineering
• Marketing
  • segments served, market shares, customer base, growth rate, and customer loyalty
  • promotional mix, promotional budgets, advertising themes, ad agency used, sales force success rate, online promotional strategy
  • distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical coverage
  • pricing, discounts,and allowances
• Facilities
  • plant capacity, capacity utilization rate, age of plant, plant efficiency, capital investment
  • location, shipping logistics, and product mix by plant
• Personnel
  • number of employees, key employees, and skill sets
  • strength of management, and management style
  • compensation, benefits, and employee morale & retention rates
• Corporate and marketing strategies
  • objectives, mission statement, growth plans, acquisitions, and divestitures
  • marketing strategies

Product lining is the marketing strategy of offering for sale several related products. ... Reverse engineering (RE) is the process of taking something (a device, an electrical component, a software program, etc. ... Strategy serves as the foundation of a marketing plan. ...

Media scanning

We can learn a lot about the competitive environment by scanning our competitors' ads. Changes in a competitor's advertising message can reveal new product offerings, new production processes, a new branding strategy, a new positioning strategy, a new segmentation strategy, line extensions and contractions, problems with previous positions, insights from recent marketing or product research, a new strategic direction, a new source of sustainable competitive advantage, or value migrations within the industry. It might also indicate a new pricing strategy such as penetration, price discrimination, price skimming, product bundling, joint product pricing, discounts, or loss leaders. It may also indicate a new promotion strategy such as push, pull, balanced, short term sales generation, long term image creation, informational, comparative, affective, reminder, new creative objectives, new unique selling proposition, new creative concepts, appeals, tone, and themes, or a new advertising agency. It might also indicate a new distribution strategy, new distribution partners, more extensive distribution, more intensive distribution, a change in geographical focus, or exclusive distribution. Little of this intelligence is definitive : additional information is needed before conclusions should be drawn. Billboards and street advertising in Shinjuku, Tokyo, Japan, (2005) Advertising is typically paid communication through a non-personal medium in which the sponsor is identified and the message is controlled. ... In business and engineering, new product development is the complete process of bringing a new product to market. ... A brand is a collection of images and ideas representing an economic producer; more specifically, it refers to the concrete symbols such as a name, logo, slogan, and design scheme. ... In marketing, positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. ... Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. ... Product lining is the marketing strategy of offering for sale several related products. ... Research is the search for and retrieval of existing, discovery or creation of new information or knowledge for a specific purpose. ... Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation. ... Companies that compete by selling similar products (or even substitutes) to the same group of customers constitute an industry. ... Marketing strategy is the art of creating value for the customer. ... To meet Wikipedias quality standards, this article may require cleanup. ... Penetration pricing is the pricing technique of setting a relatively low initial entry price, a price that is often lower than the eventual market price. ... Price discrimination exists when sales of identical goods or services are transacted at different prices from the same provider. ... Price Skimming Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. ... Product bundling is a marketing strategy that involves offering several products for sale as one combined product. ... Scale model of a Wheaties cereal box at a pep rally Promotion is one of the four aspects of marketing. ... Distribution is one of the four aspects of marketing. ...

A competitor's media strategy reveals budget allocation, segmentation and targeting strategy, and selectivity and focus. From a tactical perspective, it can also be used to help a manager implement his/her own media plan. By knowing the competitor's media buy, media selection, frequency, reach, continuity, schedules, and flights, the manager can arrange his/her own media plan so that they do not coincide. It has been suggested that this article or section be merged with Target audience. ... Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses. ...

Other sources of corporate intelligence include trade shows, patent filings, mutual customers, annual reports, and trade associations.

Some firms hire competitor intelligence professionals to obtain this information.

New competitors

In addition to analysing current competitors, it is necessary to estimate future competitive threats. The most common sources of new competitors are:

• Companies competing in a related product/market
• Companies using related technologies
• Companies already targeting your prime market segment but with unrelated products
• Companies from other geographical areas and with similar products
• New start-up companies organised by former employees and/or managers of existing companies

The entrance of new competitors is likely when:

• There are high profit margins in the industry
• There is unmet demand (insufficient supply) in the industry
• There are no major barriers to entry
• There is future growth potential
• Competitive rivalry is not intense
• Gaining a competitive advantage over existing firms is feasible

See also

• marketing
• industry or market research
• marketing management
• marketing plan

Marketing is a social and managerial function that attempts to create, expand and maintain a collection of customers. ... Industry or market research is the acquisition of corporate intelligence on a broad range of issues including: Macroenvironment economy government legal technology ecological sociocultural Market Analysis and Competitor analysis market definition market size market segmentation industry structure and strategic groupings Porter 5 forces analysis supply chain competition and market share... Marketing management is the practical application of marketing techniques. ... A Marketing Plan is a written document that details the actions necessary to achieve a specified marketing objective(s). ...

References

• Ian Gordon: Beat the Competition. How to Use Competitive Intelligence to Develop Winning Business Strategies. Basil Blackwell Publishers, Oxford/UK 1989
• Michael E. Porter: Competitive Strategy: Techniques for Analyzing Industries and Competitors 1998.

External links

• Competitor Analysis - A brief guide
• Sources of information for competitor analysis
• Competitive Intelligence & Competitor Analysis - Introduction to Competitor Analysis and Competitor Profiling