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MODULE 2
ANALYZING COMPETITION
•Market orientation: chance flavours the prepared mind and an organization that
gathers market intelligence, analyze it, disseminates it, learns from it and then
responds to it is favoured by chance.
•Four different supply environments:
1. NO COMPETITON
•Single supplier of a particular product that has control over price, quality
and quantity supplied
•Monopoly is government regulated and undertakes financial audit and
customer satisfaction surveys to see if it is making profits and satisfying
customers
•Shifting away from monopoly and towards oligopolies because
competition gives customers choice, which encourages innovation
and price competition
2. OLIGOPOLISTIC COMPETITON
•Market dominated by few large suppliers
•Evolve industries that require very large investments in equipment,
technology and/or distribution
•Compete on price, product feature, advertising and sales promotion
3. MONOPOLISTIC COMPETITION
•Many suppliers offering variety of products, each with small, loyal market
share
•Product and service differentiation between rivals as well as price
competition
4. PERFECT COMPETITION
•Many suppliers sell same product
•Supply and demand control price; advertising has little influence
•Market share measured as percentage of total sales over specified time period
•Levels of competition
•Product category competition (share specific design features and target
same customers)
•Core benefit competition (share some similar features)
•Budget competition
•Emphasis should be on commercializing and diffusing of new innovation into
market; measuring number of competitors, market share, and balance sheet of major
competitors
•Focus on new product or process technology to increase customer
satisfaction and reduce cost
•Indicators of change in future sales, profits, and competitiveness:
1. CHANGING BRAND MIND-SHARE
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MODULE 2
•Change share (%) of customers who name the first brand that comes to
mind when buying a product
•Indicates top-of-mind brand awareness and preferences
•Foreshadows change in market sales share
2. CHANGING BRAND VOICE-SHARE
•Changing share of advertising dollars brad has of total dollars spent on
advertising market
3. CHANGING RESEARCH AND DEVELOPMENT (R&D)
•Changing share company R&D expenditure has of total industry R&D
expenditure
•Direct correlation between R&D spending and successful innovation not
always high; depends on creativity
•Porter’s five forces that shape competition:
1. Current competitors
2. Threat of new entrants
3. Threat of new substitutes
4. Bargaining power of distributors (B2B customers)
5. Bargaining power of suppliers
•In marketing perspective, porter’s model reduced down to three forces
oSuppliers and distributors are generally treated not as rivals, but as business
partners in an added-value chain with whom you form an alliance to gain
collective and individual competitive advantage
•Competitive audit reports current success stories, mistakes, competitive advantages
and disadvantages of a competitor
•Competitive advantage in product quality and costs can come from one or more
stages of added-value chain of processes:
Supply
processes
Manufacturin
g operations
processes
Distribution
processes
Marketing
and sales
processes
Sales
process
es
ANALYZING CHANNELS
•New technology is the biggest driver of change in channels of distribution
•Three stages individual distributor audit:
1. Performance metric analysis
•Retail margin = sales/average inventory
•Dollar contribution per square foot and per employee and customer repeat
purchase intention
2. Fit analysis
•Market fit and product differentiation fit
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