Marketing Strategy: Competitive Analysis

Brands Overview

  • Brands
  • Brand Definition
  • Marketing Mix: Product, Price, Promotion, and Place.
  • Brand Credibility: Trust is essential.
  • Brand Value: Equity.
  • New vs. Existing Customers: Different strategies apply.
  • Awareness: Making consumers know about the brand.
  • Attitudes: Shaping consumer perceptions.
  • Loyalty: Retaining customers.
  • Advocacy: Encouraging customers to promote the brand.
  • Reduction in Risk factors: Brands help reduce perceived risk.
  • Brand Elements: Logos, colors, and other identifiers.
  • Brand Positioning: How the brand is perceived in the market.

Competitive Analysis

  • Competitive analysis is a critical part of marketing strategy.
  • Positioning: Fitting the company's offering to best serve customers and outmaneuver competitors.

Learning Objectives: Competitive Analysis

  1. Define and discuss the two levels of Competitive Analysis
  2. Illustrate the application of Porter’s 5 (Competitive) Forces and their application at the Marketing Strategy level
  3. Discuss Porter’s Generic Strategies defend against the 5 Competitive Forces
  4. Apply a basic Competitive Rival Analysis
  5. Undertake a Pain Point analysis within a Customer Journey

Brand Positioning

  • Positioning is creating an image for a product in the minds of target customers.
  • It's how consumers perceive a brand relative to its competitors.
  • Each brand tells a story through its positioning.
  • Key Question: Why would your target market (TM) purchase your product/service over a competitor's?
  • Differentiation: How are you different or better?

Competitive Advantage

  • Competitive Advantage: Factors that give a firm an edge over competitors.
  • Sun Tzu Quote: "In warfare, first lay plans which will ensure victory…"

The Marketing Mix for Each Segment

  • The marketing mix consists of:
    • Product
    • Price
    • Promotion
    • Place

Competitive Analysis Structure

  • Two Levels:
    1. Industry
      • Competitive Structure
      • Porter’s 5 Forces
      • Porter’s Generic Strategies
    2. Rivals (Detailed Analysis)

Competitive Market Structure

  • Monopoly: One firm controls the market.
  • Oligopoly: A few firms control the market.
  • Monopolistic Competition: Many firms selling differentiated products at different prices.
  • Pure Competition: Many firms selling commodities at the same prices.

Porter’s Five Forces

  • Porter’s Five Forces helps identify key competitive forces in the industry through structural analysis.
  • Porter was an economist who began by analyzing markets.
  1. Threat of New Entrants
  2. Bargaining Power of Suppliers
  3. Bargaining Power of Buyers
  4. Threat of Substitute Products
  5. Competitive Rivalry

Threat of New Entrants

The threat of new entrants is low if:

  • Large economies of scale exist.
  • High capital or startup costs.
  • Strong product differentiation.
  • Difficulty gaining distribution channels.
  • Cost advantages independent of size.
  • Government regulations or actions prevent competition.
  • Strong patent protection.

Bargaining Power of Suppliers

Bargaining power is high if:

  • Seller concentration is high.
  • Switching costs are high.
  • Threat of backward integration is low.
  • Supplier's brand is powerful.
  • Customer is of little importance to the supplier.

Bargaining Power of Buyers

Buyer power is high if:

  • Buyer concentration is high.
  • Switching costs are low.
  • Many alternative brands available.
  • Threat of backward integration is high.
  • Buyer profitability depends on the product.

Threat of Substitutes

  1. Does the substitute threaten obsolescence or offer higher perceived value?
  2. How easily can buyers switch to substitutes?
  3. To what extent can switching costs be raised?

Competitive Rivalry

Competition is greatest when:

  • High investment intensity requires firms to operate near capacity.
  • Little room for product differentiation.
  • The industry is not in balance.
  • Market is reaching maturity.
  • Excess production capacity exists.
  • High exit barriers are present.

Key Questions of Structural Analysis

  1. What are the key forces at work in the competitive environment?
  2. Are there underlying forces driving these competitive forces (e.g., government intervention)?
  3. Is it likely that these forces will change, and how?
  4. How do particular competitors stand in relation to these forces; what are their strengths and weaknesses?
  5. What can be done to influence the forces affecting the organization?
  6. Are some segments/industries more attractive than others due to these forces?

Competitive Market Response to 5 Forces

  • Two sources of sustainable competitive advantage:
    1. Cost Leadership
    2. Differentiation
  • Two levels of competitive scope:
    1. Narrow
    2. Broad
  • Resulting in three generic strategic options:
    1. Cost Leadership (overall cost)
    2. Differentiation
    3. Focus
      1. Cost focus
      2. Differentiation focus

Cost Leadership Emphasis

  1. Economies of scale
  2. Managing costs effectively
  3. Investing in large-scale technologies
  4. Developing process engineering skills
  5. Implementing stringent cost control systems
  6. Designing products for easy production.
  • Advantages:
    • Perceived value for money
    • Ability to withstand price wars
    • Appropriate for homogeneous markets
    • Increased market share

Cost Leadership Defense

  • Entry barriers: New entrants must match low costs and EOS.
  • Buyer power: Buyers can only drive prices down to the next most efficient competitor.
  • Supplier power: Flexibility to deal with price increases.
  • Rivalry: Can withstand price wars.
  • Substitutes: Less threatened by low-priced substitutes.

Differentiation Emphasis

  • Offering a uniquely different product or service than competitors.
    1. Strong marketing skills
    2. Product engineering expertise
    3. Creative flair
    4. Emphasis on quality and/or technological leadership
    5. Strong cooperation from distribution channels
  • Advantages:
    • Increased perceived value
    • Higher price
    • Greater understanding of customers

Differentiation Defense

  • Entry barriers: Brand loyalty and differentiation.
  • Buyer power: Less price-sensitive due to perceived difference.
  • Supplier power: Higher margin to offset price increases.
  • Rivalry: Brand loyalty and decreased price sensitivity.
  • Substitutes: Brand loyalty decreases the threat of substitutes.

Focus Strategies

  1. Cost focus concentrates on a particular segment and keeping costs low.
  2. Differentiation focus concentrates on a particular segment based on their needs and wants.
  • Porter's Conclusion: Avoid being 'Stuck in the Middle' when pursuing a generic strategy.

Direct Rivals: Product Life Cycle (PLC)

  • The PLC model helps understand how products evolve over time.
  • Provides insights into competitive pressures in a product category.
  • Products typically follow a general pattern: introduction, growth, shake-out, maturity, and decline.
  • Different marketing strategies are more or less appropriate at different PLC stages.
  • These stages result in different investment strategies regarding opportunities, threats, and cash flow requirements.

Competitive Analysis - 5 Factors

  1. Who are our competitors? Direct, indirect, and substitutes.
    • Direct: Competing for the same target market in the same product category (e.g., luxury car segment).
    • Indirect: Competing for the same broad market group (e.g., all car market).
    • Substitute: Alternatives to the product category (e.g., cars vs. motorbikes vs. e-scooters).
  2. Rival Analysis
    1. What are their objectives?
    2. What are their strategies?
    3. What are their strengths and weaknesses?
    4. What is our CA? - MM
    5. What is their CA?
    6. How will they react to changes in our competitive moves?
    7. Which competitors should we attack/avoid?
    8. How can we gather competitive intelligence?

Competitive Analysis Tools

  1. Competitive Benchmarking
  2. Online Analytics: Traffic Analytics, Organic Research, Ads Spend Research, Keyword Analysis, Social Media Trackers, SEO Software, AI Agents etc.
  3. Stakeholder Maps
  4. Customer Surveys
  5. Mystery Shoppers
  6. Expert Surveys
  7. Trade Publications, Industry Seminars, Expos, etc.

Identifying Competitive Advantage: Pain Points

  • Utilizing the Customer Journey to identify problems.
  • Determining the Cost of Fixing the Problem.
  • Determining the potential of the Target Segment.
  • Segmentation Evaluation.
  • Determining Company S&W’s.
  • Determining Competitive Reaction.
  • Final Brand Strategy Decision.
  • Brand Positioning.

Customer Pain Point Analysis: Decision Process Design

  • Consider the 5 Steps in the Consumer Decision–making Process to undertake a process design for your organisation.

  • Figure 4. Stages in Consumer Decision-making

    • Key Questions
    • Implications
    • Solution

  1. Problem Identification

    • What are the potential pain points in relation to problem identification i.e.

      1. Lack of information or awareness about solar windows.
      2. Misconceptions about the benefits/costs.

    • Map the Pain Points Across the CJ

    • Are any of these Pain Points

      1. Highly significant?
      2. Able to be solved?
      3. Solutions provide high value relative to the cost

  2. Information Search

    • What are the potential pain points in relation to information search

      1. Lack of new media sources of information
      2. Limited noncommercial sources of information available

    • Are any of these Pain Points

      1. Highly significant?
      2. Able to be solved?
      3. Solutions provide high value relative to the cost

  3. Evaluation of Alternatives

    • What are the potential pain points in relation to evaluation of alternatives i.e.

      1. Overwhelming amount of technical information.
      2. Difficulty comparing different products and brands.

    • Are any of these Pain Points

      1. Highly significant?
      2. Able to be solved?
      3. Solutions provide high value relative to the cost

  4. Purchase

    • What are the potential pain points in relation to purchase i.e.

      1. Complex purchasing process and paperwork
      2. Limited availability of products in certain regions

    • Are any of these Pain Points

      1. Highly significant?
      2. Able to be solved?
      3. Solutions provide high value relative to the cost

  5. Post Purchase Evaluation

    • What are the potential pain points in relation to post purchase i.e.

      1. Difficulty in maintaining and cleaning the solar windows.
      2. Limited customer support and service options.

    • Are any of these Pain Points

      1. Highly significant?
      2. Able to be solved?
      3. Solutions provide high value relative to the cost

Positioning

  • Positioning requires that an organisation determine:
    • The most important attributes that a consumer uses to assess different products in the market
    • How their product and those of competitors rate on those attributes
  • This can then be used to generate perceptual maps

Developing a Position

  1. Firm's value proposition.
  2. Customers' unmet needs (marketing opportunity).
  3. Firm's benefits that are not required - educate customer or redesign product.
  4. Key benefits that both the firm and competitor provide that customers require - carefully monitor performance relative to competitor on these benefits.
  5. Competitor's value proposition - monitor and imitate if needed.
  6. Benefits both firms provide that customers do not appear to need.
  7. Competitor benefits that are not required.

Key Strategy Tools: Perceptual Mapping

  • Formed by asking consumers to rank certain product and service attributes.
  • Location of the product in space indicates ‘position’ in consumer’s eyes.
  • Some room for creativity with the dimensions you research and analyse.