1. 06 Understanding Competitors: Analysis to Action Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin

2. LEARNING OBJECTIVES Recognize the importance of the competitive environment in shaping marketing decisions Understand how environmental forces shape the competitive environment Differentiate between competitors as defined by the company and competitors defined from the customer’s perspective Consider how the competitor mix changes as companies evaluate strategic factors Identify future competitors before they become a threat and recognize key elements in a competitor analysis Apply competitor analysis to marketing strategy and develop a competitive intelligence system 6-2

3. KEY SUCCESS FACTOR — KNOW YOUR COMPETITOR 6-3

4. DISCOVERING COMPETITORS — STRATEGIC FORCES 6-4

5. Summary and example of different Industry Structures Exhibit 6.2 6-5

6. Monopoly When a market is controlled by a single company offering one set of products. The monopoly company sets the price and controls product development. There is little need to advertise a particular brand’s benefits as the company has no direct competitors, at least in the short run. 6-6

7. Oligopoly When there are few companies with standardized (steel) or differentiated (automobiles) products. When the products are standardized it becomes difficult for any one company to break out and charge a premium price. When products are different it is possible to have greater price variability. 6-7

8. Monopolistic Competition When there are many companies offering unique products in different market segments. The difference between an oligopoly and monopolistic competition is in the number of companies operating in the industry. Companies in both market structures seek to identify opportunities and create unique products that allow a price premium. 6-8

9. Pure Competition There are many companies offering essentially the same product. Sellers lack the ability to create a price premium. Marketing communication costs are low. Profit margins are generally lower and sellers focus on creating cost efficiencies to increase profitability. 6-9

10. DISCOVERING COMPETITORS — STRATEGIC FORCES Supply Chain Product Capabilities Global Issues 6-10

11. DISCOVERING COMPETITORS – THROUGH THE CUSTOMERS’ EYES Customer Perspectives 6-11

12. DISCOVERING FUTURE COMPETITORS – LIKELY CANDIDATES Strategic Expansion 6-12

13. DISCOVERING FUTURE COMPETITORS – LIKELY CANDIDATES Channel Member Integration 6-13

14. DISCOVERING FUTURE COMPETITORS – LIKELY CANDIDATES Merger and Acquisition Defending Market Space 6-14

15. ANALYZING COMPETITORS 6-15

16. COLLECTING COMPETITIVE INTELLIGENCE 6-16

17. CHALLENGE COMPETITORS: VALUE DELIVERY STRATEGIES IN A COMPETITIVE ENVIRONMENT Competitor analysis is an essential tool in creating customer value. Competitor analysis focuses on the “big picture” and identifies overall competitor strategy. At the tactical level, competitor analysis is much more specific. 6-17

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