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Marketing Strategy: 

Marketing Strategy Competitor Analysis


Today’s objectives are to understand: Product - market structure Strategic groups / key competitors Collecting information about competitors Portfolio analysis


Product - Market Structure Generic competition products that satisfy the same need transportation, recreation Type / technological competition product types or technologies (to use) planes, trains, automobiles, bicycles, roller skates Form competition various forms of the product racing, mountain, children’s, cruisers Brand competition various brands


Budget competition Ice cream Video games Movies Beverages Furniture Generic competition Beverages Coffee Tea Beer Soft drinks Wine Type competition soft drinks Diet Fruit flavored Regular Form comp Can Tap Bottle Brand comp Pepsi Coke Product-Market Structure / Levels of Competition


What are strategic groups? Companies with similar strategies Strategic Groups


Dimensions of Strategic Groups Scope Number of the same segments served Similarity of product / service mix Similarity of geographic reach Similarity of resource commitment People Cash Materials


Factors to Identify Strategic Groups Product - market specialization Brand image Push versus pull channel strategy Channel of distribution strategy Product quality level Technological leadership


Factors continued Extent of vertical integration Cost advantage Supporting services Price position Financial and operating leverage Relationship to home and host governments


Implications of Strategic Group Analysis Method of business level analysis Many mapping variables are controlled by marketing Identifies key competitors for performance comparison


Competitor Analysis Descriptive profile of competitors Financial information Historical moves (strategies) Management capabilities & histories Evaluate competitor strengths & weaknesses Market coverage Customer satisfaction Past performance Current capabilities Anticipate competitors actions


How to Snoop on Your Competitors Steven Flax, Fortune, Mary 14, 1984, 30-34 From competitor employees Question job applicants about work experience Conduct job interviews for non-existent positions Hire people away from competitors From customers and suppliers Hire consultant to do industry study Sales people ask customers about competitor’s products, new products, promotions, etc. Help customers with new product engineering Ask your suppliers about their own capacities and capabilities


Snooping continued From public sources Track help wanted ads & lay off notices Obtain copies of labor contracts Study aerial photographs Freedom of information act files from government agencies Uniform commercial code filings Direct observation Count number of trucks leaving loading bays Take plant tours Conduct reverse engineering Go through competitors’ trash


Competitor Strength Grid Assets & skills Weakness Strength product quality W V B A G L M market share V B W A G M parent in related bus. B W V G A package W B V L G A low calorie position V G M B A L sales force / dist. V B W G A M ads / promotion V B G W A M ethnic position W A L M G L = Stoffers Lean Cuisine - Nestle’ M = LeMenu - Campbell Soup W = Weight Watchers - Heinz A = Armour Dinner Classic - ConAgra V = Van de Kamp Mexican Classic and other ethnic lines B = Benihana G = Green Giant Stir Fry Entrees - Pilsbury

BCG Model: 

BCG Model Systematic Approach to Investment Attempts to allocate resources among SBU’s for profit maximization May suboptimize some SBU’s performance Idea is to balance cash flow & maximize company performance

Strategic Business Unit: 

Strategic Business Unit All SBU’s must have: Their own identifiable customers Their own identifiable competitors Control over all necessary functions (independent profit center)

To Determine SBU’s:: 

To Determine SBU’s: - Consider the total number of SBU’s in the firm - Consider the size of each SBU - Consider the degree one can separate or combine: - Markets - Distribution systems - Product technology - R&D technology - Consider the degree of SBU overlap - Consider competitor SBU selection (industry norm) - Describe SBU’s by product - markets


BCG Model Market growth rate High Low High Low Relative market share 1.0 10% Star ? Dog Cow Cash flow (+/-) depends on competition High growth market High market share Cash flow (-) new products High market growth Low market share Cash flow (+) Low market growth High market share Market leader Stable industry Support rest of firm Cash flow (+/-) Low market growth Low market share Treat as cows or divest Most products are here


BCG Model Market growth rate High Low High Low Relative market share 1.0 10% Star ? Dog Cow Cash flow


BCG Model Ideal Movement Market growth rate High Low High Low Relative market share 1.0 10% Star ? Dog Cow Introduction Growth Maturity Decline


BCG Recommended Strategies Decision area ? Star Cow Objective Growth Earnings Positive cash flow Market share Aggressively build across all segments Target high growth high return segments Give up share to improve profit Price Start high, lower to build share Stabilize for maximum profit contribution Raise even at expense of volume Promotion Invest heavily to build share Invest as market dictates Reduce as a percent of sales Product Expand line to all segments Shift mix to higher profit categories, add selectively Eliminate low contributors, add only sure winners


BCG Benefits Gets the whole firm working toward the same goal Allows simultaneous comparison of many different products/SBU’s Helps compare your position to that of your competitors Helps identify general strategies Provides insight to competitors investment strategies Simple, easy to explain and understand


BCG Hazards Assumes all products should compete based on price / cost Psychological effects of labels Assumes a static environment Assumes market share and growth rate are the major influence on cash flow Assumes cash flow is the most important predictor of investment attractiveness Does not differentiate strategies for SBU’s in the same quadrant Does not consider synergies among SBU’s

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