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Develop a comparative understanding of strategic activity from organizations in the same market

Features are fairly straightforward, either a product has a feature or it doesn't. Benefits, on the other hand, are not as simple and should only be recorded based on customer feedback. For example, company B may claim in their company literature that their copier is fast, but a user may feel otherwise. Or, company B may indeed have a copier that by industry standards is fast, but you may have a copier that's even faster. Now, evaluate your competition's product or service.

How does your product compare to your closest competitor's product? What features and benefits are unique to your product? The more unique features and benefits your product has, the stronger your market position will be.

Strategic Management & Strategic Planning Process

For example, if you produce and market an office copying machine that staples collated copies together and your closest competitor doesn't have this feature, you have an advantage. You can then sell the same market segment the benefit of added convenience and time saved. Evaluate your competitor's price. Just because you have the same products as other businesses, doesn't mean everyone has the same price.

Your own production costs greatly impact your pricing. If your price for a similar product is higher than your competitor's, then your market position is weaker; and if it's lower, then your competitive position is better.

A temporary price decrease by a competitor might indicate nothing more serious than a transient need to move excess inventory. However, a trend of lowered prices may indicate that your competition is doing it to gain market share and improve production costs. It could also mean your rival is in financial trouble and has been forced to lower prices.

How to Conduct and Prepare a Competitive Analysis

It's in this type of situation that rumors and gossip become helpful. If there are rumors that a company is in financial trouble and you discover price fluctuations, it's more likely that there are problems.

Customer preference of products is only part of the analysis.

There are internal operational factors which can provide a competitive edge as well. Your competitors' products may not have the high quality of yours, but they might offer free delivery; or their employees might be extremely motivated and committed to gaining market share. You need to learn how they are doing on the inside. Some factors to consider: Financial resources — Are they able to withstand financial setbacks? How are they funding new product development and improvement? Operational efficiencies — Are they able to save time and cost with clever production and delivery techniques?

Product line breadth — How easily can they increase revenues by selling related products? Strategic partnerships — What kinds of relationships do they have with other companies in terms of product development, promotion or add-on sales?

Market Share The most widely used measure of sales performance is market share.

A competitor may not provide the best product or service; however, if they generate a significant amount of sales to the market, they may: Define the standards for a particular product or service.

Influence the popular perception of the product or service. Devote resources to maintaining their market share.

Understand your competitors

To determine your company's market share on a percentage basis, the following formula should be used: It will give you a clear idea of how your sales volume compares to your competition's. If you don't have total industry sales figures you won't be able to figure out your market share, but you can still get a good idea of your competitive position by comparing the sales volume figures.

It's obvious that Company B has the largest share of your market and is your greatest competitor. Competitive Objectives and Strategies For each competitor in your analysis, you should try to identify what their market objectives are and determine what types of strategies they are using to achieve them. Are your competitors trying: To maintain or increase market share?

To maximize short-term or long-term profits? To introduce technologically improved products into your market? To establish themselves as the market leaders?

  • If there is a large perceived difference created, then the firm has more price leeway;
  • To develop new markets for existing products?
  • Technological advances and the ability to tailor make to niches has ensured international competitiveness;
  • Sourcing A different approach to gaining competitive advantage may be through "out sourcing" from a number or countries, or through out sourcing in country as in the case of Kenya vegetables;
  • Summarize the major problems and opportunities facing your firm which may require action;
  • Summarize the major problems and opportunities facing your firm which may require action.

To protect their market share under attack by strong competition? To develop new markets for existing products? Once you have identified what your competitors are trying to achieve, you will need to determine what type of strategy they have employed so you can eventually counteract with a strategy of your own.

Definition

There are many specific strategies companies can employ. Some possible strategies your competitor's may be employing are: Advertising in new publications, or advertising more frequently. Buying out a competitor to increase market share and customer base. Improving a product with a new innovation. It's important to note your competitor's actions over time. For example, if one of your competitors is consistent with pricing, product features, promotion, and their market share it may mean that they're not exploring or exploiting additional market opportunities.

Or, if one of your competitors has a decline in sales volume it may mean they will be employing new marketing strategies in the near future and should be monitored closely.

Identify the Competitions Strengths and Weaknesses In order to develop effective competitive strategies, you need to make a realistic assessment of your competitors' strengths and weaknesses, as viewed by the market.

You need to ask yourself what each of your competitors do very well, better than your own company? Then, ask yourself in what areas are each of your competitors weak. Construct a simple chart. The copier company's might appear like this: Strengths and Weaknesses of Competitors Competitor: Superior customer service 3-year warranty Higher price B. Quick innovator Unique features Higher price Limited distribution channels C.

Large market share Lower price Comprehensive ad campaign Viewed as market leader by market segment Slower product No direct access to parts Other Factors to Consider Shakeups. As you analyze your competitive information be on the look out for broad management changes or changes in ownership.

This is an indication that major policies and marketing shifts are on the horizon and you should anticipate changes.

It may be a good opportunity to court your competitor's star employees.

  1. Who are my competitors likely to be? Content of the marketing plan[ edit ] A marketing plan for a small business typically includes Small Business Administration Description of competitors, including the level of demand for the product or service and the strengths and weaknesses of competitors Description of the product or service, including special features Marketing budget, including the advertising and promotional plan Description of the business location, including advantages and disadvantages for marketing Pricing strategy Medium-sized and large organizations[ edit ] The main contents of a marketing plan are.
  2. Or, company B may indeed have a copier that by industry standards is fast, but you may have a copier that's even faster.
  3. Product line breadth — How easily can they increase revenues by selling related products? You must remember that your competitive research and analysis is never finished.
  4. Green marketing involves marketing environmentally safe products and services in a way that is good for the environment. The CMB's unit of accounting was USD; c a significant rise in international shipping costs in the early 1980's; d financial crisis within Israel's agricultural settlements; e improper export product mix; f conflict of interest in the subsector giving weakened incentives for product innovations and quality; g inability of the Citrus Marketing Board CMB to reposition itself to maintain competitiveness; and, h Quality and supply of competitors, especially in demanded products for example Spain.

People often change jobs during management shakeups. Your competitive analysis should include any new players, even if they haven't yet captured a significant piece of the market. New companies often bring new ideas and innovations to the marketplace and can quickly become major players.

  1. In most organizations they would be obtained from a much smaller set of people and not a few of them would be generated by the marketing manager alone.
  2. There are many specific strategies companies can employ.
  3. It is essential to look at their production, marketing, financial and management resources. One aspect of strategy which is often overlooked is that of "timing.
  4. For more information, consult the Intellectual Property Toolkit.

In your competitive analysis, you need to make a few predictions about what the competition is going to look like in the future. Competitors are constantly coming and going in the marketplace. Who are my competitors likely to be? If you are introducing a new widget, how long before the competition catches on? Forecasting future competition will give your potential investors the confidence in the long term viability of your business.

Companies whose competitive edge depends on new technology, new manufacturing techniques or access to new markets need to be aware of the common barriers new competition faces when trying to gain entry into the marketplace. Patents provide protection for new products or services.

Saturation reduces the chance of competitors gaining a foothold in the market High startup costs. This is a difficult obstacle for small competitors. The need for significant expertise, or manufacturing and engineering difficulties. This makes it difficult for competitors to have the knowledge to compete.

What is that strategic planning process?

Determine Your Competitive Position in the Marketplace By now it should be fairly clear to you if you are a: Once you have identified and analyzed your competition, and understand your competitive position, you are ready to do the following: Identify and discuss key areas of competitive advantage and disadvantage.

Review the competitive environment for your product or service. Comment on both similar and substitute products or services. Summarize the major problems and opportunities facing your firm which may require action. Integrate your analysis of the competition with demographic analysis of your market to develop and implement a marketing strategy that will strengthen your market position. Depending on what market you're operating in it could be every two months or once a year.

Consider employing a college student for the summer or create student internship positions to fulfill the task.

Business Strategy/Marketing Plans and Strategies

You must remember that your competitive research and analysis is never finished. This is on-going, rather than a one-time process. Your competition can change quickly, new players can emerge tomorrow, the economy may upswing or downswing at any moment.

It's only when you clearly understand your competition that you can evaluate your own market position. Only then can you exploit their weaknesses to your competitive advantage and seek to improve your own marketing efforts. Do you have strategies for minimizing the value of your competitors' strengths and taking advantage of their weaknesses?

In research and development? In marketing and sales? NTC Business Books, 1999.