CHAPTER – 5 COMPETITORS

ANALYSIS
Course of Study
Concept Of Competition
Key Competitors Analysis
Competitive Strategies For Market Leader
Competitors Analysis in Nepal
Competitor is a firm that has potential to take the
customers of other firm.
Direct competitors, Indirect competitors,
potential competitor and Replacement
competitors.
CA is the process of defining the industry,
identifying the competitors, evaluating the
competitors, identifying competitors further
strategies and selecting the strategy to attack or
avoid competitors.
Process of competitors analysis
 Defining competitive arena or defining industry –
building profile of industry, analysis of value chain, supply
chain of competitors, analysis of Michael porter’s five forces
help to define competitive area. Five forces –competitive
rivalry, threats of new entrants, threats of, substitute products,
bargaining power of suppliers, and bargaining power of buyer.
Identifying key competitors and describing their
capabilities - key competitors are : companies serving the
same markets and companies successful in satisfying customer
demand. Analysis of marketing strategies, tactics and
management style of key competitors . Analysis of income
statement and balance sheet. Competitors profile analysis.
Evaluating key competitors - market coverage and
quality of marketing program of competitors. Strengths
and weaknesses of competitors.
Forecasting key competitors further strategies and
their reaction pattern– on the basis of information
obtained management should identify and predict
competitors future strategies. Monitoring, marketing
research, competitors response, management style,
interview with competitors’ supplier, distributor,
customers and hiring of competitors manager to know
strategy of competitors.
Selecting strategies to attack or avoid- competitive
strategies: expanding total market demand, protecting
market share, increasing market share, others- market
Competition
 Producing the goods and services of same kinds and dealing with same kinds of
market and customers is competition.
 It is a contest between two or more competitors.

Types of competition
Industry competition
competition between two companies offering same products. Biscuits
industries, carpet industries etc. competition is based on industry
structure( monopoly, Monospony, oligopoly, perfect competition, imperfect
competition), industry barrier( entry , exit, mobility barriers), globalization to
industry and cost efficiency of industry.
Market competition
Competition between companies to win Customers. Generic level ( computer sellers-
competing for same disposable income of buyers), class level( competing to satisfy
same need), category level(competing for satisfying same need from same
product),form level(competing to satisfy same need of same target group by same
product) ,brand level (competing for same need, same target group and same
customer by same product)
 price and non- price competition(product promotion and placement)
 Estimating Reaction Patterns of Competitors
 Laid Back Reaction – slow reaction to competitors
attack.
Selective Reaction – reaction to selective attack of
competitors.
Tiger Reaction - fast and strong reaction to attacks of
company.
Stochastic reaction – strong reaction to weak attack
and mild reaction to strong attacks.
Analyzing and Creating Competitive Advantage
 Value chain analysis – various processes involved in producing goods and
services. Starts with raw materials and ends with delivery of products. Value
chain approach to diagnose and build competitive advantages. Value chain
of firm’s suppliers, firm itself, firm’s distributors and firm’s buyers. Michael
porter’s value chain includes nine activities. They are categorized into
primary and secondary activities. They determine costs and affect profit.
Primary Activities
1. Inbound logistics – receiving goods, transporting decision, storing the goods, managing
the inventory and managing inputs to production.
2. Operations – production process, development activities, testing, packaging, maintenance
and all other activities that transform the inputs into finished product.
3. outbound logistics - collecting, storing and distributing the outputs.
4. Marketing and sales – advertising, channel selection, pricing, retail management selling
etc.
5. Service activities – customer support, repair, guarantees, warrantees, installation, training
etc.
Primary Activities

1. Inbound logistics – receiving goods, transporting decision,

storing the goods, managing the inventory and managing inputs
to production.
2. Operations – production process, development activities,
testing, packaging, maintenance and all other activities that
transform the inputs into finished product.
3. outbound logistics - collecting, storing and distributing the
outputs.
4. Marketing and sales – advertising, channel selection, pricing,
retail management selling etc.
5. Service activities – customer support, repair, guarantees,
warrantees, installation, training etc
Secondary Activities
1. Procurement – acquisition of resources at right time, at right
quality and quantity.
2. HRM – acquisition, development, utilization and
maintenance of HR.
3. Technological development – managing and processing
information or technology.
4. Infrastructure – developing departments, administrative and
general management functions.
value chain analysis help to achieve cost advantages and product
differentiation advantages through restructuring value chain
and evaluating cost drivers related to value chain. Cost drivers
are – linkage among the activities, economies of scale,
learning , capacity utilization, interrelationships, integrations,
timing of market entry, policies, institutional factors and
 Process of value chain analysis -
Analysis of own value chain – costs related to each
activity.
Analysis of customers value chain- fitness of our
products to customers value chain.
Identifying potential cost advantages – comparison
with competitors.
Identification of potential value added to customers –
lower cost or higher performance.
1. 1. Expanding Total Market Demand –
 Search New customers – market penetration strategy, New market
segmentation strategy and Geographical expansion strategy.
 More usage from existing customers
 Additional opportunities to use brand
 Find new ways to use the brand
2. Protecting Market Share –
 Proactive marketing - Responsive anticipation and Creative anticipation.
 Defensive marketing – position defense – occupying desirable market
share, flank defense – opening sales office and launching sales promotion
campaign, preemptive defense – broad market development or guerrilla
action across the market, counteroffensive defense – lunching a pincer
movement or attack from both sides, high quality product in lower price,
Mobile Defense – market broadening and market diversification,
Contraction Defense – give up weaker markets and reassign those
resources to strong markets.
3. Increasing Market Share –
 share of sales,
 share of voice
 Share of distribution
 Share of preference
 Others – stay relevant through innovation, fast response to customers, use of customers
ideas , snap competitors and be more flexible.

Market Challengers’ strategies –

 Defining the strategic objectives and opponents
 Selecting general attack strategies - (To attack the market leader,
attack the similar size firm and attack local and small firm), selecting
general attack strategies( frontal attack – matching with opponent’s
4ps, flank attack – finding the gaps, encirclement attack – capturing
wide geographical area , bypass attack –diversifying into products,
technology and territory, guerilla attack – hitting one competitor here,
another there and keeping everyone off balance.)
Choosing a specific attack strategy – price cuts or quality cuts ,
product variety, product innovation, better services, aggressive
promotion etc.
Market Followers’ strategies –
 counterfeiter – duplication of leader’s product and
packages.
Cloner – emulation of leader’s product name and
package with slight variation eg. Podrej for Godrej
Imitator- copy some thing from leader but
differentiation on packaging ,pricing, promotion and
distribution.
Adopter – taking of leader’s products and improving
them.
 Market - Nicher Strategies-
 End user specializes – one type of user; such as computer hardware and soft
ware
 Vertical level specialist- specialization only on production.
 Customer size specializes – sell of product only to certain group of customer.
 Specific customer specialist – sell of product to specific customer
 Product line specialist – produces only a line of product.
 geographical specialist – concentrates on certain area.
 Job – shop specialist – customizes product to each individual.
 Service specialist – unique service than competitors.
 Channel specialist – service through only one channel.
 Product feature specialist – focus on only one product feature. Eg. Hotel only
in catering.
 Competitors Analysis In Nepal
 Competition is common in Nepal.
 Identification of competitors is important to survival, growth, and development of
business. Nepalese marketers do systematic and unsystematic analysis.

a. Systematic Analysis Of Competitors

 Identification of key competitors

 Identification of key success factors of competitors.
 Evaluation of competitors’ objectives, strategies, capabilities and basic assumptions
regarding company and industry.

b. Unsystematic Analysis of Competitors

 Based on past experience so it is not rational.

 Less time consuming and cost effective.