Slide 1Continuing from Chs. 2 & 3Competitor Analysis SystemKey Questions to Ask for Competitor Analysis*Secondary Sources of Competitor InformationPrimary Sources of Competitor Information*Other Sources of InformationInformation Sources with Ethical ConsiderationsStep 1: Assess Competitors’ ObjectivesStep 2: Assess Competitors’ Current Strategies*Value Chain*My Own Example of Value-Chain Comparison (Cost Leadership)My Own Example of Value-chain Comparison (Differentiation)Example) Energy Bars: Competitor Feature/Strategy Matrix*Step 2: Assess Competitors’ Current Strategies* (Cont’d)Step 2: Assess Current Strategies (cont’d)Slide 17Step 3: Assess Competitors’ CapabilitiesWhat to do with all the information?  Make a Table! (Differential Advantage Analysis)*Energy Bars: Differential Advantage AnalysisEnergy Bars: Differential Advantage AnalysisStep 4: Assess A Competitor’s Will and Future StrategyA Competitive Conjecture ProcessExample: Energy Bars: Current & Future Strategy MatrixIn summary, you need to knowMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.C H A P T E R Competitor Analysis41. Essence of a “Strategy”2. Increasing ImportanceMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Continuing from Chs. 2 & 3Continuing from Chs. 2 & 3•Define your competitive set  Boundary•Industry Analysis  Macro level•Competitor Analysis  Micro Level** First decide which competitors to focus on: The more specific, the better** Need to know your own company too!McGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Competitor Analysis SystemCompetitor Analysis SystemWhat are they going to do? Differential competitor advantage analysis i.e. Who has the competitive product advantage? Key questions: -Who are they?-What are the competing product features?-What do they want?-What is their current strategy?Primary dataSecondary dataDifferential Advantage Analysis*McGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Key Questions to Ask for Competitor Analysis*Key Questions to Ask for Competitor Analysis*•Do you know…?•What are the Competitors’ Objectives?•What are the Current Strategies being used and how successful have they been?•What are the Capabilities of Competitors?•What are their likely Future Strategies?McGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Secondary Sources of Secondary Sources of Competitor InformationCompetitor InformationSecondary dataCustomer communicationsInternal sourcesLocal newspapersAnnual reportsPatent filingsBusiness press10KsGovernmentElectronics databasesNews releasesTrade associationsPromotional literatureInternetTrade pressConsultantswww.dialog.comwww.dnb.comhttp://www.beernet.comhttp://www.crn.comMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Primary Sources of Competitor Information*Primary Sources of Competitor Information*Primary dataConsultants/Specialized FirmsInvestment bankersEmployeesCustomers (Retailers)*SuppliersSales forceMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Other Sources of InformationOther Sources of Information •Help-Wanted Ads•Reverse Engineering •Monitoring Test Markets•Hiring Key Employees* •Plant ToursMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Information Sources with Ethical ConsiderationsInformation Sources with Ethical Considerations•Aerial Reconnaissance•Buying/Stealing Trash (Garbology)•PCs/Printers•Phony Want AdsMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Step 1: Assess Competitors’ ObjectivesStep 1: Assess Competitors’ Objectives Three Categories Market share or profitability?  Issues to considerOwnership structureOperating philosophy and procedures Country of originMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Step 2: Assess Competitors’ Current Strategies*Step 2: Assess Competitors’ Current Strategies*Assess Competitors’ Marketing StrategyTarget Market SelectionCore Strategy (Value-chain comparison)*Implementation (Supporting Marketing Mix)PricingPromotionDistributionProduct/Service Capabilities: Product Features Matrix (Figure 4-7 on p. 109)McGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Value Chain*Value Chain* ServiceService Firm InfrastructureFirm InfrastructureHuman Resource ManagementHuman Resource ManagementTechnology DevelopmentTechnology DevelopmentProcurement Procurement Marketing Marketing and Salesand SalesOperationsOperationsOutbound Outbound LogisticsLogisticsInbound Inbound LogisticsLogisticsMarginMarginSupport ActivitiesPrimary ActivitiesMcGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.01/14/19 12My Own Example of My Own Example of Value-Chain Comparison (Cost Leadership)Value-Chain Comparison (Cost Leadership)Upstream Downstream Tobin’s qAMERICAN EAGLEIntegrated (D) Integrated 1.80HAROLDS STORESIntegrated (D) Integrated 1.26TJXDisintegrated Integrated 2.36WILSONS THE LEATHERIntegrated (D) Integrated .80McGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.01/14/19 13My Own Example of My Own Example of Value-chain Comparison (Differentiation)Value-chain Comparison (Differentiation)Upstream Downstream 2005 Tobin’s q (1996)AMERICAN EAGLEIntegrated (D) Integrated 1.80HAROLDS STORESIntegrated (D) Integrated 1.26NAUTICAIntegrated (D) Multichannel .61 (3.59)TARRANT APPARELIntegrated (D, M) Disintegrated .54 (.95)DONNA KARANIntegrated (D) Multichannel .57 J CREWIntegrated (D) Integrated 2.28THE GAPIntegrated (D) Integrated 1.59LIMITED BRANDSIntegrated (D, M) Integrated 1.65COLDWATER CREEKDisintegrated Integrated 4.10CACHE INCDisintegrated Integrated 1.60CHICOS FAS INCIntegrated (D) Integrated 7.65McGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Example) Energy Bars: Example) Energy Bars: Competitor Feature/Strategy Matrix*Competitor Feature/Strategy Matrix*McGraw-Hill/Irwin© 2002 The McGraw-Hill Compnies, Inc., All Rights Reserved.Step 2: Assess Competitors’ Current Strategies* Step 2: Assess Competitors’ Current Strategies* (Cont’d)(Cont’d) How to Assess Competitors’ Strategies*Two key elements of a strategy**: Segments appealed toCore strategy = positioning = value