What exactly is competitor Analysis?
§ Identifying your competitors and evaluating their strategies to
determine their strengths and weaknesses relative to those of your
own product or service.
§ Competitive analysis or competitive research is a field of strategic
research that specializes in the collection and review of information
about rival firms.
Constructing a competitor array
1. Define the industry, scope and nature of the your are of specialty.
For example insurance, mining, finance and banking, education, advertising, tell
2. Determine who the competitors are. Formulate a list of
top five in the country, scale it down to province narrowing to town. It helps in
classifying them whether they are primary or secondary competitors. The whole point of
this exercise is to see you where you stand, how much work has to be done to beat the
best at their own game.
3. Determine who the customers are and what benefits
they expect. This one is equally important because they customers / clients are
what keep the brand moving and surviving thus they need to be impressed. Through
them the brand is made or destroyed. Point is unlike one’s person life public perspective
is of paramount importance
4. Determine the key strengths, for example price, service,
convenience, inventory, etc.
The strategic rationale of competitor profiling is
simple. Superior knowledge of rivals offers a
legitimate source of competitive advantage.
The raw material of competitive advantage
consists of offering superior customer value in
the firm’s chosen market.
The definitive characteristic of customer value
is the adjective, superior. Customer value is
defined relative to rival offerings making
competitor knowledge an intrinsic component
of corporate strategy.
v First, profiling can reveal strategic weaknesses in rivals that the firm may exploit.
v Second, the proactive stance of competitor profiling will allow the firm to anticipate the
strategic response of their rivals to the firm’s planned strategies, the strategies of other
competing firms, and changes in the environment.
v Third, this proactive knowledge will give the firms strategic agility. Offensive strategy can be
implemented more quickly in order to exploit opportunities and capitalize on strengths.
Similarly, defensive strategy can be employed more deftly in order to counter the threat of
rival firms from exploiting the firm’s own weaknesses.
Aspects to be looks at/ pay attention to
• location of offices, plants, and online presences
• history – key personalities, dates, events, and trends
• ownership, corporate governance, and organizational structure
• P-E ratios, dividend policy, and profitability
• various financial ratios, liquidity, and cash flow
• profit growth profile; method of growth (organic or acquisitive)
• Salary rates
• products offered, depth and breadth of product line, and product portfolio
• new products developed, new product success rate, and R&D strengths
• brands, strength of brand portfolio, brand loyalty and brand awareness
• patents and licenses
• quality control conformance
• reverse engineering
• segments served, market shares, customer base, growth rate, and customer
• promotional mix, promotional budgets, advertising themes, advertising
agency used, sales force success rate, online promotional strategy
• distribution channels used (direct & indirect), exclusivity agreements, alliances,
and geographical coverage
• pricing, discounts, and allowances
• plant capacity, capacity utilization rate, age of plant, plant efficiency, capital
• location, shipping logistics, and product mix by plant
• number of employees, key employees, and skill sets
• strength of management, and management style
• compensation, benefits, and employee morale & retention rates
Corporate and marketing strategies
• objectives, mission statement, growth plans, acquisitions, and divestitures
• marketing strategies
The most important of resent
• Scanning competitor's adverts can reveal much about what that competitor
believes about marketing and their target market.
• Changes in a competitor's advertising message can reveal new product
offerings, new production processes, a new branding strategy, a new
positioning strategy, a new segmentation strategy, line extensions and
contractions, problems with previous positions, insights from recent marketing
or product research, a new strategic direction, a new source of sustainable
competitive advantage, or value migrations within the industry.
• It might also indicate a new pricing strategy such as penetration, price
discrimination, price skimming, product bundling, joint product pricing,
discounts, or loss leaders. It may also indicate a new promotion strategy such
as push, pull, balanced, short term sales generation, long term image
The source of information that can
Different types of content can include:
• Blog posts
• Visual content
• Feature articles
• Press releases
• Case studies
• Buyer guides
Potential or new competition
In addition to analysing current competitors, it is necessary to estimate future competitive threats
The most common sources of new competitors are:
• Companies competing in a related product/market
• Companies using related technologies
• Companies already targeting the target prime market segment but with unrelated
• Companies from other geographical areas and with similar products
• New start-up companies organized by former employees and/or managers of
The entrance of new competitors is likely when:
• There are high profit margins in the industry
• There is unmet demand (insufficient supply) in the industry
• There are no major barriers to entry
• There is future growth potential
• Competitive rivalry is not intense
• Gaining a competitive advantage over existing firms is feasible
• Dissatisfaction with the existing suppliers
What is competitive blind spot and its effects
• Much competitive information is bounded by the assumptions that managers’ have with
respect to their industry and these assumptions may lead to blind spots.
• The effect of such blind spots may cause the strategist to not recognize the significance
of events, interpret them inappropriately, or see them only slowly.
• The industry or company main be over rated or under rate thus such mistakes may affect
the strategies put in place
Examples of competitive blind-spot
Misjudging Industry Boundaries.
• Too often firms define their industry around their current
• products, customer groups, and geographies blinding themselves to adjacent competitors which
subsequently enter their current space.
Poor Identification of Competitors.
• Strategists frequently focus on only the largest and most
• well-known companies to the exclusion of other viable competitors – those potential competitors noted
earlier in this chapter.
Overemphasis on Competitors’ Visible Competence.
• Competitor analysis often focuses on competitors’ hard assets and technology skills and ignore equally
potent capabilities such as logistics, product design, or human resources.
Emphasis on Where, Not How to Compete.
• Strategists too often assume that competitors’ strategies will shift only incrementally to the exclusion of
radical repositioning in how they could compete.
Competitive blind-spot continuation
Faulty Assumptions about Competitors.
• Prisoners of assumptions about competitors – the overuse of stereotypes –
cause strategists to misjudge competitors’ competences and competitive
Paralysis by Analysis
• Obsession with the task of data collection results in information overload to
the detriment of analysis and insight.
Summary of competitive analysis
mackinsey 7’s model
• The McKinsey 7s model is a
tool that analyses firm’s
organizational design by
looking at 7 key internal
structure, systems, shared
values, style, staff and skills,
in order to identify if they
are effectively aligned and
allow organization to
achieve its objectives.
• It is a plan developed by a firm to achieve sustained competitive advantage and successfully compete
in the market. For example, short-term strategy is usually a poor choice for a company but if its
aligned with other 6 elements, then it may provide strong results.
• It represents the way business divisions and units are organized and includes the information of who
is accountable to whom. In other words, structure is the organizational chart of the firm. It is also
one of the most visible and easy to change elements of the framework.
• They are the processes and procedures of the company, which reveal business’ daily activities and
how decisions are made. Systems are the area of the firm that determines how business is
done and it should be the main focus for managers during organizational change.
• These are the abilities that firm’s employees perform very well. They also include capabilities and
competences. During organizational change, the question often arises of what skills the
company will really need to reinforce its new strategy or new structure.
• The element concerned with what type and how many employees an organization will need and
how they will be recruited, trained, motivated and rewarded.
• It represents the way the company is managed by top-level managers, how they interact, what
actions do they take and their symbolic value. In other words, it is the management style of
• They are at the core of McKinsey 7s model. They are the norms and standards that guide
employee behavior and company actions and thus, are the foundation of every organization.