Analysis of competitors

By Jozef Polom Msc International Marketing student. The Claude Littner Business. University ot West London.

The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle.

Competitor analysis is an essential component of corporate strategy. It is argued that most firms do not conduct this type of analysis systematically enough. Instead, many enterprises operate on what is called "informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives." As a result, traditional environmental scanning places many firms at risk of dangerous competitive blind spots due to a lack of robust competitor analysis.

Clearly, those firms practicing systematic and advanced competitor profiling have a significant advantage. As such, a comprehensive profiling capability is rapidly becoming a core competence required for successful competition. An appropriate analogy is to consider this advantage as akin to having a good idea of the next move that your opponent in a chess match will make. By staying one move ahead, checkmate is one step closer. Indeed, as in chess, a good offense is the best defence in the game of business as well.

A common technique is to create detailed profiles on each of your major competitors. These profiles give an in-depth description of the competitor's background, finances, products, markets, facilities, personnel, and strategies. This involves:

Background

• location of offices, plants, and online presences
• history – key personalities, dates, events, and trends
• ownership, corporate governance, and organizational structure

Financials

• P-E ratios, dividend policy, and profitability
• various financial ratios, liquidity, and cash flow
• profit growth profile; method of growth (organic or acquisitive)

Products

• products offered, depth and breadth of product line, and product portfolio balance
• new products developed, new product success rate
• brands, strength of brand portfolio, brand loyalty and brand awareness
• patents and licenses
• quality control conformance
• reverse engineering or deformulation

Marketing

• segments served, market shares, customer base, growth rate, and customer loyalty
• promotional mix, promotional budgets, advertising themes, ad agency used, sales force success rate, online promotional strategy
• distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical coverage
• pricing, discounts, and allowances
• Facilities
• plant capacity, capacity utilization rate, age of plant, plant efficiency, capital investment
• location, shipping logistics, and product mix by plant
• Personnel
• 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

 (Sources: Enterpreneur.com, Wikipedia)