Competitive Analysis of Marketing

The analysis examines the overall five forces of the industry and is a starting point for assessing a company's competitive position. This is likely to be a broad definition of an industry and include many companies that may not be direct competitors. Toyota is likely to have many natural direct competitors, although both companies are in the car industry, Austin Martin is likely not one of them. While Toyota is global in scale and produces cars across the range, Austin Martin is a specialist, low-noise manufacturer of prestigious sports cars. Firms that are direct competitors in terms of products and customer profiles are seen as being in a strategic group. The car industry will be composed of several strategic groups.

Strategic group

Strategic groups are composed of organizations in the same industry that are adopting equivalent strategies to target groups of customers with similar profiles. Aston Martin's strategic group is likely to include Ferrari, Lotus, Lamborghini, etc. All these companies follow similar strategies, and these companies are also facing similar strategic questions. They are also targeting very similar market segments. There are at least three strategic groups in the airline industry. One group consists of airlines with regional operations that offer scheduled flights and compete on price. There are a group of major airlines that have global operations and offer scheduled flights with quality ambience and service. A third group offers charter services to a range of holiday destinations.

The following are some examples of the range of attributes used to identify strategic groups.

> Size of the company

> Assets and Skills

> Scope of Operation

> Width of product range

> Choice of distribution channel

> Relative product quality

> Product picture

For most companies, analyzing every competitor in their general industry would be a daunting task in terms of management time and company resources. Defining an organization's strategic group allows a company to focus its analysis on its direct competitors and examine them in more detail.

Tools used to analyze the internal environment, such as value chains, can of course be used to analyze competitors. For each competitor in their strategic group, the organization must establish as far as possible the following:

Competitors' objectives can be identified by analyzing the following three important factors.

> Whether the competitor's current performance is meeting their objectives. If not, the opponent may change strategy.

> How likely is a competitor to further invest in the business? Financial goals may indicate this. Investments are more likely to come from companies with goals such as market share and sales growth, rather than organizations under pressure to generate short-term profits. It also reveals potential trades that competitors are willing to take. If short-term profit is the main objective, a competitor may be willing to reduce market share in the short-term to achieve its profit target.

> Possible future direction of competitor's strategy. An organization may have non-financial goals, such as achieving technology leadership.

The following three areas should be explored to establish the competitor's current activities.

> Identification of the current markets or market segments in which the competitor currently operates will indicate the scope of the business.

> Identify the way a competitor chooses to compete in that market, whether it is based on service quality, brand image, or price. It can also be an indication of whether a low cost or discrimination strategy is being followed.

> A comparison between current strategies and past strategies can be instructive. First, it can explain the competitor's direction, in terms of product and market development, over time. It can also highlight strategies that the organization has tried and failed in the past. An adversary is unlikely to try these methods again without significant reservations.

> Competitive Analysis of Marketing (Strategic groups - 2)