competitive analysis

(noun)

An assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats.

Related Terms

Examples of competitive analysis in the following topics:

  • Competition

    • Companies must conduct competitive analysis to identify their competition accurately, and must avoid defining the competition too narrowly.
    • Competitive analysis focuses on opportunities and threats that may occur because of actual or potential competitive changes in strategy.
    • Competitive analysis starts with identifying current and potential competitors.
    • It is essential that the marketer begin the analysis by answering the following question: "What criteria can be used to identify a relevant set of competitors?
    • Classify the use of competitive data from an internal and external viewpoint

  • Competitive Intelligence

    • Competitive Intelligence (CI) is a hybrid process of marketing research and strategic analysis that can give companies a competitive advantage.
    • An example of competitive intelligence is when a food and beverage company conducts primary research to find out about the latest trends in the beverage industry of a foreign country.
    • Although the term CI is also considered synonymous with competitor analysis, competitive intelligence extends beyond analyzing competitors.
    • There are many synonyms for competitive intelligence such as business intelligence, market intelligence, and corporate intelligence.
    • In essence, CI is a hybrid process of marketing research and strategic analysis that ultimately seeks to provide companies and their products with a competitive advantage in the marketplace.

  • Conducting a Situational Analysis

    • An analysis on the climate is also known as the PEST analysis.
    • It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market.
    • Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will trend towards zero (perfect competition).
    • For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry.
    • Firms use Porter's five forces to develop business strategy and conduct competitive analysis.

  • Other Inputs to Pricing Decisions

    • Under this strategy, a company sets a price based upon analysis and research compiled from its target market.
    • Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry.
    • Achieving competitive advantage strengthens and positions a business better within the business environment.
    • This suggests that the differentiation value relative to the closest competitive offering is $6,000.
    • Combine the concept of customer needs, the competitive environment as well as legal and regulatory factors.

  • Competitor-Based Pricing

    • Competition-based pricing describes a situation where a firm has a pricing policy that reflects the pricing decisions of competitors.
    • Competition-based pricing describes the situation where a firm does not have a pricing policy that relates to its product, but reflects the pricing decisions of competitors.
    • Similar to competition based pricing, going rate pricing reflects the price that is being used by most of the companies within the industry, an industry standard more or less.
    • Extensive marketing research and statistical analysis are not required.
    • The problems with competition-based pricing are that:

  • Conclude with Action Plan

    • It includes developing the content; describing the product or services and special features, creating a marketing budget that includes advertising and promotional needs, describing the business-its location any advantages or disadvantages it may have, the staffing developin a pricing strategy, forecasting the company's financial future and defining the market segment as well as the competition
    • It should define the marketplace, competition, sales and distribution setup, advertising, sales promotion and merchandising strategies.
    • Situational Analysis - the current situation - the macro-environment - the Economy, legal, technological, ecological, socio-cultural and supply chain oriented, market analysis, market definition including segmentation and size, industry structure, strategic groupings, competition strengths and weaknesses and their market share, a Porter 5 Force Analysis, a consumer analysis, the nature of the buying decision, staffing, demographics, psychographics, buyer motivation and expectations, loyalty segments and company resources.
    • Financial Forecast-assumptions, budgets, use of funds, monthly pro-forma, contribution margin analysis, break even analysis, prediction of future scenarios with corresponding action plan

  • Business Analysis

    • The first step in the business analysis process is to examine the projected demand for the product.
    • A complete cost appraisal is also necessary as part of the business analysis.
    • Based on these costs, the business analysis stage will estimate the likely selling price.
    • This figure will also depend on the level of competition, as well as customer feedback.
    • Financial ratio analysis allows an observer to put the data provided by a company in context.

  • Monitoring Competition

    • Companies must monitor competition in order to make intelligent marketing decisions based on how competitors operate.
    • Since practically no marketer operates as a monopoly, most of the strategy issues considered by a marketer relate to competition.
    • Competitive intelligence is an ethical and legal business practice, as opposed to industrial espionage which is illegal.
    • Experts also call this process the early signal analysis.
    • Classify the purpose of and methodology of monitoring competition from a marketing perspective

  • Marginal Analysis

    • Pricing decisions tend to heavily involve analysis regarding marginal contributions to revenues and costs.
    • Pricing decisions tend to heavily involve analysis regarding marginal contributions to revenues and costs.
    • If the firm is operating in a non-competitive market, changes would have to be made to the diagram.
    • In a non-competitive environment, more complicated profit maximization solutions involve the use of game theory.
    • Identify the characteristics of a marginal price analysis relative to pricing decision making

  • Scanning and Analysis

    • One approach is the PEST analysis.
    • Of the four categories explored in the PEST analysis, the company has the least control over economic factors.
    • Two more factors, the environmental and legal factor, are defined within the PESTEL analysis (or PESTLE analysis).
    • The segmentation of the macro environment according to the six presented factors of the PESTEL analysis is the starting point of the global environmental analysis.
    • The six environmental factors of the PESTEL analysis are the following: