Factfile 7
Competitor analysis and planning how to respond
Competitor analysis is defined by Kotler et al (2001) as ?the process of identifying key competitors; assessing their objectives, strengths and weaknesses, strategies and reaction patterns; and selecting which competitors to attack and avoid?.
A basic tool for undertaking competitive analysis is identifying the organisation's position compared to competitors, either as a whole or in a specific market segment, in terms of their strengths weaknesses, opportunities and threats (SWOT).
The outcome of a SWOT and the competitive analysis process enables organisations to identify areas of potential competitive advantage and disadvantage and consequently develop competitive strategies to position themselves in the market. This often involves launching more effective marketing campaigns against their competitors and preparing stronger defences against competitors? actions (Kotler 1994).
Most importantly, the competitive analysis process must be ongoing to ensure that changes in competitor?s actions are identified and plans are developed for proactive market development or for defensive activities.
Any organisation?s strategic development should take into account information from competitor analysis as part of the raft of information sources to aid decision-making.
There are many useful tools to examine competitive environment. A popular tool is Porter?s five forces.
Figure 1: Porters? ?Five Forces?
Source: From Porter, 1980.
This provides a structured approach of examining the competitive environment by looking at the various pressures on the industry. Most strategy textbooks include an explanation of this.
The main discussion within the section of the Canon of Knowledge b2b survey was how to find out about the competition. Although desk research was mentioned a number of times, it was networking that came to the front as the key method of finding out information, whether it was from competition themselves, or customers who had a view on rival firms that were competing for their business.
SWOT and PEST analysis techniques were mentioned. However, they seemed to be used in an ad hoc manner and without much care and consideration for what information was actually needed.
Within the public sector, Best Value was mentioned time and time again, both in this section and also in section 2.4, where it is a government criteria of Key Performance Indicators that are not only used internally but also externally to measure against competition.
Also in the public sector, partnerships was the buzz word that was used, for example, one respondent pointed out that they had ?partnerships and (an) emphasis on working together rather than competition - need to work towards one end?.