Week 4: COMPETITOR ANALYSIS

This week was especially interesting.  We moved into discussion on Market Potential, Market Demand, and Forecasting.   When we think about Market competition, many managers simply look at product form and product category competition.   Managers compare their products to other products that are the same and the also look at the category of goods.  This leaves out many other potential forms of competition though.  Managers should take a broader approach to defining the competition for a product’s good.  Simply put, If a product can be substituted for your product (whether it’s similar or not, or whether it’s in the same category or not) then it should be viewed as competition. 

Here’s a practical application of what I’m talking about.  Let’s say that your company is called Florida Sweet Cane and  you produce sugar.  Your competition aren’t just the other companies that produce Sugar in Fl, but your competition is also the companies that produce sugar out side of the state and makes its way into Florida.  Furthermore, your competition is also the producers of Honey, corn syrup, and low fat sweeteners such as Splenda.  This is because all of these producers can take away customers and pieces of the market away from your company. 

PharmaSim:  In class we discussed our Pharmasim simulations.  The teacher asked a very basic question, “What is our mission?”  As predicted, a few students had a concept of a company mission that was too narrow.  Missions are broad and should encompass what the company is trying to do.  Sell ‘x’ product.  Target ‘x’ population.  Market visions are when the managers should begin to narrow their focus.

            From the reading, Lehmann and Winer believe that one of the most underutilized sources of information in companies is the sales force, but I think a lot of that has changed.  Companies have become very efficient and marketing conscious recently.  I believe that most companies are using their sales force to submit data and analysis on a regular basis.  Salesmen now travel around with laptops.   They input data as soon as they get back to their car about who they sold to (and all of the demographics that made up the customer), what they sold, when they sold it and where they sold it.  Some of the salesmen actually come with laptop in hand to the site of the transaction.  I think the industrialized world has grown savvy to Lehmann’s and Winer’s theories.

During class, we once again refereed to the five C’s.  The five C’s are Customers, Competitors, Collaborators, Company (internal analysis), and Context.  Note, that Company is the only ‘C’ that has internal analysis.  The other 4 ‘C’s all rely on external analysis.  When it comes to marketing, all five ‘C’s should be engaged to develop the best marketing plan.

My favorite part of the reading was in chapter four when Lehman and Winer talked about reverse engineering as a way to conduct competitor analysis.  Reverse engineering is when a company purchases a competitor’s product and takes it apart so that the company can assess the product’s strengths and weaknesses.  It is wise to become a customer of a competitor.  This is especially true in my military profession.  Enemy military forces are always trying to get their hands on America’s weapons systems to see if they can reverse engineer them.  This is why pilots are trained and equipped to disable or destroy their aircraft if they crash behind enemy lines.  Reverse engineering has been known to the military for centuries, it’s about time the marketing world caught up.

Questions from classmates: In the discussion board, Daniel asked; “Throughout Lehmann and Drucker, there is a lot of discussion about both assessing competitive threats and assessing perception of customer value.  Which of these two approaches (if one) is the higher priority and why?”

I would say that assessing perception of customer value is the higher priority.  Focusing on the competition can make you forget to pay attention to your own product.  By focusing on customer perception forces you re-evaluate your product constantly and to make it better.  Oddly enough, this question was also picked by the professor to speak on.  And of course, he agreed with me!

Megan asked a question that was very important.  Megan asked: “Is it possible for a company to know all of their competitors without spending too much time and money that could be better used in other areas (such as R&D)?”  I think she is spot on with these questions.  There is no way to know ALL of your competitors without spending too much time focusing on them.  I have spoken about this on my blog at least twice.  In my opinion, companies should focus on their biggest competitors, and ensure the company is spending the majority of time on their own product and their own customers.  If the company is big enough, they can just buy out the smaller competition’s product (like Apple does) as they spring up.

 

Student Blogs: I read a couple of student blogs this week that posted before mine (obviously).  Megan’s caught my attention.  Her comments on the articles from this week were practically the same takeaways that I had.  Basically, companies should do a little research on competitors, but more important is the CUSTOMER.