Your Competitive Intelligence Learning from The Competition 5-1 Copyright © 2011 Nelson Education Ltd. chapter 55 Prepared by Ron Knowles Algonquin College

Your Competitive IntelligenceYour Competitive Intelligence

Learning from The Competition

5-1Copyright © 2011 Nelson Education Ltd.

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Prepared byRon Knowles

Algonquin College& Jennifer Rouse Barbeau

Canadore College

Chapter OverviewChapter 5 will: Improve your competitive intelligence by

learning from and defining the competition. Build distinctive value for your product or

service. Further define your specific niche and

competitive edge. Help you write a brief competitive overview

for your business plan.


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Learning OpportunitiesUse competitive intelligence to collect and use

information about your competition for the purpose of growing your business.

Discover how to create and grow a market with the help of your customers and competition.

Define your real competitor through touchpoint analysis.

Scout the competitive landscape to research your competition.

Evaluate your potential competitors using a competitive test matrix or SWOT analysis.


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Learning OpportunitiesBegin your pricing strategy by completing a

competitor pricing review sheet.Define the unique benefits offered by your

product or service.Use the four-phase life cycle to change the

arena and establish your competitive positioning strategy.

Discover ways to create uniqueness through service and product change.

Benefit from partnerships and associations with your potential competitors.

Draft your competitive strategy.


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CompetitionCompetition Companies or individuals

who provide similar products, services, or benefits as perceived by your target customer.

Identifying Your Competitors


Types of CompetitionThree Types1. Direct (first level)1. Direct (first level)

Companies or individuals that offer the same products same products or servicesor services as perceived by the target customer.

2. Indirect (second level)2. Indirect (second level) Companies or individuals that offer the same benefitssame benefits as perceived by the target customer.3. Invisible competition3. Invisible competition

People or businesses that have the capacity or desire to the capacity or desire to provide the same products, services or benefits provide the same products, services or benefits that you do.


Competitive IntelligenceCompetitive intelligence (CI)Competitive intelligence (CI)

The process of learning, collecting and using information about your competitors for the purpose of growing your business.

Requires a well-researched understanding of:Requires a well-researched understanding of:

Your target customers

Your current competition

Your future customer


Competitive Intelligence: Common Goals 10 common goals: 10 common goals: 1. Improve your product features (especially price)

2. Improve your customer service

3. Find new ways to distribute your product/service

4. Improve your advertising and promotions

5. Develop more efficient production processes

6. Reduce your reaction and delivery time

7. Add value to your product or service

8. Find new alliances and strategic partners

9. Find new ways to grow your current product/service

10. Develop new product/service opportunities


Competitive Touchpoint Analysis

Analyzing customers’ perceptions customers’ perceptions of the competition to find out what benefits and features are important to them.


A touchpoint is any contact that your customer has with any aspect of your competition.

Making a list of all the touchpoints allows you to identify your competitors’ strengths and weaknesses.


Competitive Touchpoint Analysis

A touchpoint analysis will enable you to develop a distinctive competency:

unique features and benefits that attract customers and encourage customer loyalty.

What is a Distinctive Competency?


Scouting the Competitive LandscapeCompetitive Landscape

5-12

The customer, through touchpoint analysis, is a major source of competitive information.

• Other information sources include: Suppliers Trade shows and conferences Competitors’ literature Industry and association journals Resource centres Trade magazines Industry Internet analysis (see, for example, Box 5.1) Company Web site analysis Franchise information Internet news groups

Copyright © 2011 Nelson Education Ltd.

Competitor Profile

5-13

A competitor profile will include data needed to effectively identify, classify and track competitors and their behaviour.


Elements of a Competitor Profile

Company identificationStature and credibility of the

companyProprietary assetsProduct design/services and

innovationOperations (production/service

capability)


Marketing and sales approachMarketing strategy and pricingDistributionManagement resourcesFinance


Elements of a Competitor Profile

Developing Your Competitive Strategy

5-16

PositioningPositioningThe process of

establishing in the mind of the consumer a unique image or perception of a company, product or service.


Competitive PositioningCompetitive PositioningThe process of establishing unique

benefits and features that the target customer values relative to the competition.

• What makes your business unique?• What is your distinctive competency?• What key component will give you the

competitive edge?


Developing Your Competitive Strategy

The Competitive Edge

5-18

Niche or Focus StrategyNiche or Focus Strategy

3 BroadCompetitive

Strategies

3 BroadCompetitive

StrategiesDifferentiation StrategyDifferentiation Strategy

Cost Leadership StrategyCost Leadership Strategy


Competitor AnalysisTwo methods to evaluate potential

competitors are:1. Competitive test matrix1. Competitive test matrix

A grid showing the strengths and weakness of your competitors.

2. Competitive SWOT2. Competitive SWOT For each competitor, evaluate its internal

strengths and weaknesses and external opportunities and threats.


Competitive Pricing StrategyBefore you start your business, Before you start your business, you’re going to have to think about:you’re going to have to think about:

What price range is acceptable to your customer?

Is your product or service sensitive to price?What factors affect price (service, quality, etc.)?What prices are your major competitors

charging? If prices differ, what are the reasons?What is your competitor pricing strategy?What price will you charge and why?How will your competitors respond?


The Competition Life Cycle

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EmbryonicEmbryonic

GrowthGrowth

MatureMature

DeclineDecline

Key Stages of the

Life Cycle

Key Stages of the

Life Cycle


Your CompetitivePositioning Strategy

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EmbryoEmbryo DeclineDecline

MaturityMaturity

GrowthGrowthCU

STO

MER

S

CO

MPETIT

ION

Figure 5.4Figure 5.4Copyright © 2011 Nelson Education Ltd.

2 Major Competitive ThrustsGuide your business back into growth Guide your business back into growth segments and create your own niche by using segments and create your own niche by using 2 major thrusts:2 major thrusts:

Create strategic alliances.Create uniqueness by continually

changing your product or service to meet the changing needs of your customers.


Chapter 5 helps you prepare Part C of your business plan:

The CompetitionThe Competition


Business Plan Business Plan Building Block

Define and analyze your real competition through competitive touchpoint analysis.

Construct a competitor test matrix or a competitive SWOT analysis.

Draft a competitive pricing strategy. Are your prices competitive?

What is your major competitive positioning strategy?


Checklist for Your Business PlanYour Business Plan

What is unique about your product or service?

Are there any invisible competitors ready to invade your territory?

What is the size of the total market, and what share do you expect to achieve in the first, second, and third years, and why?


Checklist for Your Business PlanYour Business Plan

My Virtual Model, Part IIImprove your competitive intelligence.

Dig deeper into the MVM success story and consider its competitive environment. Who were the direct, indirect, and invisible competitors? Using touchpoint analysis, develop a competitor review

sheet for MVM. Formulate a competitive positioning strategy for MVM. What was MVM’s major competitive strategy and driving

force? Do a SWOT analysis for MVM.


CaseStudy

Documents

Your Competitive Intelligence Learning from The Competition 5-1 Copyright © 2011 Nelson Education Ltd. chapter 55 Prepared by Ron Knowles Algonquin College