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Concept
Competitor analysis
Summary
Competitive analysis in marketing and strategic management is 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. Profiling combines all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment.
Competitive analysis is an essential component of corporate strategy. It is argued that most firms do not conduct this type of analysis systematically enough. Instead, many enterprises operate on what is called "informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives." As a result, traditional environmental scanning places many firms at risk of dangerous competitive blindspots due to a lack of robust competitor analysis. It is important to conduct the competitor analysis at various business stages to provide the best possible product or service for customers.
One common and useful technique is constructing a competitor array. The steps may include:
Define the industry – scope and nature of the industry.
Determine who the competitors are.
Determine who the customers are and what benefits they expect.
Determine the key strengths – for example price, service, convenience, inventory, etc.
Rank the key success factors by giving each one a weighting – The sum of all the weightings must add up to one.
Rate each competitor on each of the key success factors.
Multiply each cell in the matrix by the factor weighting.
Two additional columns can be added. In one column, a company can be rated on each of the key success factors (try to be objective and honest). In another column, benchmarks can be listed. They are the ideal standards of comparisons on each of the factors. They reflect the workings of a company using all the industry's best practices.
The strategic rationale of competitor profiling is simple.
Official source
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