Five aspects of Competitive Analysis

Home, - Identify and briefly describe any five aspects of competitive analysis

Question :- Companies practising competitor analysis and accounting should also carry out competitive position monitoring. Through this, they analyse competitor positions within the industry by assessing and monitoring trends in competitor sales. In addition, companies should conduct industry profitability analysis. This provides them with a gauge for the nature and intensity of competition.

(a) Identify and briefly describe any five aspects of competitive analysis

(a) Five aspects of Competitive Analysis are - 

(i) Market Share - This covers the proportionate market share owned by the various competitors. This analysis shall help to determine how much of the total market share is owned by each competitor and design marketing techniques accordingly.

(ii) Pricing - Pricing analysis of competitors assist in setting the prices of the company's product so that more customers can be attracted.

(iii) Customer Reviews - Analysis the customer reviews of competitors shall assist in knowing the strengths and weaknesses of the competitor product and reaching out to target customers.

(iv) Geography and Culture - By analysis the geographic and cultural spread of competitor products, the firm can plan its future growth prospects and geographies it needs to reach out to sell its products.

(v) Strengths and Weaknesses - By assessing the strengths and weaknesses of competitor firms, the company can assess its position in the Industry and determine the areas it needs to work on.

Question (b) critically examines the five aspects of competitive analysis with regards to the benefits and forces affecting industry competition. You may link your answer to a industry that you are familiar with or have an interest in.

(b) Presence of competitors can largely impact pricing decisions. Prices of products need to be modified based on competitive analysis. Discussion of the above listed aspects of competitive analysis is as below -

(I) Market share - Market share is the proportionate share of the overall product market owned by a single firm in the industry. Several top firms occupy a major market share in most industries. For example, in the mobile phone sector, Apple phones own a huge market share. When it comes to low price products, several Chinese companies own a big market share. For any firm to enter the mobile phone market, it needs to first analyse the market share of several top companies and build strategies to pull the market share towards itself.

(ii) Pricing - Pricing of products depends upon several factors like costing, market demand and supply, competitive pricing, etc. by analysing the prices of competitor products, a firm can build its pricing strategy so as to attract more customers. For example, it is well-known that several Chinese companies occupy a major market share in the mobile phone industry because of cheaper prices. If a firm can design mobile phones of similar technology at a cheaper price and provide the same to customers, it will help the firm in gaining a huge market share. Thus, by observing the pricing movements of competitors, firm can design its pricing policies accordingly.

(iii) customer reviews - by examining the customer reviews of competitor products, a company can assess what exactly the customer wants. The firm can design its products based on customer preferences and ideas. If a certain competitor company has positive customer reviews, it indicates that the company is doing well in the market and product strategy can be designed similar to that of the competitor. On the other hand, if there are negative customer reviews of a competitive product, it indicates that the firm can grab an opportunity in that particular product segment by designing a product which is liked by most customers.

(iv) Geography and culture - geography and culture refers to the geographic and cultural spread of a certain product. There are companies who target certain geography or culture to market their products. For example, Tesla cars are marketed more in the United States of America than other regions. These cars are targeted towards a premium range of customers who are ready to pay a higher price for premium cars. By analysing the geography and culture aspects of competitive companies, a firm can similarly plan its marketing strategies to suit certain geography or culture.

(v) Strength and weaknesses - Strengths refer to the competitive strength owned by a competitor. Similarly, weaknesses are the marketing weaknesses and other weaknesses of competitor firms. Any company entering a new industry should assess the strengths and weaknesses of competitor firms to analyse and understand several market prospects. It should target to implement the strengths of competitor firms and avoid the weaknesses so as to occupy a larger market share. For example, in case of Apple, its strengths are its technology, processor, camera and user friendliness. Its weaknesses are high cost, huge taxes, non-compatibility with android phones and laptops. Any company entering the mobile manufacturing industry should target to ensure the strengths in its products and defer the weaknesses in order to lead over Apple.

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