3-1

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. 3 Defining the Competitive Set

3-3 Bases of Competition I.Customer-oriented Who they are – competition for same budget When they use it Why they use it- benefits sought II.Marketing-oriented: advertising and promotion Theme/copy strategy Media Distribution Price

3-4 Bases of Competition cont. III.Resource-oriented Raw materials Employees Financial resources IV.Geographic

3-5 Levels of Competition Diet lemon limes Baseball cards Fruit flavore d colas Coffee Diet Coke Diet Pepsi Diet-Rite cola Bottled water Lemon limes Regular colas Beers Juices Wine Fast food Tea Video rentals Ice cream Product form competition: Diet colas Product category competition: Soft drinks Generic competition: Beverages Budget competition: Food and entertainment

3-6 Levels of Competition: Implications for Product Strategy Budget Generic Product Category Product Form Competitive Level Convince Customers that the Brand is Better than Others Convince Customers that the Product Form is Best in the Category Convince Customers that the Product Category is the Best Way to Satisfy Needs Convince Customers that the Generic Benefits are the Most Appropriate Way to Spend their Money Product Management Task

3-7 Energy Bar Competition Odwalla Power Bar Balance Bar Clif Energy Bars Snack/Health Bars Healthy Snacks Other Snacks Nutrigrain Bars Slimfast Bars Granola Bars Fruits Nuts Juice Crackers Chips Candy

3-8 PDA Competition Level of Competition DefinitionCompetitorsNeed Satisfied Product form POAs Full-features Palm Pilot VII Compaq Aero Casioplus integrated communication Cassio Poeia Personal information management plus Product categoryPIMs Palm III Royal Casio PV-100 PIM only Generic computers Notebook/ subnotebook Paper-based solutions IBM Toshiba Many others Rolodex Day Timer Other solutions to the above BudgetBusiness items costing $100-$1,000 Fax machines Personal copiers Cellular phones Furniture (e.g. Steelcase)

3-9 Managerial Judgment of Competition MarketsSameDifferent Product/Services Same Different A C B D

3-10 Brand-Switching Matrix Time t +1 ABCDE A B C D E Time t

3-11 Defining Competition with Brand Choice Data Regular All brands RegionalNational Diet Family brand 1 Family brand 2 Cola Non-Cola

3-12 Defining Competition with Perceptual Mapping Moist Needs refrigeration Tapioca pudding mix Local mix Pudding mix Chocolate torte mix Dzer ta Jell-O Canned pudding Individual pie Hostess cupcakes Quick bread mix Good for a coffee break As a formal dessert Homemade cake Bakery cake Homemade cookies Cheese cake mix “Snackin’ Cake” mix Frozen cake Layer cake mix “ Stir’n Frost cake mix Takes a long time to prepare Bundt cake mix Custard mix Boston crème pie mix “Light Style” cake mix Coffee cake mix Bakery cookies Pillsbury cookie dough Cookie mix Easy to carry with me In my school work lunch Between meal snack Pepperidge Farm cookies Oatmeal cookies Frozen pie Homemade pie Date bar mix Brownie mix

3-13 Methods Versus Competition Levels and Information Required

3-14 Enterprise Competition in Financial Services