Competition A business’s attempt to get customers in the face of other businesses selling the same or similar products Forces companies to become more efficient Keeps prices down and quality up

8-2 Identifying Competitors

8-3 Five Forces Determining Segment Structural Attractiveness Threat of intense segment rivalry—cellular phone market

8-4 Five Forces Determining Segment Structural Attractiveness Threat of new entrants—Can come from anywhere

8-5 Five Forces Determining Segment Structural Attractiveness Threat of substitute products—Greyhound and Amtrak profitability threatened by rise of air travel

8-6 Five Forces Determining Segment Structural Attractiveness Threat of buyers’ growing bargaining power— Wal-Mart buying power

8-7 Five Forces Determining Segment Structural Attractiveness Threat of Suppliers’ growing bargaining power— ExxonMobil, Shell, BP, and Chevron-Texaco are at the mercy of oil-supplying cartels such as OPEC.

8-8 Analyzing Competitors Share of market—target market Share of mind--% of customers who names companies Share of heart--% of customers who prefer a company

8-9 Five Forces Determining Segment Structural Attractiveness Threat of intense segment rivalry—cellular phone market Threat of new entrants—Can come from anywhere Threat of substitute products—Greyhound and Amtrak profitability threatened by rise of air travel Threat of buyers’ growing bargaining power— Wal-Mart buying power Threat of Suppliers’ growing bargaining power— ExxonMobil, Shell, BP, and Chevron-Texaco are at the mercy of oil-supplying cartels such as OPEC.

8-10 Five Forces Determining Segment Structural Attractiveness

Price vs. Non-Price Competition Price Established firms focus on keeping prices down Revenue lost to lower prices is made up through higher sales Non-price Factors such as quality service, and reputation Customers are willing to pay more

Who are your Competitors? First level Specific brands which are direct competitors to your product or service, in your geographic locality Second level Competitors who offer similar products in a different business category or who are more geographically remote Third level Competitors who compete for the “same-occasion” dollars Toots 1 st Other sports bars 2 nd Other sit down restaurants 3 rd Fast food or convenience stores

Three Levels of Competition

Competitors

Competition Analysis Colorado Bearcats 1st level competitors: Other professional sports teams Denver Broncos Denver Nuggets Colorado Avalanche 2nd level competitors: Collegiate sports and geographically remote professional teams Kansas City Chiefs University of Colorado athletics Air Force Academy athletics Colorado Springs Sky Sox 3rd level competitors: Other businesses competing for money Rocky Mountain Motorcycle Museum Pro Rodeo Hall of Fame World Figure Skating Hall of Fame

Levels of Competition WE Are Boats West Marine REI Wal-Mart Bass Pro Hibbett Sports Kmart Dick’s Sporting Goods EBay Target Academy Sports and Outdoors Overtons Sams Club Murfreesboro Outdoors Boatowners.com Boatersworld.com

What Every Company Should Know About Their Competitors Who is the price leader? Who is the quality leader? Who has the largest market share? Why have certain companies recently entered or withdrawn from the market?

Competition Analysis Buy your competitors’ products Frequent your competitors’ territory Read industry publications Don’t forget to focus on your own business

Determine Competitors Strengths & Weaknesses Why customers buy from them? Value Service Convenience Reputation “Perceived” or “Actual” Strengths

Competition: Common Mistakes to Avoid Assuming you have no competition! Demonstrates inexperience and minimal understanding of your business Failing to identify both direct and indirect competitors Underestimating the power and strength of competitors Omitting the specific competitive advantages you hold over your competition Demonstrating a lack of knowledge or strategy to combat changing competitive conditions Failing to define and clarify you position, strength, and market niche focus

Factors to Consider in Analyzing the Competition Product Line (Breadth) PricingAdvertisingSupplier Advantage Product Line (Depth) Financial Resources Employee Morale Sales Force Uses of Technology Distribution Advantage Operational Efficiency Technology Competence Market ShareStrengthsWeaknesses

Analyzing Consumer Perceptions of Competitions QualityProduct Attributes ReliabilityTimely Service Friendly Service Knowledgeable Staff Convenient Location Store Hours DeliveryParkingGuaranteesBrand Recognition Credit Cards Image of Competitor Selection of Products Installation