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

Chapter Overview Chapter 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. 5-2 Copyright © 2011 Nelson Education Ltd. chapter 55

Learning Opportunities  Use 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. 5-3 Copyright © 2011 Nelson Education Ltd. chapter 55

Learning Opportunities  Begin 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. 5-4 Copyright © 2011 Nelson Education Ltd. chapter 55

Competition   Companies or individuals who provide similar products, services, or benefits as perceived by your target customer. Identifying Your Competitors 5-5 Copyright © 2011 Nelson Education Ltd.

Types of Competition Three Types 1. Direct (first level) same products or services Companies or individuals that offer the same products or services as perceived by the target customer. 2. Indirect (second level) same benefits Companies or individuals that offer the same benefits as perceived by the target customer. 3. Invisible competition the capacity or desire to provide the same products, services or benefits People or businesses that have the capacity or desire to provide the same products, services or benefits that you do. 5-6 Copyright © 2011 Nelson Education Ltd.

Competitive Intelligence 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:  Your target customers  Your current competition  Your future customer 5-7 Copyright © 2011 Nelson Education Ltd.

Competitive Intelligence: Common Goals 10 common goals: 1. 1.Improve your product features (especially price) 2. 2.Improve your customer service 3. 3.Find new ways to distribute your product/service 4. 4.Improve your advertising and promotions 5. 5.Develop more efficient production processes 6. 6.Reduce your reaction and delivery time 7. 7.Add value to your product or service 8. 8.Find new alliances and strategic partners 9. 9.Find new ways to grow your current product/service Develop new product/service opportunities 5-8 Copyright © 2011 Nelson Education Ltd.

Competitive Touchpoint Analysis Analyzing customers’ perceptions of the competition to find out what benefits and features are important to them. 5-9 Copyright © 2011 Nelson Education Ltd.

  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 Copyright © 2011 Nelson Education Ltd. 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? 5-11 Copyright © 2011 Nelson Education Ltd.

Competitive Landscape Scouting the Competitive 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. Copyright © 2011 Nelson Education Ltd.

Elements of a Competitor Profile  Company identification  Stature and credibility of the company  Proprietary assets  Product design/services and innovation  Operations (production/service capability) 5-14 Copyright © 2011 Nelson Education Ltd.

 Marketing and sales approach  Marketing strategy and pricing  Distribution  Management resources  Finance 5-15 Copyright © 2011 Nelson Education Ltd. Elements of a Competitor Profile

Developing Your Competitive Strategy 5-16 Positioning  The process of establishing in the mind of the consumer a unique image or perception of a company, product or service. Copyright © 2011 Nelson Education Ltd.

Competitive Positioning  The 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? 5-17 Copyright © 2011 Nelson Education Ltd. Developing Your Competitive Strategy

The Competitive Edge 5-18 Niche or Focus Strategy 3 Broad Competitive Strategies 3 Broad Competitive Strategies Differentiation Strategy Cost Leadership Strategy Copyright © 2011 Nelson Education Ltd.

Competitor Analysis Two methods to evaluate potential competitors are: 1. Competitive test matrix  A grid showing the strengths and weakness of your competitors. 2. Competitive SWOT  For each competitor, evaluate its internal strengths and weaknesses and external opportunities and threats Copyright © 2011 Nelson Education Ltd.

Competitive Pricing Strategy Before you start your business, 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? 5-20 Copyright © 2011 Nelson Education Ltd.

The Competition Life Cycle 5-21 Embryonic Growth Mature Decline Key Stages of the Life Cycle Key Stages of the Life Cycle Copyright © 2011 Nelson Education Ltd.

Your Competitive Positioning Strategy 5-22 EmbryoDecline Maturity Growth CUSTOMERS COMPETITION Figure 5.4 Copyright © 2011 Nelson Education Ltd.

2 Major Competitive Thrusts Guide your business back into growth segments and create your own niche by using 2 major thrusts:  Create strategic alliances.  Create uniqueness by continually changing your product or service to meet the changing needs of your customers Copyright © 2011 Nelson Education Ltd.

Chapter 5 helps you prepare Part C of your business plan:  The Competition 5-24 Copyright © 2011 Nelson Education Ltd. 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? 5-25 Copyright © 2011 Nelson Education Ltd. Your Business Plan Checklist for Your 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? 5-26 Copyright © 2011 Nelson Education Ltd. Your Business Plan Checklist for Your Business Plan

My Virtual Model, Part II Improve 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 Copyright © 2011 Nelson Education Ltd. Case Study