CHAPTER 4: Defining the competitive set PRODUCT MANAGEMENT CHAPTER 4: Defining the competitive set

LEARNING OBJECTIVES: After studying this chapter, you should be able to: Understand what is a competitive set Identify the levels of market competition Understand the methods of determining competitors

CHAPTER OUTLINE Overview of the competitive set Levels of market competition Methods of determining competitors

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

Bases of Competition cont. Resource-oriented Raw materials Employees Financial resources Geographic

Levels of Competitions Def : The proximity of other products to the physical attributes of the product in question In terms of product form, product category, generic competition and budget competition

Levels of Competition Diet lemon limes Baseball cards Coffee Coke Fruit flavored colas Coffee Coke Pepsi Diet-Rite cola Bottled water Lemon 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

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

Methods For Determining Competitors Managerial judgment Customer-based Measures

Managerial Judgment Experience Salesperson call reports Distributors Other company sources

Managerial judgment Markets Product/Services Same Different A B C D

Customer-Based Measures Behavioral data Customer Judgements

Behavioral Data Time t + 1 Time t A B C D E .6 .2 .3 .4 .1 .5

Customer Judgments Judged overall similarity Similarity within consideration Product deletion Substitution in use