1. Managing Markets Strategically
Managing Markets Strategically
Professor Noel Capon
R.C. Kopf Professor of International Marketing
Columbia Business School
New York, NY

2. Managing Markets Strategically
Section 1: Marketing and the Firm
Section 2: Fundamental Insights for Strategic Marketing
Chapter 3: Market Insight
Chapter 4: Customer Insight
Chapter 5: Insight about Competitors, Company, Complementers
Transition to Strategic Marketing
Section 3: Strategic Marketing
Section 4: Implementing the Market Strategy

3. Insight about Competitors, Company, Complementers
Chapter 5
Insight about Competitors, Company, Complementers

4. Developing Competitive Insight Project Competitor Actions
Chapter Roadmap
Competitors
Developing Competitive Insight
Identify Competitors
Describe Competitors
Evaluate Competitors
Project Competitor Actions
Manage Competitors
Structure of Competition
Competitive Dynamics
The Firm as Competitor
Collecting Competitor Data
Competitive Data Sources
Processes to Secure Competitive Data
Frameworks to Describe Competitors
Putting It All Together
Competitor Assessment Analysis (CAA)
The Company
Company Assessment Analysis
Complementers
Independent Organizations
Competitors

5. The Fundamental Business Model
Shareholder Value
Organizational Survival, Growth
Current, Potential Profits
Competitors
Attract, Retain, Grow Customers
Competitors
Customer Value
Company

6. Key Topics Insight about Competitors, Company, Complementers
Key Topics
• Competitors
• cannot do
• will not do
• will be disadvantaged if they do
• Complementers
• Any organization whose actions affect firm sales

7. Session Roadmap A Competitors
Session Roadmap A
• Identify: Who are our competitors today? Who will they be tomorrow?
• Describe: What are our competitors’ capabilities and difficulties?
• Evaluate: What are our competitors’ strategic options?
• Project: What do we expect our competitors to do? In the short term? Medium term? Long term?
• Manage: How can we get our competitors to do what we want them to do?

8. Session Roadmap A Competitors
Session Roadmap A
• Identify: Who are our competitors today? Who will they be tomorrow?
• Describe: What are our competitors’ capabilities and difficulties?
• Evaluate: What are our competitors’ strategic options?
• Project: What do we expect our competitors to do? In the short term? Medium term? Long term?
• Manage: How can we get our competitors to do what we want them to do?

9. Competitors
Identify: Who Are Our Competitors Today? Who Will They Be Tomorrow?
• Structure of competition
• Direct and indirect competition
• Threat framework
• Intrafirm competition

10. Identify Competitors Structure of Competition The Firm Suppliers
Structure of Competition
Suppliers
Current Direct
Competitors
New Direct Entrants
Indirect Competitors
The Firm
Buyers

11. Identify Competitors Direct and Indirect Competition
Direct and Indirect Competition
Direct competitors: Target similar customers to the firm by offering similar benefits and values with similar products, technology, and/or business models.
Indirect competitors: Target the same customer with similar benefits and values, but with different products, technology, and/or business models.

12. Identify Competitors Direct and Indirect Competition Firm
Direct and Indirect Competition
Firm
Customer Benefits and Values
Direct Competitors
Indirect Competitors
Bloomberg BusinessWeek
Business information
Fortune, Forbes
MSNBC, Yahoo!, News
Citibank (retail)
Financial deposits
JPMorgan Chase, Bank of New York
Vanguard, Merrill Lynch, T. Rowe Price
Disney World
Family fun
Universal Studios, Busch Gardens
Beach or ski vacation; home-entertainment system (for disposable income)
ESPN
Men (to advertisers as customers)
CBS, Fox, NBC, Fox SportsNet
Comedy Central, Discovery Channel
Monster
Employee recruiting
CareerBuilder, Yahoo!, Hot Jobs
LinkedIn, Facebook, Twitter
Home builders
New homes
Other builders
Foreclosed homes
Kodak
Images
Fuji, Agfa
HP, Sony
Metropolitan Museum of Art
Spending leisure time
Museum of Modern Art, Whitney Museum
Broadway plays, movies, Central Park
Professional sports
Live sports entertainment
Other professional sports
Movie theaters, restaurants, TV

13. Identify Competitors Direct and Indirect Competition Direct Indirect
Direct and Indirect Competition
Direct
Indirect
• American Airlines
• Delta
• Regional airlines
• Southwest Airlines
• jetBlue
• Amtrak
• Telephone
• Fax
• Video conferencing
• Electronic communications

14. Identify Competitors
Threat Framework – identifies four categories; firm can prioritize threats

15. Session Roadmap A Competitors
Session Roadmap A
• Identify: Who are our competitors today? Who will they be tomorrow?
• Describe: What are our competitors’ capabilities and difficulties?
• Evaluate: What are our competitors’ strategic options?
• Project: What do we expect our competitors to do? In the short term? Medium term? Long term?
• Manage: How can we get our competitors to do what we want them to do?

16. Describe Competitors • What competitor data should the firm collect?
• What competitor data should the firm collect?
• Level of data
• Type of data
• What sources of competitive data are available?
• Secondary data
• Primary data
• What internal processes should the firm use to secure competitive data?
• What frameworks can the firm use to describe competitors?

17. Sample Internal Sources Sample External Sources
Describe Competitors
Primary Data
Generic Modes of Competition
Sample Internal Sources
Sample External Sources
Availability
• Distribution and logistics personnel
• Sales force reports
• Customer satisfaction surveys
• Third-party (industry analysts) studies
Features
• Sales, marketing, engineering personnel
• Internal analyses and trials
• Trade publication product reviews
• Competitor literature, consultants
• Competitor websites
Functionality
• Competitor supplier analysis
• Product comparison studies
• Reverse engineering
• Customer reports
• Specialist trade reports/industry observers
General information
• Senior firm executives
• The Internet, including
• Rumor sites, e.g.,
• Complaint sites, e.g.,
• Blogs and forums
• Investment bankers/industry analysts
• Media (local, national)
• Annual reports, SEC filings, 10Ks
• Suppliers

18. Sample Internal Sources Sample External Sources
Describe Competitors
Primary Data (continued)
Generic Modes of Competition
Sample Internal Sources
Sample External Sources
Image and reputation
• Marketing, sales, and advertising personnel
• Tracking studies
• Customer perceptions, third-party studies
• Competitor advertising, promotion, and public relations
Product line
• Sales, marketing, engineering personnel
• Industry studies
• Competitor product catalogs
• Trade shows
• Trade associations, press, consultants
• Regulatory and patent filings
Price
• Marketing, sales, and service personnel
• Sales force reports
• Competitor price lists
• Interviews with end customers
Selling and relationships
• Managerial assessments
• Interviews with customers and channel members
Service
• Service personnel comparisons
• Comparative studies
• Customer, third-party assessments
• Mystery shopper reports

19. Describe Competitors Internal Processes to Secure Competitive Data
Internal Processes to Secure Competitive Data
• Competing
• Competitive intelligence system
• Competitive intelligence department
• Formal development of strategic plans
• Gaming with multifunctional teams
• Review of business lost and gained
• Shadow system
• Ethical and legal issues

20. Strengths & Vulnerabilities Firm in the Environment
Describe Competitors
Frameworks to Describe Competitors
Organization
• Culture
• Infrastructure
• Processes
Strengths & Vulnerabilities
• Assets
• Capabilities and competencies
Firm in the Environment
• Value chain
• Alliances and special relationships
• Networks
Mind-Set
• Assumptions
Current Strategy
Performance
Source: L. Fahey, Outwitting, Outmaneuvering and Outperforming Competitors, New York: Wiley, 1999
Future Strategy

21. Describe Competitors The Value Chain Infrastructure
The Value Chain
Infrastructure
Human resource management
Product and process development
Procurement
Inbound logistics
Production
Outbound logistics
Sales and marketing
Service
Supporting
activities
Primary
activities

22. Describe Competitors The Value Chain
The Value Chain
• Where does the competitor have a cost advantage?
• Where is the competitor at a cost disadvantage?
• Where does the competitor have a value advantage?
• Where is the competitor at a value disadvantage?

23. Describe Competitors Illustration Indicators Inferences
Illustration
Indicators
Inferences
Hired new customer service manager
Competitor is going to upgrade service quality
Reorganized customer support and service (CSS)
Initial confirmation of alerting signal
CSS now reports to VP of marketing (versus sales)
Signals increased importance of service
Initiating new training programs for sales force
Enhancing service for all key customer segments
Emphasizes customer service in advertising
Service seen as valuable to attract, retain, and grow customers
CEO comments: “Customers expect quality in services as well as in the product”
Service is becoming part of the competitor’s mind-set — will be institutionalized
Customer to our salesperson: “ABC is now doing things for us they never did before”
Confirms competitor is institutionalizing and leveraging service

24. Session Roadmap A Competitors
Session Roadmap A
• Identify: Who are our competitors today? Who will they be tomorrow?
• Describe: What are our competitors’ capabilities and difficulties?
• Evaluate: What are our competitors’ strategic options?
• Project: What do we expect our competitors to do? In the short term? Medium term? Long term?
• Manage: How can we get our competitors to do what we want them to do?

25. Evaluate Competitors Competitive Assessment Analysis * C B A
Competitive Assessment Analysis
Customer Requirements: needs, benefits, values A
Importance Rank B
Necessary Capabilities / Resources C
Efficient Manufacturing System
Good Distribution System
Just-in-Time Delivery Systems
Well-Funded R&D
Access to Low Cost Materials
Easy product availability 1 *
Low prices 2
Low inventories 3
Access to cutting-edge technology 4
Etc.

26. Evaluate Competitors Three Questions
Three Questions
• Relevance — Do we have the capability/resource?
• Superiority — Is our capability/resource superior to competition?
• Sustainability — Would it be difficult for competitors to catch up with us?

27. Evaluate Competitors Competitive Assessment Analysis A B C * YN * YYY
Competitive Assessment Analysis
Customer Requirements: needs, benefits, values A
Importance Rank B
Necessary Capabilities / Resources C
Efficient Manufacturing System
Good Distribution System
Just-in-Time Delivery Systems
Well-Funded R&D
Access to Low Cost Materials
Easy product availability 1
* YN
* YYY
Low prices 2
* YYN
Low inventories 3
* N
Access to cutting-edge technology 4
Etc.

28. Session Roadmap A Competitors
Session Roadmap A
• Identify: Who are our competitors today? Who will they be tomorrow?
• Describe: What are our competitors’ capabilities and difficulties?
• Evaluate: What are our competitors’ strategic options?
• Project: What do we expect our competitors to do? In the short term? Medium term? Long term?
• Manage: How can we get our competitors to do what we want them to do?

29. Session Roadmap A Competitors
Session Roadmap A
• Identify: Who are our competitors today? Who will they be tomorrow?
• Describe: What are our competitors’ capabilities and difficulties?
• Evaluate: What are our competitors’ strategic options?
• Project: What do we expect our competitors to do? In the short term? Medium term? Long term?
• Manage: How can we get our competitors to do what we want them to do?

30. Manage Competitors Signaling • Preemptive signals
Signaling
• Preemptive signals
suggests how competitors should behave
• Tit-for-tat signals
prohibits competitor gains; matches action
• Warning signals
preannounces response to possible competitor actions

31. Session Roadmap A Competitors
Session Roadmap A
• Identify: Who are our competitors today? Who will they be tomorrow?
• Describe: What are our competitors’ capabilities and difficulties?
• Evaluate: What are our competitors’ strategic options?
• Project: What do we expect our competitors to do? In the short term? Medium term? Long term?
• Manage: How can we get our competitors to do what we want them to do?

32. Session Roadmap B Complementers • Definition • Types of complementer
Session Roadmap B
• Definition
• Types of complementer

33. Complementers Definition Types of Complementer
Definition
• Any organization whose activities impact firm sales
Types of Complementer
• Independent organizations
• customers
• suppliers
• Competitors
• strong complementarity
• weak complementarity
• unwelcome complementarity

34. Complementers Class Discussion
Class Discussion
• Compare Apple’s and Google’s approach to smartphones.
• Discuss competitor and complementer relationships.

35. Session Roadmap B Complementers • Definition • Types of complementer
Session Roadmap B
• Definition
• Types of complementer

36. Insight about Competitors, Company, Complementers
Chapter 5
Insight about Competitors, Company, Complementers