Competition Analysis and Strategy Flashcards
What are the types of Competitors
Direct competition, Subtitute competition, Budget Competition
What is Substitute Competition
Rivalry between products that meet the same need in different ways, like tea vs. coffee.
What is Budget Competition
Budget competition occurs when different products or services compete for the same portion of a consumer’s limited budget, even if they are unrelated. For example, a person may choose between buying new shoes or going to a concert because they can’t afford both.
Competitor Myopia
Too Narrow of a scope when viewing competition
What is a supplier based method to identify competition
The North American Classification System(Find competitors using the same suppliers or resources.)
What are the Consumer/Demand methods?
Observed Consumer behavior(Cross-price elasticity, Brand Switching, Substitution in use) and Perceived Brand Similarity>
What is Cross Price Elasticity?
Cross Price Elasticity: Measures how the demand for one product changes when the price of another product changes.
Positive: If the price of one product rises, demand for the other also rises (substitutes).
Negative: If the price of one product rises, demand for the other falls (complements).
What does a positive price elasticity mean?
That they are competitors
What is Brand switching Matrix
Brand Switching Matrix: A tool used to analyze how customers switch between different brands.
Rows: Represent the brand customers are switching from.
Columns: Represent the brand customers are switching to.
It helps identify patterns in customer behavior, showing which brands are gaining or losing customers.
What is substitution in use
Which alternative would be purchased when a product is not available
What are Porters Generic Strategies
Overall Cost leadership, Differentiation, and Focus.
What is overall cost leadership?
Overall Cost Leadership: A strategy where a company aims to be the lowest-cost producer in its industry.
Focuses on reducing costs to offer products at a lower price than competitors.
What is Differentiation?
Creating a highly differentiated product line and marketing program.
What is focus?
Effort is focused on serving a few market segments
What is non price competition?
Non-Price Competition is when companies compete using factors other than price, like quality, branding, customer service, or innovation. It focuses on differentiating products or services without lowering prices, often used in markets where price competition is limited
Effects of price wars
Harmful to weaker firms, Negative product image, ignorance of non price factors
After weak competitors drop out price is increased
Perceptual map types?
Attribute based and non attribute based
What is the attribute based method
Choosing two attributes and measuring consumer perception of these attributes
What are the non attribute based methods?
Multidimensional scaling, and Correspondence analysis
What is multidimensional scaling?
Multidimensional Scaling (MDS) is a statistical technique used to visualize the similarity or dissimilarity between different products or brands. It places items in a spatial map, where the distance between them reflects how similar or different they are based on customer perceptions or preferences. The closer two items are on the map, the more similar they are considered to be
What are the advantages and disadvantages
Advantages: Insights about perceptions, and shows competition from a consumers view.
Disadvantages: Need to infer the attribute levels, and needs a specific number of decisions.
What is a contingency table
Shows number of dimensions used to distinguish objects and shows relative position of each objects and segments along these dimensions
What are the advantages of a contingency table
Uses categorical data and can represent segments on a joint space map.
What are the market strategies market-leaders use?
Expanding the total market, Defending the current market share, and expanding market share.
