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Defining the Competitive Set

Key Question for This Chapter:

Who do we or will we compete against?

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Bases of Competition

I. Product-oriented Approach

Similar Physical Attributes

Functional Similarity

II. Customer-oriented Approach

Who they arecompetition for same budget

When they use the productWhy they use the product - benefits sought

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Bases of Competition (cont).

III. Marketing oriented: promotion &distribution

- Media

- Distribution

IV. Resource-oriented Approach (Internal)

- Raw materials- Employees

- Financial resources

III. Geographic: Becoming less relevant

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Levels of Competition

Diet

lemon

limes

Baseball

cards

Fruit

flavore

d colas

Coffee

Diet

Coke

Diet

Pepsi

Diet-Rite

cola

Bottledwater Lemonlimes

Regular

colas

Beer

Juices

Wine

Fast food

Tea

Video

rentals

Ice

cream

Product form

competition:

Diet colas

Product

category

competition:Soft drinks

Generic

competition:

BeveragesBudget

competition:

Food and

entertainment

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Example 1: Energy Bar Competition

OdwallaPower Bar

Balance Bar

Clif

EnergyBars

Snack/Health

Bars

Healthy Snacks

Other Snacks

Nutrigrain BarsSlimfast BarsGranola Bars

Fruits

Nuts

Juice

Crackers

Chips

Candy

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Levels of Competition:

Implications for Product Strategy

Budget

Generic

ProductCategory

Product

FormCompetitive Level

Convince Customers that the

Brand is Better than Others

Convince Customers that the

Product Form is Best in the

CategoryConvince Customers that the

Product Category is the Best

Way to Satisfy Needs

Convince Customers that the

Generic Benefits are the

Most Appropriate Way to

Spend their Money

Product Management Task

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Methods for Determining Competitors*

Existing categories: ex. If any studies are

done by govt agencies like National and

reports are provided

Managerial judgment

Customer-purchase-based measures

Customer-judgment-based measures

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Managerial Judgment of Competition

Markets Same Different

Product/Services

Same

Different

A

C

B

D

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Customer-purchase-based measures

Brand Switching Data The Extent ofSubstitutability among Brands

Cross-Elasticity of Demand:

Change in Brand Bs Sales/Change in Brand As Price

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Customer-Judgment-Based Measures

Overall similarity (by Perceptual Mapping)*

Similarity of consideration sets

Substitution In Use: List all the uses of a product

List other products that provides the same uses

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Perceptual Mapping

Means graphic description of customers

perception about different brands/products.

You can use it to gain

Better understanding of market structure

Customer perceptions for a new product

concept Direction for R&D efforts to satisfy customers

better

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Defining Competition with Perceptual Mapping

example: desserts

MoistNeeds refrigeration

Tapioca

pudding mixLocal mix

Pudding mix

Chocolate torte mix

D-zer ta Jell-O

Canned pudding

Individual pie

Hostess cupcakes

Quick bread mix

Good for a coffee break

As a formal dessert

Homemadecake

Bakery cake

Homemade cookies

Cheese cake mix

Snackin Cake mix

Frozen cake

Layer cake mix

Stirn Frost cake mix

Takes a longtime to prepare

Bundt cake mix

Custard mix

Boston crme pie mix

Light Style cake mix

Coffee cake mix

Bakery cookies Pillsbury cookie dough

Cookie mix

Easy to carry with meIn my school work lunch

Between meal snack

Pepperidge Farm cookies Oatmeal cookies

Frozen pie

Homemade pie

Date bar mix Brownie mix

Bakery pie