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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