2 Indirect or Secondary You sell bottled water You have direct competition from

2 indirect or secondary you sell bottled water you

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2. Indirect or Secondary : You sell bottled water. You have direct competition from other bottled water companies and indirect competition from a large number of soft drink companies. The direct to indirect to distant competition is like the rings in a circle; the further you get from the core, the weaker the impact. The same thing holds true for the market space. You sell in Ontario and your competitor sells in Quebec. Or, you have two cupcake stores in downtown Toronto and there are cupcake stores in Oakville and North York. The consumer and the business-to-business buyer ultimately decide if your product/service is a suitable substitute. 3. Future Competitors : These are the products/services that are not available now, but may be just around the corner. They are more difficult to identify, although signals of new products or prototypes are usually available before launch. In retailing, there are observable key investments made years before the competitors become a threat. In addition, many large companies announce new products years before they become a market reality. The need for competitive intelligence is as important as market and customer intelligence. Sources of competitive intelligence include: 1. Suppliers 2. Current customers 3. Trade shows 4. Company websites and sales literature 5. Trade journals, new announcements 6. Internet searches 7. Sites and databases such as “Reference Canada,” “Global Market Information Database GMID,” “Sedar” (Annual Filings of Canadian Public Companies), Lexis/Nexis (see Appendix 1). 8. Industry websites such as trade associations and franchise associations
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Tools for Clarifying Competitors’ Position : 1. Maps : Locate all competitors on a map of the market served. This provides an idea of consumer choice within an area and the distance between sites. It’s a tool for retailers and direct service establishments such as restaurants. It has limitations when it comes to business-to-business markets, although you could use it to compare mining companies, mine locations worldwide, and then use this as a basis for political risk analysis of sites in various countries. 2. More Maps : Maps range from the simple to the complex. The perceptual map is a simple, two-variable map with companies located in their perceived space. The difficulty is always in selecting the two axes. Sometimes companies are depicted by a circle approximating their size. Keep in mind this is a perceptual map and agreement on position is important. Some axis labels are more fact based, such as the number of locations versus price, while others are more perceptual, such as quality versus buyer image. Several maps can be drawn with different axes to provide deeper insight. You can also bundle companies that are similar. Once the map is drawn, the strategist can plot expected moves and the migration of companies. Once a map or two have been developed, potential competitors and competitive moves can be plotted, different scenarios can be developed, and vacant space analysis can take place.
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  • Fall '09
  • GEDEON
  • Management, Michael E. Porter

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