Analysis of forces shaping competitions should be supplemented by competitor analysis. Not all competitors compete directly with each other but only through groups. Competitor analysis can be done through two methods.
1.Strategic group analysis
- A strategic group in an industry consists of those firms that have similar combination of strategies to compete for example Coca Cola and Pepsi Co.
- Strategic groups can be identifies by using two or three bases out of several bases of competition.
- The bases for identifying a strategic group can be product differentiation extent of geographical coverage, market segment served, distribution channel used, extent of branding, market efforts, pricing etc.
- To identify who the direct competitors are
- To identify strategic issues involved in competing.
2.Competitors approach analysis
- After identifying the direct competition, the bases of strategic group analysis, the organization undertakes competitor’s approach analysis.
- It can be done by answering the following questions:
- What are the strategic strengths and weakness of the competitors?
- What are the prices charged by the competitors?
- To what extent are the product differentiated from the competitors like the price, features, distribution channel, etc.
- What are the cost and other disadvantages
- What are the areas uncovered by the competitors in respect to geographical location or customers served?
- What is the product positioning of the competitors?
- What is the competitor’s product performance and specification, product design and engineering, manufacturing methods, raw material specification and extent of outside components?