Marketing Strategy and Competitive Positioning pdf ebook

Is the competitor satisfied with its current position? One that is satisfied may allow 
indirect competitors to exploit new markets without being perturbed. Alternatively, one 
Figure 5.7 
Competitor capabilities
Key success factors
Self: total 5
Competitor B: total 4
Competitor A: total 6
Competitor C: total –2
Financial strength
Staying power 
Strong R&D
Technological breadth
Quick response capability
European marketing
Key success factors
Financial strength
Staying power 
Strong R&D
Technological breadth
Quick response capability
European marketing
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CHAPTER 5 COMPETITOR ANALYSIS
that is trying to improve its current position may be quick in chasing market changes 
or be obsessed by improving its own short-term profits performance. Knowledge of a 
company’s future goals will clearly play an important part in answering this question.
● 
What likely moves or strategy shifts will the competitor make? History can provide some 
guide as to the way that companies behave. Goals, assumptions and capabilities will also 
give some guidance as to how the company can respond effectively to market changes. 
After looking at these, a company may be able to judge which of its own alternative 
strategies is likely to result in the most favourable reaction on the part of the competitors.
● 
Where is the competitor vulnerable? It takes no great insight to realise that it would be 
foolish for a company to take on a market leader in the areas where it is strongest. Much 
better to compete against large and relatively successful competitors in niche markets 
where large scale is a disadvantage – for example, in rapidly changing markets where 
bureaucracy may lead to inflexibility in responding to niche competition. Complacency 
of leaders in markets can provide major opportunities for the well-informed and targeted 
niche competitor. The leader’s feeling of invulnerability may be its weakness, and one 
that could lead to its downfall. In truth, businesses, like armies, cannot defend them-
selves on all flanks, from all positions, at all times. No company is ever all-powerful 
at all places. In the past, the Virgin brand has been particularly skilful, and relatively 
successful, at identifying opportunities in markets where existing competitors had key 
vulnerabilities – for example, attacking financial services suppliers through branding, 
high value and product simplicity in its direct marketing strategy.
● 
What will provoke the greatest and most effective retaliation by the competitor? Mar-
ket leaders may accept some peripheral activity from competitors, perhaps because of 
relatively low margins, anti-trust laws or maybe the scale involved relative to their entire 
business. However, other competitor actions might provoke intense retaliation, and 
taking a look back in time might present some insights into what stimuli provokes a 
particular response. For example, Rolls-Royce has learned to expect intense reaction 
whenever competing in the US market for aero engines. There is little sense, even for 
the most powerful businesses, in antagonising strong competitors when less ‘sensitive’ 
routes to success are available.
Besides providing a general guideline, a competitor’s response profile depends on obtain-
ing a view of how a competitor is likely to respond, given various stimuli (see Figure 5.8). 
Porter (1980) suggests examining the way a competitor may respond to the feasible strate-
gic moves by a firm and feasible environmental changes. This first involves assessing the 
vulnerability of a competitor to the event, then the degree to which the event will provoke 
retaliation by the competitor and, finally, the effectiveness of the competitor’s retaliation 
to the event.