Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 5 COMPETITOR ANALYSIS
5.1.4 Comparison with own processes 
The final stage in the benchmarking process is to compare and contrast the processes of 
those identified as ‘best in class’ organisations with the firm’s own processes, in order to 
identify actions and processes to measure and monitor improvement. 
Once benchmarking is complete, and actions identified, a number of options are likely 
to be apparent. First, the firm may conclude that its own operations are actually very 
good (even when compared to ‘best in class’), and that it will continue to support and 
improve them. Alternatively, the firm may conclude that its processes are inadequate or 
suboptimal in some way, and there is a need for change. This may involve setting up new 
processes that mirror those of the best practices identified, or it may involve adopting 
best practice processes from other industries, to enable the firm to ‘leapfrog’ the com-
petition and gain competitive advantage through market-leading process innovation. 
One consideration, of course, is the resources available to the organisations considering 
change (can we do this?), and the underlying strategy of what they are trying to achieve 
(should we do this?). Any changes, based on benchmarking data, must still ‘fit’ with the 
strategy of the organisation. A poor reason for change is to replicate competitors without 
an underpinning strategic rationale, and to illustrate this we can briefly reflect on cus-
tomer relationship management (CRM) systems. Traditionally, these have a high failure 
rate in many industries, generally attributable to organisations implementing change (in 
this case buying and implementing a new CRM system) without embedding the change 
within a broader strategic objective or rationale. As such, at best, they are an expensive 
and somewhat novel technological ‘bolt-on’, rather than a means to achieve a higher 
order strategic goal. 
Whether new processes are proposed or existing processes reinforced, measurable targets 
should be set that enable the firm to assess progress towards better and improved practices. 
Targets should be specific and achievable within specified timeframes – for example, ‘we 
aim to answer 95 per cent of telephone calls within 20 seconds’. Additionally, and impor-
tantly, consideration should also be given to those tasked with achieving new targets. Have 
they ever performed at this level previously? Do they, or will they, require training and/or 
incentives in order to perform at this level? The alignment of resources with strategic aims 
is important. If those tasked with delivering them see them as unrealistic or unachievable, 
then they are unlikely to commit, and hence the new goals are unlikely to be met – possibly 
delivering a damaging competitive blow at an organisational level. 
Beyond the benchmarking value of competitor analysis, a clearer picture of competitor 
strategies, strengths and weaknesses also helps firms develop effective competitive strate-
gies. We now discuss the main processes involved in competitor analysis for the purposes 
of strategy formulation.
5.2 
The dimensions of competitor analysis 
In the medium term, the focus of competitor analysis must be firms within the same stra-
tegic group as the company concerned. In the longer term, however, there is a danger of 
the analysis being constrained and possibly limited or myopic. Hence, the entire industry 
should be explored for competitors with the necessary resources or the need to overcome 
entry barriers to the incumbent’s strategic group. Regardless of whether entry barriers are 
high, if the incumbent’s strategic group shows high profits or growth potential beyond the 
rest of the market, it is likely to attract new entrants. 
The UK financial services sector is an example of where conventional competitors have 
lost business to the entry of new-style competitors. Well-known examples of this are: a) 

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THE DIMENSIONS OF COMPETITOR ANALYSIS
Direct Line Insurance (UK-based insurance services based on telemarketing and direct mar-
keting); and b) banking facilities and other financial services offered by major UK-based 
supermarkets such as Sainsbury’s, Tesco and Marks and Spencer (exploiting their customer 
base and existing retail locations). It follows that a second source of threat could be poten-
tial entrants into an industry, or possibly substitutes. Part of EMI’s failure in the whole body 
scanner market was its neglect of new entrants attracted by its success. Rather than build 
defences or foster coalitions against an almost inevitable onslaught, the company chose 
to continue to exploit the market as if it was the sole supplier. Perhaps the greatest failing 
was its falling behind in product quality and its inability to develop a support network for 
its product (Kay, 1993).
In the longer term, substitutes are the major threat to an industry. These deliver new 
processes and products with advantages that undermine established competitors’ capabili-
ties and sources of advantage. They are also likely to attract new and hungry competitors, 
willing to question conventional industry practices. When the mighty IBM entered the PC 
market it was successful relative to target competitors (Apple and Hewlett-Packard), but 
had great difficulty in handling new competition (at the time, Toshiba and Dell), which its 
standardised PC attracted. A more recent example is that of downloads that have revolu-
tionised the music industry, and largely precipitated the demise of pre-recorded CDs, with 
Apple (originally a computer company) becoming the key player. At the time of writing, 
it is likely that a similar phenomenon will occur in video games – a sector that has moved 
from hardware-based games (a game is purchased and them loaded onto a piece of hard-
ware such as a PC or an Xbox), to downloadable games (a game is downloaded straight 
onto a console such as PlayStation), and is now set to enter cloud-based, subscription-type 
arrangements, where gamers pay a monthly fee for access to unlimited gaming content (for 
example Apple Arcade and Google Stadia) through devices such as laptops, desktops and 
phones and tablets.
Competitor analysis, therefore, involves evaluating a series of concentric circles of adver-
saries: innermost are the direct competitors within the strategic group; next come compa-
nies within the industry that are driven to overcome the entry barriers to the strategic group; 
and then the outermost potential entrants and substitutes (see Figure 5.1).