Marketing:problem analysis and competitive position of companies in the market
The need for analysis of competitive position
In the process of transition to a market economy, enterprises are confronted with many problems of survival. Full access to the external environment has brought not only new opportunities, new challenges as the effective functioning of the enterprise market. By the introduction of marketing companies have come and still come only because the plight of the sale of its products. This is typical for most domestic enterprises. And often, the newly created marketing department becomes the second sales. Also, executives often do not fully realize the essence of marketing and “binds” a salary of marketing specialists to sales. And because of that marketers have lacked neither the time nor the great motivation for continuous and comprehensive market analysis. The actions of management are clear – need to sell products and make a profit now and peak rather than expend time, money and efforts of professionals to those conducted studies, often bringing quick and one hundred percent return. Thus, creating the marketing department, the company hopes to obtain additional customers and to ensure that market their products.
Meanwhile, focusing exclusively on marketing, the company can not fully control the situation. It is “stewing in its own juice, not realizing the danger to become an outsider the industry.
Often leadership prevails misleading – “we know their competitors, we need not constantly monitor the situation in the industry …”. This misconception leads to the fact that the company freezes at a certain stage of development. Due to the fact that the competitive position is not clearly defined, the management begins to realize that something is wrong only after a significant reduction in sales volumes. In this situation, usually attempts to market looking more and more new markets for their products, while its life cycle, such as through the development of technologies of competitors is already at the stage of residual demand. Or, for example, finding new raw materials has allowed competitors to significantly reduce their prices. Hence clearly seen the need for continuous monitoring of the industry and a comprehensive study of its competitive position in it.
Information needed for the analysis of competitors
It should be noted that the classic marketing does not insist on in-depth study of competitors, suggests a simple ranking of the breadth of assortment, the external advantages, characteristics, quality, price and promotion of production systems. Also used the opinions of consumers about the products of competitors, which also affects the rank of a competitor.
In my opinion, for UK companies such superficial study is unacceptable. The fact that the situation in most domestic markets are extremely volatile and the man who yesterday was a “nobody”, tomorrow may break out in the leaders and vice versa. This is connected with many features and macro. This situation can be described as “the unpredictability of their own situation and that of its neighbors in the market.”
In this connection it is necessary to highlight the problem facing the majority of UK market – how to predict changes in the situation in the industry through the year, through a number of years. To answer the question must be sufficiently detailed study of the competition.
All information on competitors can be classified into two groups: primary and secondary.
The data obtained specifically for the analysis of specific aspects of activity of a competitor, are the primary information. The main methods of collecting primary data are observations, surveys and experiments. With these interesting facts are established, quantitatively and qualitatively describe the actions of a competitor. The main sources of primary information about competitors are usually: distribution channels, suppliers and customers, advertising agencies, brokers, marketing firms, serving a competitor, engineering, commercial and managerial personnel of the company a competitor, special analytical services.
The main advantage of primary data: speed of response to questions, easy to follow her attention to the desired form, view “live” views on the activities of a competitor.
Disadvantages of primary data include: subjectivity, incompleteness, high degree of uncertainty, complexity and high cost of access (in the case of plant personnel and special analytical services).
Secondary competitors include information about the data, pre-analytical processing of the goals of which usually does not coincide with the objectives of the analysis. Therefore, this information requires additional selection procedures, ranking and compiling, leading it into the form needed for analysis. The main sources of secondary information include: reports on industrial and economic activities, articles about the activities of a competitor in periodicals, reference works on market conditions, trends and challenges of its development, including information on competitors, published an interview with management personnel and company management, consumer opinion of characteristics of competitors’ products.
Problems associated with collecting the necessary information
It should be noted that often, to produce a painting competition above information is not enough. For in-depth study is also needed and the secondary information of a confidential nature, for example – output of a company positions, schedule production, the base shipping companies – competitors, which include also a description of all its users. In general, an in-depth study of the competitor begins with analyzing financial statements (balance sheet) – is already possible to trace the dynamics of the competitor and its relative strength.
All secondary information on the degree of accessibility can be divided into three groups:
1. The public information (nomenclature, price, quality characteristics of products, the system of promotion, representation on the market).
2. Conventionally, public information (balance sheet business, profit and loss account, the rating company).
3. Privileged information (volume of production by nomenclature lines, schedule production and shipment facilities, the technologies used).
When collecting and analyzing information, a number of problems: the first group is characterized by incomplete information to fully study the competitive market situation, the second group are often characterized by unreliable – domestic firms tend to falsify data in order to balance tax evasion, ie, possible inaccurate estimation of the force a competitor, and finally a third group is characterized by private-access or emergency cost of living.
To meet the challenges of uncertainty it is desirable to gather information from different (independent) sources, which increases the objectivity of the results. Here is a good way to weigh the expert sources of information on their relative reliability, or credibility of the source. Addressing the third group of information lies in increasing the financing of marketing in business. As practice shows, no serious study of the competitors can not do without the use of such information.
Methods of analysis of competitive position in its industry
All methods of research the company’s competitive position can be divided into two groups.
The first group – parametric (mainly based on primary data, when comparing the parameters are chosen of competitors and seeking the views of consumers, vendors, suppliers with respect to these parameters, then the information is in a convenient form – a matrix or table). The advantage of these techniques is the speed and relative cheapness, but at the same time there is a danger of subjectivity and inaccuracy of opinion. It is difficult to trace the strength or weakness of a competitor, the more impossible to build forecasts its development.
The second group – rating scores (using the information obtained by interviewing managers and consolidated financial statements of competitors, and then construct a clear mathematical model on which all data on competitors can be reduced in the coefficient values). Based on the performance rating is built businesses. The obvious advantage of these techniques is sufficient accuracy and the ability to identify the exact position of his own company in the industry.
But, in my opinion, you need to add another group of techniques associated with a more detailed study of the industry – in-depth analysis of competitors and forecasting the industry. It needs information that reveals the inner workings of a competitor. This information may include data on volumes of production by the individual positions of the nomenclature, detailed data on exports and shipping, production plans, etc. Based on these data it is possible to build a model of behavior of a competitor, its future status. These techniques will provide a huge advantage over competitors, and possibly win the competition, with competent use.
It is worth noting the specifics of the third group of methods – can be traced quite a fine line between these methods and industrial espionage, special caution is needed here.
Situational approach to the analysis of competition in the market (the problem of choice of alternatives)
Despite the obvious relevance of continuous monitoring of the competitive position of the company, must take into account the high cost of information and lead time for decision. In determining the composition of the data used is important to constantly compare these factors and the significance obtained in the analysis of results. In other words, you must correctly identify its position on the objective, but rather “expensive” results and “cheap”, but not sufficiently accurate, comparing all this time for a decision.
Depending on the situation at the enterprise, marketers should make the choice of information necessary to analyze the competitive position based on the following model (Fig. 1)..
The model assumes the choice of any information for the analysis of competitors under the following conditions:
Block 1 – should be a rapid response to the current problem, the shortage of funding for market research. It is possible to select only general information, such as: the number of competitors in the industry, their nomenclature lines, prices, ratings companies – competitors in the press, the external characteristics of systems of promotion, etc. As a result – probably insufficient data for full analysis of the industry.
Block 2: there is also solved any tactical problem, often – quick identification of their place in the industry. If sufficient funding is recommended for this ready-made ratings of the largest consulting companies or rating agencies. Basically, it is companies such as: Standard & Poor’s, Dun & Bradstreet, Moody’s and others, as in UK – rating agency Expert RA, the agency AK & M, etc. The rating score allows you to quickly find and may take any action, but plans for the future to build not allow it. Also, the basis of construction ratings are the financial performance of the enterprise, and in UK is possible tampering, and as a result – incorrect assessment.
Block 3 – this is in doubt, as is probably impossible to conduct in-depth analysis of the industry cheaply and quickly.
Block 4: is likely the company is in crisis and management sees output in the fast changing enterprise behavior in the market. In this case, in order to quickly find on the capacity of his company and neighbors in the industry, it is best to get your report analyzes the industry proven marketing and consulting company. In this case, guaranteed results, but there are disadvantages – first, have to trust someone else’s results, and secondly, to pay quite a lot.
Block 5 – this is the situation when need to figure out what companies in the industry, not having to do more resources and effort to the detailed elaboration. In this case, the best way to analyze the competition is a parametric analysis based on primary information. At competent to hold it is possible to obtain good results.
Block 6 – This block, like block 3 is questionable, but for other reasons – would it be appropriate to conduct an analysis of competitors’ long and expensive, even without sufficient detalizovannosti? Probably not, but if you still need, then it may be advisable to develop a rating companies on their own, though there the mass of complexities and will be quite expensive.
Block 7: is the situation when the company’s management feels that the leadership in the field, keep a lot of years, the beginning of “teeter” and need detailed study of its competitors, which until recently was not seen. There may be forecasting the industry on its own, by the marketing department. Perhaps the use of project management.
Block 8 : this is likely to show no specific situation, and constant monitoring of the situation in the industry. This is the most effective unit, which allows to keep control over all its competitors and most effectively respond to market changes.
Based on the foregoing, it can be concluded that the need for continuous monitoring industry is obvious, but the options for the use of funds and a lot of time. Thus, correctly using the knowledge marketers may get a lot of advantages to achieve leadership in the industry or simply to survive in it.
Tags: analysis, characteristics, competitive, competitors, enterprises, information, leadership, marketing, position, problem
