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Introduction

The current business environment requires vigilance, strong reactions toexternal markets and extra product offerings. Gone are the days when businesswould only focus on the needs of their clients; this approach is no longerviable in the market today. Companies need to keep a close eye on theircompetitors.

How marketers identify primary competitors

Companies need to identify their competitors through two major perspectives;thy can choose an industrial outlook or alternatively utilize a marketapproach.

Marketers using the industrial outlook need to realize that all companiesproviding similar products or services fall in the same categories. Marketersneed to ask themselves whether their companies represent the monopolisticstructure, oligopolistic structure, monopolistic competition structure or purecompetition structures since each of these structures will have differentprimary competitors. The first structure is made up of only one companyproviding a particular good or service. Such companies may not need marketersas they dominate the market. Oligopolistic structures may have some competitorsin the market but they are fe in number. On the other hand, monopolisticcompetition applies to those who specialize in certain products. This categoryhas to identify their competitors. Lastly, there is the pure competitionstructure where all competitors offer the same products. The automobileindustry can be classified under the pure competition sector but there may beinstances when it also falls under the monopolistic competition structure.(Brown, 1995)

After marketers have determined the kind of structure which they operate in,they now need to look at specific factors that affect their industry in ordertop identify which competitors are the most important o them. An industry thathas low entry barriers and high exit barriers, then it will most likely havenumerous competitor who may be struggling to stay afloat. Most of them may besurviving on the basis of covering their operating cots. However, others mayhave the ability to cover their daily cost and even meet their capital cotstoo; these are the kinds of competitors that marketers need to watch outfor.

Marketers also need to be careful about their cost structures. Companiesthat seem to have firm control over their cost especially in relation toindustry requirements are the primary competitors. Also, if a company operatesin an industrial that is largely international, then chances are that the mostcompetitive companies are the ones who have a well established global marketsand they qualify as primary competitors. On the other hand, some companies maybe operating in industries with high levels of vertical integration. Forinstance, a company liaises with its suppliers to create a larger market force.Such companies end up dominating the market and therefore qualify s primarycompetitors. (Hope, 1997)

The automobile industry is affected by cost structure. It can be argued thatthey spend most of this cost on production and advertising. In the nineties,Honda managed to establish a name for itself especially in the US marketbecause it invested in new technologies. Consequently, its products weresuperior to those ones offered by other competitors such as Toyota and itbecame a primary competitor for Toyota.

The second approach that companies can use to identify their primarycompetitors is through marketing. In this approach, companies need to look outfor those companies that satisfy the same needs that they do. The currentmarket has changed drastically. Primary competitors are not just thosecompanies offering the exact same things offered by the company; they are firmsthat can serve similar needs. This approach requires that marketers trace allthe captivities involved while using their product and then examine what otherfirms perform the same activities. The closest match will be the primarycompetitors while the next category of firms will be called indirect customers.(Porter, 1985)

In the automobile industry, some of the central activities include; drivingin dangerous terrains, preventing accidents while driving, having some sort ofentertainment when driving, filling up the car with fuel, sitting in comfortand others. Based on these features, Toyota would identify its primarycompetitors on the basis of these features. The Subaru Forester is a primarycompetitor because it has lash seat belt, airbags, door locks and mirrors forsafety or for prevention of accidents. It has an FM/AM/CD player forentertainment. The Nissan is also a primary competitor because it version ofthe Forrester has dual transmission plus AM/CD/FM player, air-conditioning,cruise control, storage space and central locking for prevention of accidents.On the other hand, the Honda model is also primary competitor because it has apicnic table that can be pulled out after driving; it has dual airbags forcomfort among other things.

Ways of analyzing competitor’s strengths weaknesses objectives andstrategies

Competitor’s strategies need to be analyzed by examining the kind of productthey offer to the market (where product on this case refers to the tangiblegood and the services that are offered beside it. Thereafter, marketer needs toexamine the level of vertical integration adopted by a given company. These twofeatures form the backbone of any competitors’; strategy. It should be notedthat companies that have these to feature in common also fall under the samegroup and will be subjected top the same level of entry barriers. Somecompanies may be offering a wide range of products for instance, in theautomobile industry, Toyota, Honda, Subaru and Nissan happen to follow similarproduct offerings such as the SUVs, Jeeps and others. Additionally, marketersmust ask themselves what kind of services o their competitors offer to attractclientele. Also, marketers must know the kind of prices offered by theircompetitors. All these will give a hint of the kind of strategies adopted bythe competitor.

Competitor’s objectives are analyzed by the kind of financial approachadopted by a company. If a company is constantly chasing after profits, then itis likely that the company is in the business on a short term basis. On theother hand, competitor’s objectives are also subject to their history. Acompany like Toyota has operated for a long period of time in the automobileindustry. In the mid nineteenth Century, Toyota was responsible fro producinganother company called Honda through one of its workers. During the formativestages of Honda, the company was trying to fulfill objectives based on itsmother company and its competitor’s had acknowledged that. However, afterbreaking away, the company became independent and its objectives changed.(Hope, 1997)

Competitor’s strengths need to be analyzed through the kind of share thatthey possess in the market. If a company has a large share in the market, thenchances are that it is a force to reckon with. For example, in the automobileindustry, specifically in the 4WD wagon models, the company with the largestshare is Honda, followed by Toyota, Subaru and Nissan is the newest candidatein this market segment. Consequently, Honda is the strongest.

Company’ strengths and weaknesses can also be analyzed by the kind of imagesthat the draw from people’s minds. For instance, when one is asked to name themost influential firm in a certain industry, they are likely to mention oneparticular company; such a company can be considered as a strong company.Additionally, some companies may be more influential in that they have thehighest form of loyalty from customers. For example, when one is asked whatkind of company they would choose in order to buy a product then most of themwill choose a particular company.

A company’s weaknesses may be indicated the nature of its productavailability. Additionally, if the company provides minimal additional servicesfor its products, then chances are that that it can be considered weak.

How market leaders can expand total market and defend total marketshare

Market leaders can expand their market share through a number of platforms.They have the option of using marketing penetration approaches. Here, a companywill try to convince the consumers of other similar products to try theirproduct. On the other hand, companies have the option of creating a new marketsegment. By doing this, companies will be approaching customers that areunaware of the product at all. Lastly, market leaders have the option ofexpanding into geographical locations that have never been reached before.(Jaworski & Rayport, 2001)

Most of the major companies in the automobile industry have applied one ofthe following strategies to expand their market share. For instance, Toyota andHonda applied geographical expansion after starting their operations in Japan.They marketed their vehicles in Asian countries first and this later on spreadto other regions such as the United States and even Canada. Expansion intomarkets that have never used company product before can also be quiterewarding. This can only be achieved after a company has convinced theirpotential users about the quality of the brand or product.  On the otherhand, companies have the choice of making their products more convenient andavailable to their final consumer. For instance, there are numerous Subaruoutlets in its mother country and this has contributed to increased marketshare because consumers need to invest too much money in the process oftransporting the vehicle.

However, before companies can contemplate expansion, there are a number ofissues that need to be ironed out. For instance, they need to make their shareare in line with other players in the industry. When certain competitors feelthreatened by a strong company, they may file legal suits claiming that theircompetitor is trying to monopolize the industry. Besides this, sometimesexpanding market share may not be economically feasible especially wheneconomies of scale do not allow it. In the automobile industry, Nisan Companyhas been trailing Toyota in term of new product lines and expansions because ofits labor intensive economy. Toyota is quite efficient at employingtechnologies in production thus explaining the expansion strategiescharacteristic of the latter. (Brown, 1995)

Market leaders can defend their total market here by ensuring that theirpricing strategies are always ahead of the rest. They need o refrain fromgetting too comfortable with their position in order to avoid most of theinefficiencies that come with it. Additionally, they also need to be on thefrontline when it comes to product innovations. Other companies should betrying to catch up with the continuous improvements otherwise market leadersface the danger of being thrown out of business for becoming complacent.Furthermore, market leaders can defend their place in the market byestablishing a strong distribution line. They need to be constantly looking outfor new market segments in order to expand their products. Also, market leaderscan defend their place by setting the pace in the advertisement and promotionsector. Their promotional efforts need to be above all the rest in order tohave substantial market shares.

How market challengers attack market leaders

Market challenging can work best when the challenger feels that he isbringing a superior product to the market or if he is convinced that thecurrent market leader is not doing enough to make the consumer satisfied.Additionally, companies may also decide to establish themselves in pre-existingmarkets if they feel that they will employ better methods of production thoughtechnology.

Market challengers have to choose among the following objectives; they coulddecide to attack the market leader head on. This direct approach is quite riskybut it also has high rewards. Market challengers using this approach may decideto make new products or they could decide to improve their products. Anothermarketing objective for market challengers is trying to attack opponents thathave relatively equal capabilities to them. Lastly, challengers can tryattacking smaller companies at first and then work their way to the top. (Hope,1997)

After identifying some objectives, challengers then need to identifyattacking strategies. They have the option of using frontal attack where everyprice, distributional, promotional and product strategy of the market leader ismet head on. On the other hand, challengers can adopt a flank attack whichentails reaching markets that have never been reached before or reachinggeographical areas that competitors have not though of. In the automobileindustry, Toyota applied flank attack by creating cars that use less fuel.Sometimes companies may decide o choose an encirclement attack where they makecontracts with numerous businesses in the industry. By doing this, a challengerwill establish its name slowly but surely. Lastly, companies may settle on abypass attack. Such a company can choose to leave the entire market segmentoffered by competitors and penetrate easy markets.

After identifying the large strategy, challengers will need to employsmaller strategies. This can be done by offering price discounts, lower prices,increasing value of goods, making goods more sophisticated, constantinnovation, aggressive advertisements and creating better distributionchannel.

How market followers or niches compete effectively

Market followers stand to loose the moment they try competing directly withthe market leaders. This is because it takes a lot in order to erase some ofthe images that consumers have about their favorite companies. Consequently,market followers should try employing differentiation strategies. Here, theycould emphasize on the issue of quality. Additionally they could make theirproducts easily accessible. (Porter, 1985)

Market followers need to identify gaps that have been left by the majorindustry players and then try to fill them the best way possible. On the otherhand, market followers need to establish sound marketing strategies. They needto focus their advertisements and promotions on services and products that arefrequently purchased. Commodities that are not sold on a regular basis willcould be made more expensive in order to earn the company some additionalpoints. It should be noted that market followers cannot reduce all their pricesto match their competitor’s but they can reduce prices of a few and then marketthose ones aggressively.

Market followers can also compete effectively by adopting cost effectiveproduction methods. This will go along way in enhancing their profit margins.The automobile industry is in serious need of this strategy. Their profitmargins would really increase if they employed better forms of technology inproduction. Utilizing such a strategy greatly reduces cost and it also enhancesthe quality of the vehicle.

Conclusion

It should be noted that the very definition of a competitor has changed.Firms should keep abreast of small brands that provide similar goods at lowerprices. They should also watch for expansion strategies among huge companies.As if this is not enough, some competitors may come in the form of internetdealers. Consequently, competition is a major issue affecting marketingstrategies and companies need to be aware of this. Market followers can adoptleaner production strategies and reduce prices of common products. Marketchallengers can use price, distribution, promotion and product innovation asways of maintaining competitive advantage.

Reference:

Porter, M. (1985): Competitive advantage, Free Press, p 82-115

Jaworski, B. & Rayport, J. (2001): E-Commerce, McGraw-Hill Publishers, p53

Brown, S. (1995): Don’t innovate, imitate; Sales and Marketingmanagement

Hope, M. (1997): Contrast and Compare, Journal for Mraketing, p 11-13

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