Product Competitive Set

C H APT E R
Defining the Competitive Set
Key Question for This Chapter:

Who do we or will we compete against?
Set the boundary of our business
This is the starting point
McGraw-Hill/Irwin
2002 The McGraw-Hill Companies, Inc., All Rights
Major Topics for Ch. 2

I.
Bases of Competition
II.
Levels of Competition*
III.
Methods for Determining Competitors**
IV.
Right Level of Competition for the

Project
McGraw-Hill/Irwin
Bases of Competition
I.
Product-oriented Approach
Similar Physical Attributes
Functional Similarity
II.
Customer-oriented Approach
Who they are competition for same budget
When they use the product
Why they use the product - benefits sought
McGraw-Hill/Irwin
Bases of Competition (cont).

Marketing oriented: promotion & distribution
- Media Channel
- Distribution Channel
IV. Resource-oriented Approach (Internal)
- Raw materials
- Employees
- Financial resources
III. Geographic: Becoming less relevant
III.
McGraw-Hill/Irwin
Levels of Competition*
Beer
Ice
cream
Tea
Regular
colas
Diet-Rite
cola
Wine
Diet
Pepsi
Fast food
Bottled
water
Baseball
cards
McGraw-Hill/Irwin
Diet
lemon
limes
Fruit
flavore
d colas
Diet
Coke
Lemon
limes
Coffee
Product form
competition:
Diet colas
Juices
Product
category
competition:
Soft drinks
Video
rentals
Generic
competition:
Beverages
Budget
competition:
Food and
entertainment
Example 1: Energy Bar Competition

Other Snacks
Healthy Snacks
Snack/Health
Bars
Energy
Bars
Odwalla
Power Bar
Balance Bar
Clif
Nutrigrain Bars
Slimfast Bars
Granola Bars
Fruits
Nuts
Juice
Crackers
Chips
Candy
McGraw-Hill/Irwin
Example 2: Super-Premium Ice Cream

Level of
Competition
Definition
Competitors
Product form
Super-Premium
Haagen-Dazs
Starbuck/Godiva
Ben & Jerrys
Product category
Ice cream
Breyers
Dreyers
Private labels
Generic
Snacks
Desserts
Novelties
Frito Lay
Nabisco
Nestl
Mrs. Fields
Yoplait
Budget
Other supermarket,
Convenience store products
Many
McGraw-Hill/Irwin
Example 3: PDA
Level of
Competition
Definition
Competitors
Need Satisfied
Product form
Full-featured PDAs
Palm Pilot VII

Handspring
Compaq Aero
Pocket PC makers
Personal information
management plus
integrated
communications
Product category
PIM (Personal
Information Managers)
Palm III
Royal
Casio PV-100
PIM only
Generic
Tablet PC/
Cell phones
Toshiba
Nokia
Samsung
Other solutions to the

above
Budget
$100-$1,000
Paper-based solutions
Business items costing
$100-$1000
Rolodex
Day Timer
Fax Machines
Personal copiers
Furniture (e.g.
Steelcase)
McGraw-Hill/Irwin
MP3 Phone Competition
McGraw-Hill/Irwin
Levels of Competition:
Implications for Your Product Strategy
Competitive Level
Product Management Task
Product
Form
Convince Customers that the

Brand is Better than Others
Product
Category

Product Form is Best in the
Category
Generic

Product Category is the Best
Way to Satisfy Needs
Budget

Generic Benefits are the Most
Appropriate Way to Spend
their Money
McGraw-Hill/Irwin
Methods for Determining Competitors**

Existing
categories: ex) IRI; SIC
NAICS
Managerial judgment
Customer-purchase-based measures*
Customer-judgment-based measures*
McGraw-Hill/Irwin
Managerial Judgment of Competition

Markets
Product/Services
Same
Different
Same
Different
McGraw-Hill/Irwin
Customer-purchase-based measures*
Brand
Switching Data The Extent of Substitutability among Brands

Cross-Elasticity of Demand:
Change in Brand Bs Sales/

Change in Brand As Price
Mainly
Used for Nondurable Products
McGraw-Hill/Irwin
Brand-Switching Matrix
A
Time t+1
B
.6
.2
.2
.2
.3
.4
.1
.2
.3
.5
.1
.1
.5
.3
.1
.4
.5
Time t
McGraw-Hill/Irwin
Customer-Judgment-Based Measures*
Overall
similarity (by Perceptual Mapping)*

Similarity of consideration sets
Product deletion (based on product
unavailability)
Substitution In Use:
List all the uses of a product
List other products that provides the same uses
McGraw-Hill/Irwin
Perceptual Mapping
Means
graphic description of customers

perception about different brands/products.
You can use it to gain
Better understanding of market structure*
Customer perceptions for a new product
concept
Direction for R&D efforts to satisfy
customers better
McGraw-Hill/Irwin
Developing A Perceptual Map

Two
Alternative ways
Attribute
Rating method (AR)

Overall Similarity method (OS)
Attribute
Rating Method
Data Cube (brands*attributes*respondents)

Statistical Analysis (Factor Analysis)
Find out two (or three) axes for the perceptual map
Attribute Analysis
Limitations
Suitable for B-to-B products
McGraw-Hill/Irwin
Developing A Perceptual Map

Overall
Similarity method (OS)
Suitable
for consumer products and services

Ask consumers perception the extent of
similarity of pairs of items.
Similarity Data Analysis (Multidimensional
Scaling)
You name the axes and infer the attributes
McGraw-Hill/Irwin
Defining Competition with Perceptual Mapping

example: desserts
Moist
Needs refrigeration
As a formal dessert
Bakery pie
Bakery cake
Homemade cake
Homemade pie
Layer
cake
mix
Takes a long
Cheese cake mix
time to prepare
Bundt cake mix
Frozen pie

Chocolate torte mix
Frozen cake
Boston crme pie mix
Stirn Frost cake mix
Light Style cake mix
Individual pie
Coffee cake mix
Quick bread mix
Snackin Cake mix
Pudding mix
Local mix
Jell-O
D-zer ta
Custard mix
Tapioca pudding
mix
Canned pudding
Hostess cupcakes
Date bar mix

Brownie mix
Homemade cookies
Cookie mix
Good for a coffee break

McGraw-Hill/Irwin
Bakery cookies
Pillsbury cookie dough
Oatmeal cookies
Pepperidge Farm cookies
Between meal snack
Easy to carry with me

In my school work lunch
Methods versus Competition Levels and

Information Required
McGraw-Hill/Irwin
Enterprise Competition in Financial Services
McGraw-Hill/Irwin
Two Key Things to Remember

I.
How would you determine competition?
II.
Choose the focal level of competition*
McGraw-Hill/Irwin
Right Level of Competition for You*

I.
Your Firms Market Position
II.
Time Horizon
III. Product Life Cycle and Technology Change

IV. Your Position in the Firm
McGraw-Hill/Irwin

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C H APT E R

Defining the Competitive Set

Key Question for This Chapter:

2002 The McGraw-Hill Companies, Inc., All Rights

Major Topics for Ch. 2

Methods for Determining Competitors**

Right Level of Competition for the

2002 The McGraw-Hill Companies, Inc., All Rights

2002 The McGraw-Hill Companies, Inc., All Rights

Bases of Competition (cont).

2002 The McGraw-Hill Companies, Inc., All Rights

2002 The McGraw-Hill Companies, Inc., All Rights

Example 1: Energy Bar Competition

2002 The McGraw-Hill Companies, Inc., All Rights

Example 2: Super-Premium Ice Cream

2002 The McGraw-Hill Companies, Inc., All Rights

Palm Pilot VII

Other solutions to the

2002 The McGraw-Hill Companies, Inc., All Rights

MP3 Phone Competition

2002 The McGraw-Hill Companies, Inc., All Rights

Product Management Task

Convince Customers that the

Convince Customers that the

Convince Customers that the

Convince Customers that the

2002 The McGraw-Hill Companies, Inc., All Rights

Methods for Determining Competitors**

categories: ex) IRI; SIC

2002 The McGraw-Hill Companies, Inc., All Rights

Managerial Judgment of Competition

2002 The McGraw-Hill Companies, Inc., All Rights

Switching Data The Extent of Substitutability among Brands

Change in Brand Bs Sales/

Used for Nondurable Products

2002 The McGraw-Hill Companies, Inc., All Rights

2002 The McGraw-Hill Companies, Inc., All Rights

similarity (by Perceptual Mapping)*

2002 The McGraw-Hill Companies, Inc., All Rights

graphic description of customers

2002 The McGraw-Hill Companies, Inc., All Rights

Developing A Perceptual Map

Rating method (AR)

Data Cube (brands*attributes*respondents)

2002 The McGraw-Hill Companies, Inc., All Rights

Developing A Perceptual Map

Similarity method (OS)

for consumer products and services

2002 The McGraw-Hill Companies, Inc., All Rights

Defining Competition with Perceptual Mapping

Date bar mix

Good for a coffee break

Easy to carry with me

Methods versus Competition Levels and

2002 The McGraw-Hill Companies, Inc., All Rights

Enterprise Competition in Financial Services

2002 The McGraw-Hill Companies, Inc., All Rights

Two Key Things to Remember

How would you determine competition?

Data Cube (brandsattributesrespondents)