Chapter 3: Defining the Competitive Set

By Group 2: Anuj Mody Anupam Rai Anurag Mathur

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Definition
Competition: The effort of two or more parties acting independently to secure the business of a third party by offering the most favourable terms. Competitive Set: Any brands that are considered to be targeting the same audience.
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Bases of Competition
I.

Customer-oriented

Competition for customers for their budget When they use it Why they use it: Benefits sought
I.

Marketing-oriented:

Advertising and promotion Media 3/4/12

Bases of Competition (contd.)

III.

Resource-oriented

Raw materials Employees Financial resources

III.

Geographic

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Levels of Competition

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Levels of Competition
Beer s Ice cre am Tea Regula r colas DietRite cola Diet Cok e

Diet lemo n limes

Win e Fast foo d Bottl ed wate r Base ball card s

Diet Peps i

Product form
Jui ces

Fruit flavored colas

Lem on lime s

Product categor y

Vid eo rent als

Coff ee

Generic competitio n

Budget competitio n 3/4/12

Levels of Competition: Implications for Product Strategy

Competitive Level
Product Form Product Categor y Generic

Product Management Task

Convince Customers that the Brand is Better than Others Convince Customers that the Product Form is Best in the Category Convince Customers that the Product Category is the Best Way to Satisfy Needs Convince Customers that the Generic Benefits are the Most Appropriate Way to Spend their 3/4/12 Money

Budget

Methods for Determining Competitors

Existing categories based on physical product categories
Two approaches to assess set of competitors:
Managerial judgment Customer-based evaluation Customer-purchase-based measures Customer-judgment-based measures 3/4/12

Managerial Judgment of Competition

Markets
Same

Product/Services Same Differen t

Different

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Managerial Judgment of Competition

Markets
Same

Product/Services Same Differen t

Different

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Managerial Judgment of Competition

Markets
Same

Product/Services Same Differen t

Different

C
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Managerial Judgment of Competition

Markets
Same

Product/Services Same Differen t

Different

D
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Customer Purchase Based

Brand Switching Data: Extent of Substitutability among Brands
A A Time t B C D E .6 .2 .2 0 .1 Time t+1 B C .2 .3 .3 .1 0 .2 .4 .5 .1 0 D 0 .1 0 .5 .4
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E 0 0 0 .3 .5

Family brand 2 Regional

Brand Choice Data

3/4/12 Non-Cola Cola Family brand 1 Regular Diet National All brands

Various approaches are used in judgement

Customer-JudgmentBased
based measures.

1. 2. 3. 4.

Judged Overall or perpetual mapping Similarity of consideration sets Product deletion Substitution In Use:

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1.

Judged Overall

Measures similarity between pairs of

brands
It is used to create geometric

representations in multidimensional space called perpetual mapping. It can used it to gain

Better understanding of market structure Customer perceptions for a new product

concept better

Direction for R&D efforts to satisfy customers

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Perceptual Mapping for general category of desserts

Moist

Needs refrigeration

As a formal dessert Bakery cake Homemade cake Homemade pie Layer cake mix Takes along Cheese cake mix time to Bundt cake mix Frozen pie prepare Chocolate torte mix Frozen cake Boston crme pie Stirn Frost cake mix mix

Custard mix Pudding mix Tapioca Local mix pudding mix Jell-O Dzer ta

Canned pudding

Light Style cake Coffee cake mix mix Snackin Cake mix

Individual pie Quick bread mix

Date bar mix Brownie mix Homemade Cookie mix cookies

Hostess cupcakes

Good for a coffee break

Oatmeal cookies Pepperidge Farm Bakery cookies Pillsbury cookie dough cookies Between meal

In my school work lunch

snack Easy to carry with me

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2. Similarity within Consideration sets:

Asks customers to take large set of products and divide them into groups of items that can be substituted for one another.
3. Product Deletion:

Based on customer reaction based on unavailability of any product.

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4. Substitution in Use:
List all the uses of a product List other products that provides the same uses

Example:

Target: Uses:

Base-ball game Sports events

Substitutes: Horse racing, Movies, dinner at restaurants, visiting sports bar

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