Definition and purpose of 1. competitor analysis

Competitor analysis is the process of systematically collecting, organizing, analyzing and evaluating an enterprise's existing and potential competitors to understand their objectives, strategies, capabilities, strengths, weaknesses, behaviors and reactions. The purpose of competitor analysis is:

Identify the type, number, size, position and trends of competitors to determine the complexity and variability of the competitive environment;

Evaluate competitors' strategies, resources, capabilities, strengths, weaknesses and performance to determine competitors' strengths and weaknesses;

Predict competitors' goals, motivations, assumptions, actions, and reactions to determine competitors' intentions and likelihoods;

Compare their differences and similarities with competitors to determine their competitive strengths and weaknesses;

Develop or adjust their own strategies and actions to respond to or influence the behavior of competitors, thereby increasing their competitiveness and market share.

Indicators and methods for 2. competitor analysis

There are a variety of indicators and methods of competitor analysis, and this article will introduce four commonly used methods: SWOT analysis, Porter five-force analysis, value chain analysis, and strategic group analysis.

1. SWOT analysis

SWOT analysis is a simple and effective method to assess a firm's competitive position by analyzing its internal strengths (Strengths) and weaknesses (Weaknesses), as well as external opportunities (Opportunities) and threats (Threats). The steps of SWOT analysis are as follows:

Determine the objectives and scope of the analysis, such as analyzing a product, market or industry;

Collect and organize relevant information, such as competitors' strategies, resources, capabilities, performance, market demand, industry trends, etc;

List the strengths and weaknesses of oneself and competitors, as well as external opportunities and threats, as specific, quantitative and objective as possible;

Compare and analyze their own and competitors' SWOT, find out their own competitive strengths and weaknesses, as well as competitors' strengths and weaknesses;

According to the results of SWOT analysis, formulate or adjust their own strategies and actions to take advantage of advantages and opportunities, overcome disadvantages and threats, and improve their competitiveness.

2. Porter's Five Forces Analysis

Porter's Five Forces analysis is a classic method of assessing the attractiveness and degree of competition in an industry by analyzing the five competitive forces in the industry. The five competitive forces are:

The competitive intensity of existing competitors depends on the number, scale, differentiation, cost structure, exit barriers, etc. of competitors;

The threat level of new entrants depends on the barriers and attractiveness of entering the industry, such as capital requirements, economies of scale, policies and regulations, brand loyalty, etc;

The threat level of alternatives depends on the price, performance, availability, switching cost, etc. of the alternatives;

The bargaining power of suppliers depends on the supplier's concentration, differentiation, substitution costs, the possibility of forward integration, etc;

The buyer's bargaining power depends on the buyer's concentration, differentiation, switching costs, and the possibility of backward integration.

The steps of Porter's five forces analysis are as follows:

Determine the objectives and scope of the analysis, such as an industry or market;

Collect and collate relevant information, such as industry structure, size, growth, profits, trends, etc;

Analyze the strength and impact of the five competitive forces in the industry, as specific, quantitative and objective as possible;

Comprehensive assessment of the attractiveness and competitiveness of the industry, as well as its own position and advantages in the industry;

According to the results of Porter's five forces analysis, formulate or adjust their own strategies and actions to deal with or influence the competitive forces in the industry, so as to improve their competitiveness.

3. Value Chain Analysis

Value chain analysis is an innovative method to evaluate the competitive advantages and disadvantages of enterprises by analyzing the value activities of enterprises. Value activities are the various activities carried out by an enterprise to create and provide products or services, including primary activities (e. g., procurement, production, sales, etc.) and ancillary activities (e. g., human resources, technology, finance, etc.). The steps for value chain analysis are as follows:

Determine the objectives and scope of the analysis, such as analyzing a product, service or process;

Collect and organize relevant information, such as content, cost, revenue, quality, efficiency, etc. of value activities;

Draw a value chain map, arrange value activities in order and relationship, and indicate the input and output of each activity;

Analyze the value contribution and cost-effectiveness of each activity in the value chain, as well as the comparison with competitors, and find out its own core competitiveness and room for improvement;

According to the results of value chain analysis, formulate or adjust their own strategies and actions to improve the efficiency and effectiveness of value activities, thereby improving their competitiveness.

4. Strategic Group Analysis

Strategic firms form a class with similar strategic characteristics, resource allocation and competitive behavior. The steps for strategic group analysis are as follows:

Determine the objectives and scope of the analysis, such as an industry or market;

Collect and organize relevant information, such as industry players, strategies, performance, trends, etc;

Select the main strategic variables used to classify the strategic group, such as product range, market coverage, cost structure, quality level, innovation ability, etc;

According to the value of strategic variables, the enterprises in the industry are divided into different strategic groups, and the strategic group map is drawn, showing the location and scale of each strategic group;

Analyze the similarities and differences between strategic groups, as well as the advantages and disadvantages of each strategic group, and find out the strategic group to which you belong and the strategic group of competitors;

According to the results of the strategic group analysis, formulate or adjust their own strategies and actions to improve the competitiveness of their strategic group, or transfer to a more favorable strategic group.

3. Champu Consulting's competitor analysis service case.

Champu Consulting is a professional strategic management consulting firm that provides clients with a variety of consulting services, one of which is competitor analysis services. Using the above four methods, Shangpu Consulting provides customers with customized competitor analysis reports to help them understand their own and competitors' competitive situation, formulate or adjust their own strategies and actions, and improve their competitiveness and market share. The following is a brief example of a competitor analysis service provided by Champ Consulting for an e-commerce platform:

SWOT analysis: Shangpu Consulting Company listed the SWOT of itself and competitors for customers, and found that the advantages of customers lie in having a large user base, rich commodity types, efficient logistics and distribution and excellent customer service experience, while the disadvantages lie in facing fierce price competition, low profit margin, high marketing costs and legal risks, the opportunity lies in the use of big data and artificial intelligence to improve user stickiness and conversion rates, expand overseas markets and emerging fields, and establish an ecosystem of social and content e-commerce. The threat lies in the imitation and squeeze of competitors, government supervision and intervention, user privacy and security issues, and the impact of the new coronavirus. Shangpu Consulting recommends that customers use their own advantages and opportunities to overcome their own disadvantages and threats, improve their core competitiveness and differentiation advantages, increase user loyalty and satisfaction, and increase their market share and profit margin.

Porter's Five Forces Analysis: Shangpu Consulting analyzed the five competitive forces of the e-commerce industry for customers, and found that the industry is highly attractive and competitive, and the position and advantages of customers are not stable. Shangpu Consulting found that the competition intensity of existing competitors is very high, which is mainly reflected in price wars, promotional activities, user subsidies, etc., which leads to pressure on customers' profit margins and market share; the threat level of new entrants is low, mainly because customers have established high barriers to entry, such as economies of scale, brand loyalty, network effects, etc., making it difficult for new entrants to gain market share; the threat of substitutes is high, the main reason is that the customer's product types and service quality are replaceable, such as offline retail, social media, content platforms, etc., which makes the customer's users easy to lose; the bargaining power of suppliers is low, mainly because customers have a variety of suppliers to choose from, and can reduce their dependence on suppliers through platform, self-management and other methods; the buyer's bargaining power is relatively high, mainly because the customer's users have a variety of shopping channels to choose from, and can affect the customer's revenue and costs through price comparison, reviews, returns and exchanges. According to the results of Porter's five forces analysis, Shangpu Consulting recommends that customers formulate or adjust their own strategies and actions to respond to or influence the competitive forces in the industry, so as to improve their competitiveness.

Value chain analysis: Shangpu Consulting has drawn a value chain map for customers, analyzed their value activities, and found that the core competitiveness of customers lies in their platform-based business model, that is, by integrating various resources and capabilities, to provide users with a one-stop shopping experience. Shangpu Consulting found that the main value activities of customers include: procurement activities, that is, through cooperation with a variety of suppliers, to provide users with a rich variety of goods and price advantages; production activities, that is, through self-management and outsourcing, to provide users with high-quality goods and services; sales activities, that is, through a variety of channels and methods, to provide users with convenient shopping processes and payment methods; logistics activities, that is, through cooperation with a variety of logistics companies, to provide users with fast delivery services; after-sales activities, that is, through the establishment of a sound customer service system, to provide users with timely returns and complaints handling services. Shangpu Consulting found that the auxiliary value activities of customers include: human resource activities, that is, through recruiting, training, motivating and retaining outstanding employees, to provide customers with human capital support; technical activities, that is, through the development, maintenance and update of advanced Technical systems provide customers with technical capital support; financial activities, that is, through raising, allocating and managing funds, provide customers with financial capital support. Based on the results of the value chain analysis, Champ Consulting advises clients to develop or adjust their own strategies and actions to improve the efficiency and effectiveness of value activities, thereby improving their competitiveness.

Strategic group analysis: Shangpu Consulting Company analyzed the strategic groups of e-commerce industry for customers and found that there are four strategic groups in the industry, namely: comprehensive platform, that is, platform providing a variety of goods and services, such as customers and their main competitors; Vertical platform, that is, a platform focusing on a certain type of goods or services, such as clothing, beauty makeup, e-books, flowers, etc.; Social platform, that is, platforms created using social networks and content, such as Little Red Book, Shake Sound, and Spelling More; content-based platforms, that is, platforms that use content production and consumption, such as Zhihu, Douban, Himalayas, etc. Champ Consulting selected market coverage and product differentiation as the main strategic variables to divide the strategic group, and drew the strategic group map, showing the location and size of each strategic group. Shangpu Consulting Company analyzed the similarities and differences between strategic groups, as well as the advantages and disadvantages of each strategic group, and found that the advantages of the comprehensive platform to which the customer belongs are that it has extensive market coverage and rich product differentiation, and the disadvantages are that it faces competition and challenges from other strategic groups, especially social platforms and content platforms. These platforms use the social and content needs of users, increased user stickiness and conversion rates, threatening customer market share and profit margins. Based on the results of the strategic group analysis, Champ Advice recommends that clients develop or adjust their strategies and actions to improve the competitiveness of their strategic groups or move to more favorable strategic groups.

The Value and Limitations of 4. Competitor Analysis

Competitor analysis is a valuable strategic management tool that can help companies understand their own and competitors' competitive situation, formulate or adjust their own strategies and actions, and improve their competitiveness and market share. The value of competitor analysis is mainly reflected in the following aspects:

Enhance the awareness of competition, improve the sensitivity of competition, so that enterprises can detect and respond to the actions and changes of competitors in a timely manner;

Provide competitive information, improve competitive intelligence, and enable enterprises to systematically collect, organize, analyze and evaluate competitors' information and data;

Reveal competitive advantages and improve competitive ability, so that enterprises can compare and analyze their own and competitors' strengths and weaknesses, and find out their own core competitiveness and differentiation advantages;

Guide competitive strategy, improve competitive effectiveness, so that enterprises can develop or adjust their own strategies and actions according to the results of competitor analysis, so as to improve their competitiveness and market share.

Competitor analysis also has certain limitations, requiring enterprises to pay attention to the following aspects:

Avoid over-reliance on competitor analysis, ignore customer needs and market changes, so that enterprises into a passive and imitate the state;

Avoid over-complicating competitor analysis, increase the cost and time of analysis, and make the enterprise lose the efficiency and effect of analysis;

Avoid excessive disclosure of competitor analysis, exposing their own strategies and actions, so that enterprises lose the secrets and advantages of competition;

Avoid excessive hostility to competitor analysis, ignoring the cooperation and learning of competitors, so that enterprises lose the opportunity to compete and progress.

Conclusion

Competitor analysis is a strategic management tool designed to help companies understand their relative strengths and weaknesses in the market and how to respond to the actions of competitors. There are many indicators and methods of competitor analysis, and this paper introduces four commonly used methods: SWOT analysis, Porter's five forces analysis, value chain analysis and strategic group analysis. This paper also shows how to use these methods to provide customers with the services of competitor analysis, as well as the value and limitations of competitor analysis. I hope this article can help and inspire readers.