Importance and Purpose of Competitor Analysis

In today's market environment, competitor analysis is an indispensable management tool that can help companies gain a competitive advantage in a highly competitive industry. The importance of competitor analysis is reflected in the following aspects:

Competitor analysis can help companies identify and evaluate their competitors, including direct and indirect competitors, as well as their size, product, price, quality, marketing, distribution, technology, innovation, culture, organizational structure, financial situation, strengths and weaknesses.

Competitor analysis can help companies understand their relative position in the market, as well as their core competencies and differentiation advantages. By comparing the strengths and weaknesses of themselves and their competitors, companies can determine their competitive strategies, such as cost leadership, differentiation, or focus strategies.

Competitor analysis can help companies predict and respond to competitors' behaviors and strategies, such as price wars, product innovation, market expansion, mergers and acquisitions, partnerships, and exits. By analyzing the objectives, motivations, capabilities, resources, opportunities and threats of competitors, enterprises can formulate corresponding countermeasures, such as defense, attack, cooperation, avoidance, etc.

Competitor analysis can help companies identify and exploit opportunities and gaps in the market, such as new customer needs, new technologies, new regions, new market segments, etc. By analyzing the strengths and weaknesses of competitors, companies can identify their own opportunities and threats, and how to exploit and circumvent them.

The purpose of competitor analysis is to help companies develop effective strategies to improve their competitiveness and profitability. Competitor analysis is not only a one-time activity, but an ongoing process that requires regular collection, analysis and updating of competitor information to adapt to changes in the market.

Key points and steps of competitor analysis

The main points and steps of competitor analysis can be summarized in the following five stages:

Identify competitors: At this stage, companies need to identify their competitors, both direct and indirect. Direct competitors are businesses that offer the same or similar products or services, such as Coca-Cola and Pepsi. Indirect competitors are businesses that offer products or services that are different but can replace or satisfy the same needs, such as coffee and tea. There are many ways to identify competitors, such as market share analysis, customer surveys, industry associations, professional media, patent databases, etc.

Collecting competitor information: At this stage, companies need to collect information about their competitors, including their size, product, price, quality, marketing, distribution, technology, innovation, culture, organizational structure, financial status, strengths and weaknesses. There are many ways to collect competitor information, such as public information, web searches, industry reports, market research, confidential customers, suppliers and distributors, employees and former employees, partners and competitors.

Analyzing competitor information: At this stage, companies need to analyze competitor information to understand the competitor's goals, motivations, capabilities, resources, opportunities and threats, as well as the competitor's behavior and strategy. There are many ways to analyze competitor information, such as SWOT analysis, Porter's five forces model, value chain analysis, strategic group analysis, competitive map analysis, competitive intelligence analysis and so on.

Compare the strengths and weaknesses of competitors: At this stage, companies need to compare their strengths and weaknesses with those of their competitors to understand their relative position in the market, as well as their core competencies and differentiation advantages. There are many ways to compare the advantages and disadvantages of competitors, such as the advantages and disadvantages matrix, the competitive advantage matrix, the competitiveness evaluation, the competitiveness index and so on.

Develop a competitive strategy: At this stage, companies need to develop competitive strategies based on their own and competitors' strengths and weaknesses, as well as competitors' behaviors and strategies, such as cost leadership, differentiation or focus strategies, as well as defense, attack, cooperation, avoidance and other countermeasures. There are many ways to formulate competitive strategy, such as Porter's competitive strategy model, blue ocean strategy, game theory, competitive simulation and so on.

Case for competitor analysis

In order to better illustrate the main points and steps of competitor analysis, this article will provide a practical case to show how Champ Consulting conducted competitor analysis for an automobile manufacturer to help it formulate effective market entry and positioning strategies.

The automaker, a high-end European brand, plans to enter the Chinese market, but lacks in-depth knowledge of the Chinese market and competitors. As a result, the automaker commissioned Champu Consulting to conduct a competitor analysis to determine its best strategy in the Chinese market.

According to the main points and steps of the competitor analysis, Champ Consulting carried out the following work for the automaker:

Identify competitors: Through market share analysis and customer surveys, Shangpu Consulting has identified the automaker's main competitors in the Chinese market, including high-end brands such as Mercedes-Benz, BMW, Audi, Volvo, and Tesla, as well as Geely and BYD., Great Wall and other local brands.

Collecting competitor information: Shangpu Consulting collects competitor information through public information, online search, industry reports, market research, secret customers and other methods, including competitor's scale, product, price, quality, marketing, distribution, Information on technology, innovation, culture, organizational structure, financial status, advantages and disadvantages, etc.

Analysis of competitor information: through SWOT analysis, Porter's five forces model, value chain analysis, strategic group analysis, competitive map analysis, competitive intelligence analysis and other methods, Shangpu consulting company analyzed the competitor's information to understand the competitor's objectives, motivation, ability, resources, opportunities and threats, as well as the competitor's behavior and strategy. Champu Consulting found that the automaker faces the following key competitive challenges in the Chinese market:

Market saturation: The Chinese market is already the world's largest auto market, but it is also one of the most competitive. Competition among high-end brands is particularly fierce, and it is difficult to increase market share.

The rise of local brands: in recent years, China's local brands have continuously improved their product quality and technical level, as well as their marketing and distribution capabilities, and have gradually gained the recognition and trust of consumers. Some local brands have begun to enter the high-end market, posing a threat to European brands.

The development of new energy vehicles: The Chinese government has given strong support and encouragement to the development of new energy vehicles, including providing subsidies, preferential policies, and infrastructure construction. The market demand and potential of new energy vehicles are huge, but it has also brought more competitors, such as Tesla, Weilai, and Xiaopeng.

Diversification of consumer demand: Chinese consumers' demand and preference for cars are becoming more and more diversified. They not only pay attention to the performance and quality of cars, but also pay attention to the design and personalization of cars, as well as the intelligence and Internet of cars. The loyalty of consumers is also getting lower and lower, and they are more likely to be attracted and influenced by other brands.

Comparing the strengths and weaknesses of competitors: Shangpu Consulting compares the strengths and weaknesses of the automaker and its competitors through the strengths and weaknesses matrix, competitive advantage matrix, competitiveness evaluation, competitiveness index and other methods to understand the automaker's relative position in the Chinese market, as well as its core competitiveness and differentiation advantages. Champ Consulting found that the automaker's strengths and weaknesses in the Chinese market are as follows:

Advantages: The automaker has a long brand history and reputation, as well as excellent product quality and performance, and is loved and respected by high-end consumers. The automaker also has strong technological innovation capabilities and design aesthetics, as well as high environmental awareness and social responsibility.

Disadvantages: The automaker's popularity and influence in the Chinese market are relatively low. Compared with other European brands, it lacks obvious differentiation characteristics and advantages. The automaker's prices in the Chinese market are also relatively high, and the price competitiveness with local brands and new energy vehicles is insufficient. The automaker's marketing and distribution capabilities in the Chinese market are also relatively weak, lacking effective channels and networks, as well as in-depth understanding and communication with Chinese consumers.

Develop a competitive strategy: Champ Consulting has developed the following competitive strategy for the automaker based on the strengths and weaknesses of the automaker and its competitors, as well as the behaviours and strategies of the competitors:

Market entry strategy: The automaker should choose a potential market segment, such as luxury SUVs or luxury cars, as its entry point in the Chinese market to avoid direct competition with other high-end brands, while meeting consumer needs and preferences. The automaker should use its brand influence and reputation in Europe, as well as its advantages in product quality and performance, to attract and retain target consumers.

Market positioning strategy: The automaker should position itself as a high-end brand with unique design aesthetics and technological innovation capabilities to highlight its differentiated advantages with other European brands and local brands. The automaker should emphasize its performance in environmental protection and social responsibility to win the trust and respect of consumers.

Marketing strategy: The automaker should adopt diversified marketing methods and channels to increase its visibility and influence in the Chinese market, as well as interaction and communication with consumers. The automaker should use new media such as the Internet, social media, video, live broadcast, and traditional media such as television, radio, newspapers, and magazines to showcase its brand image and product characteristics, as well as its attention to the Chinese market and consumers. respect. The automaker should cooperate with some influential opinion leaders, stars, experts, etc. to improve the recognition and credibility of its brand. The automaker should establish a good relationship with some strong dealers and partners to expand its distribution network and coverage in the Chinese market, as well as provide quality after-sales service and customer experience.

The competitor analysis report of Shangpu Consulting Company provides valuable information and suggestions for the automaker to develop an effective market entry and positioning strategy. The automaker chose the luxury SUV as its entry point in the Chinese market based on the advice of the Shangpu Consulting Company, positioning itself as a high-end brand with unique design aesthetics and technological innovation capabilities, and adopting diversified marketing means and channels to improve its popularity and influence in the Chinese market, as well as interaction and communication with consumers. The automaker's performance in the Chinese market has been well received by consumers and the media, and its market share and brand value have also increased significantly.