Evaluation of competitors' strategies, strengths, limitations, and plans is also a key aspect of the situation analysts. It is important to identify both existing and potential competitors. Typically, a few of the firms in the industry comprise the organization's key competitors. Competitor analysis includes evaluating each key competitor. The analyses highlight the competition's important strengths and weaknesses. A key issue is trying to figure out what the competition is likely to do the future.

SMH's experience in the U.S. inexpensive-watch market illustrates the importance of sensing what is happening in the marketplace. By 1995 it was apparent that SMH had underestimated buyers' preferences for metal watches with leather bands. Competitor offered buyers new options, stressing both fashion and precision quality to attack Swatch's dominant market position. Timex's successful Guess line racked up $75 million in sales in 1994. Fossil the market leader, had $100 million, while Swatch's sale declined to less than $30 million. SMH implemented an aggressive counter strategy will new designs and advertising (see the accompanying advertisement). An example of market size and competitor identification for the Caribbean cruise market is shown in Exhibit 1 -4.

The cruise ship companies arc targeting various: customer groups (segments) with their marketing efforts. Revenues for 1991 increases nearly 10 percent to $6 billion. The tap 4 companies, out of a total of 32, account for nearly 60 percent of the market. The domination of a market by a few competitors is characteristic of many mature markets.