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Although competitor description and evaluation are interrelated, it is useful to separate the two activities. Evaluation shows the strengths and weaknesses of each competitor in the four areas shown in Exhibit 3-8.
Market coverage analysis' centers on the market segments targeted by the competition and the competitor's actual and relative market-share position Relative market position is measured by comparing the share of the firm against the competitor with the highest market share in the segment. All segments in the product-market that could be targeted by the firm should be included in the competitor evaluation. Consider, for example, the brand positioning map shown in Exhibit 3-9. The map was used by Chrysler Corporation to evaluate possible positioning opportunities. The upper-right quadrant offers a possible position for Chrysler and other U.S. automobile manufacturers. Honda introduced the Acura Legend in 1986 to compete in this quadrant. A few years later Toyota introduced the successful Lexus 400. This analysis suggests segments where competitors are not providing .market coverage and alerts a firm to potential new competition. The Industry Feature describes competition in the ready-to-eat cereal market. Kellogg and General Mills dominate the market with a combined market share of 66 percent. The starting point in assessing how well competitors meet customer needs is finding out what criteria buyers use to rate each supplier. Customer-focused measures of customer satisfaction are more useful than relying on management judgments of satisfaction. Measurement methods include customer comparisons of attributes of the firm versus its competitors, customer satisfaction surveys, loyalty measures, and the relative market share of end-use segments.14 Preference maps like the one shown in Exhibit 3-9 are useful in comparing the competing brands for attributes that are important determinants of customer satisfaction. An analysis of each competitor's past sales and financial performance indicates how well the Competitor has performed on a historical basis. A typical period of analysis is five years or longer depending on the rate of change in the market. Performance information may include sales, market share, net profit, net profit margin, cash flow, and debt. Additionally, for specific types of businesses other •performance information may be useful. For example, sales per square foot are often used to compare the performance of retail stores. Operating cost per passenger mile is used in airline comparisons
Determining market coverage, customer satisfaction, and past performance supplies useful information about competitors. Using this information, we can develop an overall evaluation of the key competitor's current strengths and weaknesses. Additionally, the summary assessment of current capabilities includes information on the competitor's management capabilities and limitations technical and operating advantages and weakÂnesses, marketing strategy, and other key strengths and limitations. Since competitors often have different capabilities, it is important to highlight these differences. A checklist for evaluating competitor strengths and weaknesses is shown in Exhibit
The strategic marketing process
Journal of Strategic Marketing
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