The objective of competitive analysis is to acquire a deep understanding of your competition
When is it useful?
Competitive analysis is a key input into strategic thinking, since it is relative performance vs competitors that matters.
This Marimekko chart illustrates the competitive market share position very effectively, enabling us to draw conclusions:
- HP dominates the three main product segments, with at least 30% share
- Ink Jet is the most concentrated market segment, and the only one where competitors threaten HP’s leadership
- Lexmark and Epson are competitors across the full product range
- Colour Laser printers appears to be a different market to B&W, since there are niche competitors of Minolta and Xerox
How do you do the analysis?
The easiest competitive analysis to conduct is generic – describing a competitors’ products, business units and financials on the basis of publicly available data. It can highlight areas for additional research, but has limited ability to provoke strategic insight.
More valuable, but requiring industry expertise, is to identify the few questions that would make a difference to your strategy if you knew the answers and then build the analysis from industry sources. Where does the competitor make most of their profit? For similar products, what is their comparative cost position? What are the competitor’s future growth avenues?