Defining the Competitive set

Levels of Competition

Beers

Ice
Tea Regular
cream Diet
colas
lemon
limes
Diet-Rite
Product
cola category
Wine
Diet Product competition:
Pepsi Form Soft drinks
Diet
Fast food competition Juices
Coke
Diet colas
Fruit flavored
colas
Bottled Lemon Video
water limes rentals

Generic
Coffee competition:
Baseball
cards Beverages
Budget
competition:
Food &
Entertainment
Levels of Competition
 Budget - broad
 Generic
 Product Category
 Product Form- narrow
Levels of Competition
 Budget Competition – broadest view
of competition- considers all products
& services competing for the same
customer rupee – diamonds, cars.
vacations
 Generic Competition– those product
& services fulfilling the same customer
needs – beverages, coffee shops, ice-
cream parlors
Levels of Competition
 Product Category Competition – soft
drinks, tea, coffee, beer, juices, bottled
water, flavored colas, regular colas
 Product Form Competition -
narrowest view of competition - pursue
the same market segment & features
have similar values – Diet Coke, Diet
Pepsi
Levels of Competition: Implications
for Product Strategy
Competitive Level Product Management Task
Product Convince Customers that the
Form Brand is Better than Others

Product Convince Customers that the

Product Form is Best in the
Category Category

Convince Customers that the

Generic Product Category is the Best
Way to Satisfy Needs

Convince Customers that the

Budget
Generic Benefits are the Most
Appropriate Way to Spend
their Money
Levels of Competition &
Implications for Product strategy

 Budget  Convince
 Generic customers that
 Product Category generic benefits are
 Product Form the most
appropriate way to
spend their money
Levels of Competition &
Implications for Product strategy
 Budget  Convince
 Generic customers that the
 Product Category product category is
 Product Form the best way to
satisfy needs
Levels of Competition &
Implications for Product strategy
 Budget  Convince
 Generic customers that
 Product Category product form is the
 Product Form best in the category
Levels of Competition &
Implications for Product strategy
 Budget  Convince
 Generic customers that the
 Product Category Brand is the better
 Product Form than others in the
product form
 Methods for determining
Competition
 Managerial Judgments
 Customer behavior based –
 Usage data – inter-purchase times
 Cross- elasticities
 Brand switching
 Customer Evaluation based –
• Overall similarity
• Consideration sets
• Ease of substitution
Competitor Selection

Product Manager can decide who the

competition will be based on –
 Time –horizon of the marketing plan

 Stage of the PLC of the relevant

product
 Rate of change in the technological
base of the product
Competitor Selection
 Imperative for product managers to
Choose whom to compete with
 Choosing who your competitors are
has major implications on
 Performance standards - market share
 Strategy- competitive advertising
Bases of Competition
 Customer –oriented
 Marketing – oriented
 Resource – oriented
 Geographic – oriented
 Enterprise -oriented
Customer –Oriented
 Who are they – competition for the
same budget
 When they use it – strength of usage
 Why they use it – benefits sought

[Link]
Marketing – Oriented
 Advertising & promotion
 Theme
 Media
 Distribution
 Price
Resource – Oriented
 Raw materials
 Finance
 Employees
Enterprise - Oriented
 Products & services do not compete against
each other – Companies do – this is known
as Enterprise Competition. Thus HP
competes with IBM, Sun, Compaq etc

 When HP develops a market strategy it

competes not only in terms of product
features & benefits communicated but also
against the resources of IBM- finances,
sales force, image