Analyzing Competitors - A Marketing Activity

Marketing Management Article


Companies need to know five things about competition.

Who are our competitors?
What are their strategies?
What are their objectives?
What their strengths and weaknesses?
What are their reaction patterns?

Who are our competitors?

Kotler outlined four levels of competition, based on the degree of product substitutability.

1. Brand competition.
2. Industry competition
3. Form competition
4. Generic competition

Identifying Competitor Strategies

Resourceful competitors revise their strategy through time. A group of firms following the same strategy in a given target market is called a strategic group. A company needs to identify the strategic grouping which it competes. It has to monitor efforts so potential new entrants into this strategic group.

Determining Competitors’ Objectives

The company has to make efforts understand what drives each competitor’s behavior. Normal microeconomic assumption is that every firm attempts to maximize their profits. However, in actual practice, companies differ in the weights they put on short-term versus long-term. Hence, each firm pursues a mix of objectives, current profitability, market share growth, cash flow, technological leadership, service leadership etc. with different weights attached to them.

Assessing Competitors’ Strengths and Weaknesses

Marketing department has to determine the strengths and weaknesses of competitors. When market share is to be increased, the marketing department has to know the weaknesses of competitors, which can be attacked in the market place for grabbing market share.

Reaction Patterns of Competitors

The laid back competitor
The selective competitor
The tiger competitor
The stochastic competitor

Designing the Competitive Intelligence System

A well designed system provides company managers with timely information about competitors and responds better to requirements of more information when needed in response to significant new about the actions of a competitor.

For Further Reading

Philip Kotler, Marketing Management


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