TABLE OF CONTENTS
Page 1. Introduction 1.1 Identifying the competitor 1.2 Direct competitors versus potential competitors 1.3 Identifying Woolworths‟ competitors 2. Analyse strategic groups 2.1 Characteristics for identifying strategic groups 3. Analysis of key competitors 3.1 Competitors‟ objectives and strategic thrusts 3.2 Competitors‟ strategies 3.3 Competitors‟ strengths and weaknesses 4. Forecasting likely response strategies 5. Conclusion References 2 2 3 3 3 3 4 4 4 4 5 5 5
2 1. Introduction
It is common knowledge in business practices that a successful marketing strategy from an organisation‟s point of view includes positioning of a new product or service (finding your market niche), pricing of products and services, promoting them through continued advertising, promotions, public relations and sales, and last but not least, analysing the competition. A marketing strategy is the way in which an organisation matches its own human, financial and physical resources with the wants of its customers. According to Jooste, Strydom, Berndt and du Plessis (2008), competitor analysis in strategic marketing management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context through which to identify opportunities and threats. Competitor analysis is normally with the focus on the competitors as „rivals‟ and the objective is to identify the strengths and weaknesses of the rivals in order to develop strategies to „fight the battle‟. The focus of competitor analysis is thus not only to gain an advantage over direct competitors but also to search for starting points for collaboration. (Jooste, Strydom, Berndt & du Plessis, 2008, p.96).
The focus will be to answer the following: Who Woolworths‟ present and potential competitors are What positions they have established in the market What their strategic objectives and thrusts are What their present and future strategies are What their strengths and weaknesses are What their response patterns are
In order to answer these questions effectively, a framework for competitor analysis will be used. This framework is comprised of four main components (divided into sub-components), each of which will be discussed in detail. These four main steps in performing a competitor analysis include: identifying the competitor; analysing strategic groups; analysing key competitors and forecasting likely response strategies.
1.1 Identifying the competitor The first step or component of this framework is to identify the competitors, bearing in mind that competitors can be classified into different categories. Identifying one‟s competitors might seem like a straightforward task, but in actuality the range of actual and potential competitors faced by an organisation is much broader than appears to be, even though it is much more difficult to ascertain who „potential‟ customers are.
3 1.2 Direct competitors versus potential competitors According to Unisa (2010), competition is an activity that occurs between rival companies that produce similar offerings and between industries that compete to satisfy similar needs of the same customers. For example, rival companies would include BMW, Mercedes Benz and Audi and rival industries would include motor car and motorcycle industries. These rival companies are called competitors and two common methods used to identify direct competitors include customer perceptions and strategic groups. Identifying competitors using customer perceptions means asking customers whom and what they consider when making their purchase choices. The second method involves identifying competitors whose competitive strategies conflict with organisation‟s strategies. These competitors can be labelled as „direct‟. Direct competition include: competitors competing to satisfy the same customer need; industry competition; product line competition; organisational...
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