Performing the competitive analysis

Experience shows that when performing the competitive analysis, the marketing manager must have a basic assumption to be efficient: Better keep it simple instead of thinking big. Because the marketing manager's task is to pass on competitive information that he or she has at his or her disposal to areas where it can be the most useful within the company, his or her first challenge is to define the information needs. To do so, the marketing manager can perform an internal market study of the different departments of the company with the help of a questionnaire to determine their needs.

The second challenge is the organization and collection of information. An executive of the Boston Consulting Group indicates: "Too often, in high-tech companies, the monitoring of competitors is not taken seriously. For example, reverse engineering is practically never carried out." The responsibility of the marketing department is to identify the different necessary sources of information and to set up methods for the systematic disbursement of information to appropriate departments. Without asking for long reports from each salesperson, it is obvious that "walking the hallways" will not lead to a precise understanding of the competition in the market. These methods can be adapted to every company, but the marketing department must assure its implementation.

Finally, coordination between research and development, manufacturing, and after-sales service departments is a necessity (as we will see in Chapter 10). As stressed by numerous marketing managers, the information is usually available, but the analysis is not performed correctly. More particularly, putting sales and technological data in perspective is important when performing a competitive analysis.

Only departments with technological expertise can carry out an evaluation and a serious monitoring of the competitors' possibilities. The marketing manager must then be able to compare these evaluations and monitoring activities to his or her own sales, financial, and industrial data. Is a company with a new revolutionary manufacturing process really a dangerous competitor? Are its distributors or its customers not satisfied with the current product's poor performance and ready to switch to another company? Is the company on the edge of bankruptcy? If so, which other competitor has sufficient cash flow and strategic interest to buy out this company?

In fact, the monitoring of competitors is everyone's responsibility. Analyses performed by a company's headquarters (usually by employees who are often far removed from the company's day-to-day activities) must be enriched by viewpoints from all members of the company who can add useful information.

Marketing has to combine these energies in such a way that the monitoring of competitors becomes "an obsession, even if in this field much can be improved," according to the marketing director of a major European software company.

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