View
92
Download
1
Category
Tags:
Preview:
DESCRIPTION
Entrepreneurship Unit 2.2. Analyzing a business’s competitors and industry. Students will Assess their Market’s Competitors and Industry. Students will be able to: Research competitors and identify their niche Assess competitors’ strengths and weaknesses Assess industry characteristics. - PowerPoint PPT Presentation
Citation preview
EntrepreneurshipUnit 2.2
Analyzing a business’s competitors and industry
Students will Assess their Market’s Competitors and Industry
Students will be able to:• Research competitors and identify their
niche• Assess competitors’ strengths and
weaknesses• Assess industry characteristics
The Purpose of Competitive Analysis
Competitive Analysis explains the market positions of both a company’s direct and indirect competitors.
Competitive analysis often uncovers
new business opportunities by pinpointing where customer needs are not yet being met.
What is a Niche? Niche A small, specialized segment of the
market based on customer’s needs.• Some businesses will focus on the smaller
segment instead of competing with everyone else for the bigger market.
• Example: In real estate, Planned Unit Developments (PUDs) target the 55+ age group, instead of competing with all the other builders in an area. They don’t sell homes to their niche—they sell “lifestyle.”
Competitive OverviewThe first step in creating competitive
analysis is to research one’s top direct and indirect competitors.
Direct competitors offer similar
products.
Indirect competitors offer close substitutes that meet the same basic need.
How to “Research” Competitors(Create a table to analyze)
Identify your top direct competitors. Identify your top indirect competitors. State the locations of your top competitors and
the number of years in business. Describe the primary markets or market
segments your competitors serve. Describe the primary products and services your
competitors sell and how much they sell, if known, in units or sales dollars.
The Value Proposition The second step in the competitive
overview is to analyze your top direct and indirect competitors in greater detail to determine their strengths and weaknesses. This will help you determine the value proposition of each of your competitors.
How to Determine the“Value Proposition”
Evaluate your competitors’ product or service selection, quality, and availability.
Evaluate your competitors’ promotion strategies, including advertising, branding, packaging, and labeling strategies.
Evaluate your competitors’ pricing policies and pricing structures.
Explain your competitors’ customer service and after-sale service policies.
Example: LeFever’s River Grill(Competitors’ Strengths and Weaknesses)
Strengths Weaknesses
Ken Stewart’s Great reputation for quality and service; personalized touch of owner; leverage brand name to additional catering services
High prices; additional restaurants spread owner too thin to maintain personalized touch and superior service
Moe’s Restaurant Something new and different; can maintain intimate appeal
Small size; lack of brand awareness
Lanning’s Old-world feel; superior, white-glove service; perceived as a very “Special Night Out”
May not appeal to Generation X and Y; may appear too outdated
River Front at the Sheraton
Location inside hotel; can handle large events and catering
Relies on hotel customers; convention market is heavily tied to local economy and visitors not controlled
The Olive Garden Well-known; consistent food menu
Not perceived as something special
Industry Trends
You can find opportunity in an industry by looking at trends and patterns of change. Consider:• Has the rate of sales growth slowed?• Does the government heavily regulate the
industry?• How volatile is the industry?• Is it becoming more difficult for new companies
to enter the industry?
Industry Forcesthat Affect Your Business
1. Barriers to EntryConditions or circumstances that make it difficult or costly for outside firms to enter a market to compete with the established firm or firms. Existing businesses may bar new companies from certain distribution channels.
Industry Forces thatAffect Your Business (Cont’d.)
2. Threats from Substitute Products. • Example: Suppose you are planning to
open a restaurant serving low-carbohydrate meals. You will be competing with other restaurants in your area, with grocery stores, and with specialty food stores.
Industry Forcesthat Affect Your Business (Cont’d.)
3. Sources of Supply may affect costs, pricing, and sales.
Consider: Access to affordable sources of inventory,
raw materials, and goods; Where your suppliers located; What trade discounts they offer; Availability of alternative sources.
Industry Forcesthat Affect Your Business (Cont’d.)
4. Buyers’ Ability to Bargain.In industries where large discount buyers have bargaining power, a new business may have difficulty gaining a foothold. Small businesses usually compete by offering personalized service and customized products.
Industry Forcesthat Affect Your Business (Cont’d.)
5. TechnologyTechnology allows companies to improve their business processes. Companies that use technology to operate effectively and efficiently are more likely to remain competitive.
Competitive Intelligence Visit competitors’ outlets. Buy your competitors’ products. Search the Internet and your
competitors’ Websites.
Industry CharacteristicsEach industry has basic characteristics
or demographics.
For example: Number of companies Annual revenues Average size of the companies by
number of employees
Terms to Define:
Competitive Analysis Direct Competitors Indirect Competitors Industrial Markets Industry Trends Industry Characteristics
Let’s Review• Identify ways to research competitors and
identify their niche.• How can you assess competitors’
strengths and weaknesses?• What are 5 industry forces that may
affect your business?• List examples of industry characteristics
Sources Allen, Kathleen R., & Meyer, Earl
(2006). Entrepreneurship and small business management. New York: Glencoe.
Green, Cynthia L. Entrepreneurship: ideas in action. Boston: Thompson/
South-Western.
Created by: JJ AbernathySnow Canyon High School
2006
Recommended