CEB Marketing Excellence Survey®

Competitive Analysis
Course Workbook

In this course you will learn how to critically examine your company and your
competition to develop a competitive strategy.

To review this course, please visit: [Link]/Members/ResearchAndTools/[Link].

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Table of Contents
Module One Module Two

Collecting Competitor Information Conducting a Competitive Analysis

• Course Introduction.................................................... p. 1 • Module Two: Introduction.................................p. 21

• Module One: Introduction......................................... p. 4 • Action Item Four...................................................p. 22

• Industry Analysis.......................................................... p. 5 • Competitor Analysis Example.........................p. 23

• Porter’s Five Forces..................................................... p. 7 • Budweiser Versus Miller Competitive

Analysis....................................................................p. 24
• Action Item One............................................................ p. 10
• Cost Advantage....................................................p. 25
• Review.............................................................................. p. 11
• Differentiation Advantage................................p. 27
• Identifying Benchmark Competitors.................... p. 11
• Three Basic Differentiation Advantages.....p. 29
• Taking a Wider View of Your Competition......... p. 13
• Action Item Five....................................................p. 31
• Action Item Two............................................................ p. 14
• Review......................................................................p. 32
• Review.............................................................................. p. 15
• Conclusion...............................................................p. 32
• Gathering Competitor Intelligence........................ p. 15
• Retention Quiz.......................................................p. 33
• Action Item Three........................................................ p. 18

• Review.............................................................................. p. 19 Course Review

• Conclusion....................................................................... p. 19
Glossary of Terms.........................................p. 34
• Retention Quiz............................................................... p. 20

To review this course, please visit: [Link]/Members/ResearchAndTools/[Link].

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MES5662013SYN
Module One: Collecting Competitor Information

module 1
Course Introduction
• Competitive analysis is the study of how you
compare versus your competition in key areas
of performance.
• Studying your competition has a long and time
honored tradition dating back to the earliest

Module 2
times. Humans have always been driven by the
spirit of competition—from clashes between
civilizations—to the earliest organized sporting
events.

Course review
Notes
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Course Introduction (Continued)

• History has rewarded those who embraced
this competitive drive and made it a priority to
understand and gain strategic advantages over
their competition. 2,500 years ago, the Chinese
military strategist Sun Tzu wrote, “Whoever
is first in the field and awaits the coming of the
enemy will be fresh for the fight; whoever is
second in the field and has to hasten to battle
will arrive exhausted.”
• What Sun Tzu was saying was that people who
can anticipate their competition’s next moves
will have a considerable advantage.

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 1
Course Introduction (Continued)
• Understanding and analyzing your competition

module 1
is not just important to military strategists or
world-class athletes. These are critical skills
that every successful organization in the
business world should have. Many companies
have discovered the hard way that superior
competitive intelligence is not a luxury but
a key to long-term success.

Module 2
• Seventy percent of all business stalls since
1955 occurred because of faulty market
understanding. That is why competitive
intelligence and analysis are climbing the
priority lists of today’s CEOs. In fact, a
PricewaterhouseCoopers study showed that
84% of CEOs consider competitive intelligence

Course review
Notes a prime driver of profit growth.
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Course Introduction (Continued)

• Competitive analysis is not just for CEOs; it
needs to permeate the organization, and those
at the top levels of senior management are
starting to take notice of this idea. While you
personally might not regularly participate
in a robust competitive analysis, you can
still benefit from the type of information it
produces. Competitive intelligence helps make
smarter marketers. Whether you are working
on a new product or designing collateral to
deliver a competitive message, competitive
intelligence makes you smarter and better able
to do your job.
Notes
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MES5662013SYN Competitive Analysis: Course Workbook 2
Course Introduction (Continued)
• The type of analysis that we are going to

module 1
discuss in this course will help you to identify
your strengths and weaknesses so that you
can create a competitive advantage over your
competition. If you are the same as your
competition, there is no reason for a customer
to buy your product or service.
• In this course we will take a look at a

Module 2
structured process you can use to conduct a
competitive analysis in your own organization
so you can see what your strengths are.

Notes

Course review
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Course Introduction (Continued)

• By the end of the course, you should be able
to do the following:
– Identify the attractiveness of your industry.
– Select your benchmark competitors.
– Recognize where you can collect competitor
intelligence.
– Conduct a competitive analysis.
– Select an area of competitive advantage
to emphasize.

Reflection Question
Does your company’s CEO and senior
management appear to place an emphasis
Notes on competitive analysis?
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MES5662013SYN Competitive Analysis: Course Workbook 3
Module One: Introduction
• In this module, we are going to discuss how

module 1
to perform an industry analysis, select your
benchmark competitors, and collect competitor
intelligence. The steps we are discussing in this
module will help you to set the stage for doing
your own competitive analysis. These steps are
important because this information will very
much determine the depth and quality of your
analysis.

Module 2
Course review
Notes
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Module One: Introduction (Continued)

• By the end of this module, you should be
able to do the following:
– Identify the competitive nature of your
industry.
– Select your benchmark competitors.
– Identify where you can collect competitor
intelligence.

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 4
Industry Analysis
• Your competitive analysis is a part of the first

module 1
step of the larger marketing-planning process—
the situation analysis. It should be one of the
first things that you do during this process.
Understanding your competition and the
competitive landscape is something that
will drive a large part of your strategy.
• The first step in conducting a competitive

Module 2
analysis is to do an industry analysis. Before
you understand how you compare against
specific competitors, you need to look at the
bigger picture of the industry and market in
which you are competing.
Notes

Course review
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Industry Analysis (Continued)

• In preparing an industry analysis, companies
need to understand the attractiveness of the
competitive environment. This is important,
because in an unattractive market, a company
can have low profitability even if they have a
strong competitive position. On the other hand,
operating in an attractive market, even without
a strong competitive position, companies have
a better chance of succeeding than a company
in an unattractive market.

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 5
Industry Analysis (Continued)
• Most likely, the industry you are in is probably

module 1
the industry you are going to be staying in. So,
this analysis might be most relevant for when
you are considering entering a new industry
with a new product or service. However, this
type of analysis can still be beneficial because
it lets you better understand the forces
affecting your industry, which will lead to a
better understanding of why competitors in

Module 2
your industry act the way that they do.

Notes

Course review
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Industry Analysis (Continued)

• There are five main industry forces to consider
when examining how attractive a market
is. These forces are known as “Porter’s Five
Forces” after the framework developed by
Michael Porter. These forces characterize the
competitiveness of a market, which determine
its attractiveness. A less competitive market
is more attractive because it provides your
company the opportunity to operate without
fear of your competition jumping on your every
move. By examining these five forces, you can
get a full picture of the level of attractiveness
of your industry.

Reflection Questions
How competitive does your industry seem?

Has it either increased or decreased in

competitiveness in the past five years?
Notes
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MES5662013SYN Competitive Analysis: Course Workbook 6
Porter’s Five Forces
• The first of these five forces is barriers to

module 1
entry. An industry with high barriers to
entry, such as one that requires a substantial
investment in technology like that needed to
develop sophisticated microchips, would pose a
significant barrier to entry for new companies
entering this market. Other barriers include
geographical or political barriers to entry.

Module 2
Notes

Course review
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Porter’s Five Forces (Continued)

• The second force is barriers to exit. The
competitive environment is more attractive
when weak competitors can easily leave an
industry. On the other hand, an industry
with strong barriers to exit can discourage
competitiveness. A company that is restricted
from leaving an industry, such as through legal
restrictions, may have to maintain its position
in a market even when it is not profitable
anymore.

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 7
Porter’s Five Forces (Continued)
• The third force is customer buying power.

module 1
An industry where customers have a large
amount of buying power, allowing them to
easily switch between competitors, is one that
would be unattractive to most companies. This
can force companies in these markets to lower
their prices or increase their service to retain
customers. An example of an industry’s effort
to restrict this type of customer buying power

Module 2
is the early termination fee your mobile phone
company may charge if you decide to switch
to a competitor.

Notes

Course review
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Porter’s Five Forces (Continued)

• The fourth of these forces is supplier selling
power. Your company’s ability to easily switch
between suppliers determines supplier selling
power. When suppliers have a large amount
of selling power, such as industries where
contracts make it hard to switch between
suppliers, it decreases the attractiveness
of the market.

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 8
Porter’s Five Forces (Continued)
• The fifth and last of the industry forces is

module 1
product substitutes. The larger the number
of product substitutes, the easier it is for
customers to switch to another competitor.
An industry with a large amount of product
substitutes would be one that would be
unattractive to most companies.

Module 2
Notes

Course review
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MES5662013SYN Competitive Analysis: Course Workbook 9
Action Item One:
Instructions: Rate each aspect of your industry’s attractiveness using the five forces we just reviewed by

module 1
matching the appropriate statement with your industry. Circle the statements that most closely match
your industry for each of the five forces.

Industry Force 1 (Attractive) 2 3 4 5 (Unattractive)

Barriers Companies can Companies can There are some There are heavy It is almost

Module 2
to Entry freely enter. easily enter. restrictions to restrictions to impossible
entry. entry. to enter.

Barriers to Exit Companies can Companies can There are some There are heavy It is almost
freely exit. easily exit. restrictions restrictions impossible
to exit. to exit. to exit.

Course review
Customer Customers Customers Customers Customers Customers have
Buying Power have no buying have little have some have significant all the buying
power. buying power. buying power. buying power. power.

Supplier Suppliers have Suppliers have Suppliers have Suppliers have Suppliers have
Selling Power no selling little selling some selling significant all the selling
power. power. power. selling power. power.

Product There are There are a There are a There are There is almost
Substitutes no product few product moderate many product an infinite
substitutes. substitutes. amount of substitutes. amount of
product product
substitutes. substitutes.

Write down the numbers that correspond with the statements you circled:

Barriers to Entry (i.e., companies can freely enter—1): _______________________________________

Barriers to Exit:_ _____________________________________________________________________

Customer Buying Power: ______________________________________________________________

Supplier Selling Power: ________________________________________________________________

Product Substitutes: __________________________________________________________________

Add all the numbers you selected to rate the overall attractiveness of your industry. Use the scale
below to get an idea of how attractive your industry.

5–10 Very Attractive

10–15 Somewhat Attractive

15–20 Somewhat Unattractive

20–25 Very Unattractive

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MES5662013SYN Competitive Analysis: Course Workbook 10
Review
• An industry analysis is a part of the situation

module 1
analysis step in the marketing-planning
process.
• “Porter’s Five Forces” are the industry forces
that help to determine the attractiveness
of a market:
– Barriers to entry
– Barriers to exit

Module 2
– Customer buying power
– Supplier selling power
– Product substitutes
Notes

Course review
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Identifying Benchmark Competitors

• The second step in the competitive analysis
process is identifying your benchmark
competitors. After you understand the
attractiveness of your industry and the
competitive forces acting within it, you need
to identify the specific competitors within your
industry against which to benchmark yourself.
While a general look at your industry like the
industry analysis we just completed is very
helpful, a comparison against your most direct
competitors will provide you with the most
accurate understanding of how your company
is performing.
Notes
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MES5662013SYN Competitive Analysis: Course Workbook 11
Identifying Benchmark Competitors (Continued)
• There are many ways to identify a business’s

module 1
top competitors, and you may already have
a pretty good idea as to what companies
you could benchmark yourself against to
get an accurate picture of your company’s
performance.
• One of the best ways to gather this information
is internally through your own people. For

Module 2
example, your sales force probably interacts
with your customers regularly and hears who
your customers are considering besides just
your own company. The sales force and other
customer-facing employees would be a great
place to start to understand who exactly your
competitors are. Here are a couple of additional

Course review
Notes methods to help you narrow the list down.
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Identifying Benchmark Competitors (Continued)

• If you and another company target the
same customers, the chances are you are
competitors. For example, it took a long
time for newspapers to realize that they, in
fact, were competing against Web sites and
bloggers. However, it has become evident
that they are competing against these entities
because they are both targeting customers who
are interested in the same thing—news.

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 12
Identifying Benchmark Competitors (Continued)
• The second method, and perhaps the best way

module 1
to understand who your closest competitors
are, is to have customers evaluate how
similar they see your company and another
company. The more similar two competitors
are from a customer’s perspective, the more
likely customers are to switch between the
two companies. To get this information,
businesses can survey a sample set of their

Module 2
customers to rate each competitor on how
close that competitor’s offerings compares to
your offerings. These customer perceptions
can help to create a picture to give you a better
Notes understanding of the competitive position and
help to identify key competitors to benchmark.

Course review
______________________________________________
Reflection Question
______________________________________________ Does your company have a standardized method
for identifying competitors?
______________________________________________
______________________________________________
______________________________________________
______________________________________________

Taking a Wider View of Your Competition

• One thing you should be wary of when you
are selecting your benchmark competitors is
overemphasizing current competitors instead
of potential entrants. Remember that Sun Tzu
said that “whoever is first in the field will be
fresh for the fight.” If you take a wider view
of your potential competitors, you will be
the first in the field, freshly waiting for new
competitors.

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 13
Taking a Wider View of Your Competition (Continued)
• Let’s look at an example of a company that

module 1
overlooked a new market entrant at the
expense of its own competitive analysis.
When Eastman Kodak, a leader in the field of
photography products, first learned of digital
photography, it dismissed it as a potential
competitor, thinking that digital photography
would never compete with traditional film
photography. By miscalculating the importance

Module 2
of digital photography, Eastman Kodak failed
to take a wide-angle view of its competition
and lost a sizeable market share to new market
entrants.
Notes
Reflection Questions

Course review
______________________________________________ Has a new market entrant ever taken your
company by surprise?
______________________________________________
Were there any warning signs that you might
______________________________________________ have missed that could have tipped you off
to this new competitor?
______________________________________________
______________________________________________
______________________________________________

Action Item Two:

Instructions: Write down your top two benchmark competitors. Consider which competitors your
customers consider as substitutes for your own product. Also consider which competitors are targeting
the same customers as your company.

Benchmark Competitor #1:_____________________________________________________________

Benchmark Competitor #2:_____________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 14
Review
• Step Two: Identify Your Benchmark

module 1
Competitors.
– Identify competitors by determining which
companies target the same customers as
your company.
– Ask customers to compare the similarity
between your company’s offerings and those
of competing companies.

Module 2
– Be sure to take into account potential new
market entrants.

Notes

Course review
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Gathering Competitor Intelligence

• After you have analyzed your industry
and selected your benchmark competitors,
you need to gather information about your
competitors so that you can benchmark
yourself. There is a great deal of competitive
intelligence made public and readily available
from third parties like dealers, the press,
the government, and even your customers.
• For example, the Internet has a wealth
of knowledge about your competitors.
Specifically, you can monitor your competitors’
Web sites and press releases online. You can
also use search engines to discover references
to competitors’ activities, or you can search
public bulletin boards for investor or employees
Notes discussing rumors.
__________________________________________________________________________________________________
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MES5662013SYN Competitive Analysis: Course Workbook 15
Gathering Competitor Intelligence (Continued)
• Another way to collect competitor intelligence

module 1
is through networking connections. You can
track competitors’ attendance at industry
conferences, monitor industry and trade
journals for articles written by employees at
rival companies, and speak informally with
professional colleagues and vendors.
• Also, you can obtain competitor intelligence in

Module 2
the marketplace. You can collect competitors’
current price lists, catalogs, and sample
products. You can listen for rumors on product
and service offerings or delivery expectations
from vendors and suppliers. Finally, you can
read rival companies’ annual reports and
Notes financial statements.

Course review
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Gathering Competitor Intelligence (Continued)

• In addition, you may want to look beyond
your immediate industry competitors for
benchmarks. For example, Lands’ End is
legendary for excellence in outbound logistics.
Even though Lands’ End may not be in your
industry, studying a company like it for ideas
on how to improve outbound logistics might
be extremely instructive and provide ideas
for improvement opportunities. Because such
generic benchmarks are not direct competitors,
many companies are surprisingly willing to
be forthcoming with information, since even
asking is somewhat flattering.
Notes
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__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 16
Gathering Competitor Intelligence (Continued)
• The depth of information you select for your

module 1
comparison is up to you and should be based
on the most relevant competitive aspects
to your industry and company.
• Remember though, while the job of gathering
competitive intelligence usually falls to your
competitive intelligence group or your market
research group, anyone in your organization

Module 2
can collect this type of information.

Reflection Questions
Do you come across competitive intelligence
on a day-to-day basis?

Do you know what to do with this information

Course review
Notes if you do discover it?

__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 17
Action Item Three:
Instructions: Select five methods for gathering competitor intelligence from the list below that you could

module 1
use to create a picture of your competitors’ activities.

Methods for Gathering Competitor Intelligence

Competitors’ Web sites

Module 2
Competitors’ press releases

Online search engine to discover references to competitors’ activities

Public bulletin boards for investors or employees discussing rumors

Course review
Competitors’ attendance at industry conferences

References to competitors in industry and trade journals

Articles written by employees at rival companies

Speak informally with professional colleagues and vendors

Competitors’ current price lists

Competitors’ catalogs

Competitors’ sample products

Competitors’ annual reports and financial statements

Your list of five methods for gathering competitor intelligence:

1 _________________________________________________________________________________

2 _ ________________________________________________________________________________

3 _ ________________________________________________________________________________

4 _________________________________________________________________________________

5 _________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 18
Review
• Step Three: Gather Competitor Intelligence.

module 1
– Internet and press releases
– Networking connections
– Price lists, reports, and statements
• Look for benchmarks outside your industry.

Module 2
Notes

Course review
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__________________________________________________________________________________________________

Conclusion
• Competitive analysis is the study of how you
compare versus your competition in key areas
of performance. The first step you need to
consider in this process is an industry analysis,
or an understanding of the forces that affect
how attractive your industry is. The second
step to consider is selecting your benchmark
competitors. These are the competitors that
most closely approximate your offering in the
market and will give you the best comparative
look at your own performance. The last step
we discussed was collecting competitor
intelligence. You need a lot of information
Notes about your competitors to understand how
you compare.
______________________________________________ • In the second module we will discuss how you
can take this information and perform your
______________________________________________ analysis.
______________________________________________
______________________________________________
______________________________________________
______________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 19
Retention Quiz
Please circle one answer per question.

module 1
1. Which is one of the determinants of an industry’s attractiveness?
a. Barriers to competition
b. Customer selling power
c. Products
d. Supplier selling power

Module 2
2. The company that you should compare yourself against in a competitive analysis is called what?
a. Top competitor
b. Benchmark competitive
c. Competitive comparison

Course review
d. Benchmark competitor

3. In the example we reviewed, Eastman Kodak failed to take what type of a view of its competition?
a. Wide-angle
b. Competitive
c. Surreptitious
d. Historical

4. Which is not one of the methods we reviewed for collecting competitor intelligence?
a. Attendance at industry conferences
b. Price lists
c. Public bulletin boards
d. Corporate espionage

5. What is one of the best ways to understand who your benchmark competitors might be?
a. Google it
b. Finance team
c. Sales/customer service reps
d. From competitors

Note: To receive credit for this quiz and see an explanation of each correct answer,
take this quiz online in slide 14 of this course at [Link].

Notes
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MES5662013SYN Competitive Analysis: Course Workbook 20
Module Two: Conducting a Competitive Analysis

module 1
Module Two: Introduction
• In the first module we discussed performing
an industry analysis, selecting your benchmark
competitors, and gathering competitive
intelligence. Now we will use the information
that you have collected about your competitors

Module 2
to perform a competitive analysis.
• A detailed competitive analysis is a lengthy
process but a necessary one for market-
oriented companies. Companies that keep a
careful eye on their competitors in the market
should be gathering competitor information
constantly and, as a result, should have

Course review
constantly evolving competitor profiles from
Notes which they can evaluate their own competitive
advantages.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

Module Two: Introduction (Continued)

• By the end of this course, you should have a
better idea about how to structure this analysis
with all of the good competitive intelligence
that you have collected and select a competitive
advantage to emphasize.
• At this point, you have already done a lot
of work by identifying your benchmark
competitors and collecting your competitive
intelligence. You just need to put this
information to good use.

Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 21
Module Two: Introduction (Continued)
• Let’s begin with the goals of this analysis.

module 1
There are essentially two different goals that a
company will usually choose from when they
are setting their goals in this step:
– The first potential goal is to identify areas of
low performance relative to your competitors
so that you can make corrections in your own
processes.

Module 2
– The second potential goal for your analysis
is to determine areas where your company
outperforms competitors to develop and
strengthen your marketing campaigns.
Notes • Ideally, your analysis would address both
of these goals. As a result of the analysis, you

Course review
would identify areas to improve and areas
______________________________________________ of strengths to emphasize.
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________

Action Item Four:

Instructions: Write down the goals for your own competitive analysis. Consider which goals would have
the most impact on your own organization.

Competitive Analysis Goal #1:___________________________________________________________

Competitive Analysis Goal #2:_ _________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 22
Competitor Analysis Example
• Once you have identified the goal for this

module 1
initiative you can begin to structure this type
of analysis in your own company. To help you
envision how this analysis would work, let’s
look at two competitors that have clashed head-
to-head for years.

Module 2
Notes

Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

Competitor Analysis Example (Continued)

• Miller and Budweiser brands compete directly
against each other for control of the U.S. beer
market. In recent years, both Miller Brewing
company and Anheuser-Busch—Miller’s and
Budweiser’s parent companies—have been
acquired by other brewing companies which
takes their competition to a global scale.
Let’s compare these two beer heavyweights’
performances in the place where their
competition started—the U.S. beer market.
The two companies combine to control 78%
of the U.S. beer market. Without an in-depth
understanding of the U.S. beer market, you
might think that these two competitors are
fairly evenly matched. But after a closer
competitive comparison, you will see that one
of these companies has a substantial advantage
Notes over the other.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 23
Budweiser Versus Miller Competitive Analysis
• To definitively understand which of these

module 1
companies has an advantage in the market,
you can perform a simple competitor analysis.
To show you that you can accomplish this
type of analysis by using publicly available
information, we conducted this analysis based
on information from the two companies’ 2008
annual reports.

Module 2
• The information you collect from a public
source like an annual report might not be
complete, but it will at least give you the ability
to directionally compare your company versus
your competition. After comparing the two
companies’ financial performance, we can see
that Budweiser holds advantages in market

Course review
share, gross margin, marketing and sales
Notes expense, and net marketing contribution.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

Budweiser Versus Miller Competitive Analysis (Continued)

• Budweiser also outperforms Miller in both
marketing return on sales—its net marketing
contribution as a percentage of sales—and
marketing return on investment—its sales and
marketing expenses as a percentage of sales.
These two numbers indicate the effectiveness
of marketing and sales expenses in returning
profits to the organization. Budweiser
outperforms Miller in this area
as well.
• This type of a high-level competitive analysis
tells you that Budweiser has a considerable
advantage in all of the areas that we examined.
Notes While Miller is its number-one competitor,
Budweiser holds a large advantage over
______________________________________________ Miller in market share, which may contribute
to larger returns on its sales and marketing
______________________________________________ expenditures because these expenses are
returning larger sales volumes than Miller’s
______________________________________________ on a relative basis.
______________________________________________
______________________________________________
______________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 24
Budweiser Versus Miller Competitive Analysis (Continued)
• Budweiser holds more than an 11% advantage

module 1
in gross margin, which means that it’s able
to produce its beer at a lower cost than Miller
can. This may be an area that Miller could
investigate further to understand how its
operations are lagging behind Budweiser’s in
this area. By lowering its cost of goods sold
through some process improvement, Miller
would be able to increase its profitability. In

Module 2
addition, Miller might want to consider looking
at why its marketing campaigns are providing
much less efficient returns than the marketing
programs that Budweiser is investing in. Also,
Notes since Miller is having a hard time competing
with Budweiser on costs alone, it may be able

Course review
to differentiate its product in some other way.
______________________________________________
______________________________________________
Reflection Question
______________________________________________ Do you know what advantages you have over
your direct competitors?
______________________________________________
______________________________________________
______________________________________________

Cost Advantage
• After you have identified your areas of strength
and weakness through a competitor analysis,
you need to decide which area of competitive
advantage to emphasize.
• The first competitive advantage that companies
can take advantage of is a cost advantage. A
cost advantage is when your company has a
significantly lower cost position from which
you can create lower prices for your customers
while still maintaining a profit.

Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 25
Cost Advantage (Continued)
• Businesses with a lower unit cost maintain

module 1
lower cost per margin on their units
compared to their competition. These
variable cost advantages may come in the
form of manufacturing costs, discounts,
sales commissions, transportation, or other
transactional costs.
• Unless you have some sort of a manufacturing

Module 2
process advantage that allows you to achieve a
lower per unit cost advantage, most companies
that achieve a variable cost advantage do so
by achieving a certain level of scale in their
production. Larger companies—usually the
Notes market share leader—that produce their goods
at such a high level spread their costs out across

Course review
______________________________________________ a larger amount of units, lowering their per
cost unit. Larger companies also exert pressure
______________________________________________ on their suppliers to lower their costs, which
also allows them to produce at lower variable
______________________________________________ costs.
______________________________________________
______________________________________________
______________________________________________

Cost Advantage (Continued)

• As we saw in the Budweiser versus Miller
example, the market share leader Budweiser
maintains an edge in unit production costs,
perhaps in part due to its larger market share
and production scale.
• A relatively simple way of comparing variable
cost advantages between your company and
your competitors is by looking at how your
costs of goods sold as a percentage of sales
compares to that of your competitors. For
example, if your costs of goods sold are 65%
of your sales, and your top three competitors
average 50% for their cost of goods sold as
a percentage of sales, you likely do not have
Notes a variable cost advantage.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 26
Cost Advantage (Continued)
• Another cost advantage is a marketing cost

module 1
advantage. Many companies do not think
about this when determining if they have a
cost advantage over their competition, but it
is important to consider. Companies with line
extensions achieve a marketing cost advantage.
For example, when InBev, which owns
Budweiser and a number of other beer brands,
runs an advertisement for any of its drink lines,

Module 2
it is in effect raising its customers’ awareness
for the InBev brand and its other drink lines.
This scale across multiple product lines allows
it to lower its advertising dollars spent per unit
Notes sold.

Course review
Reflection Questions
______________________________________________
Does your company maintain a cost advantage
______________________________________________ over your competition? If not, do you know which
one of your competitors holds this advantage
______________________________________________ over your company?

______________________________________________
______________________________________________
______________________________________________

Differentiation Advantage
• The other type of competitive advantage that
a company can emphasize is a differentiation
advantage. For companies that can’t maintain
a cost advantage over their competition, which
is most companies, the other option is to
differentiate themselves in some other way.
• For a differentiation advantage to be
competitively significant, it must meet two
criteria: one, it must be meaningful to the
customer, and two, it must be sustainable
or not easy for the competition to copy.

Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 27
Differentiation Advantage (Continued)
• A meaningful advantage is one that is

module 1
important to customers and one that must
provide a reason that is important enough to
justify a higher priced product. For customers
to patronize your products, there must be
a distinct reason for them to purchase over
other offerings in the marketplace.
• For example, since Budweiser’s large market

Module 2
share gives it an advantage in production costs,
Miller has tried to differentiate its products
through meaningful differences in its product
offerings.

Notes

Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

Differentiation Advantage (Continued)

• For example, Miller launched a product called
“Miller Chill,” which added a lime taste to its
beer, and it marketed it as a summer drink.
Miller Chill was a runaway success and
allowed Miller to pull market share away from
Budweiser in one of its segments.
• The next year, Budweiser launched a
competing lime-flavored drink—Bud Light
Lime—which mimicked the flavor of Miller
Chill and immediately competed directly with
Miller Chill. So while Miller maintained a brief
differentiated advantage, it was short lived
Notes because it was something relatively easy for its
competitor to replicate. Remember the idea of a
sustainable advantage while you consider your
______________________________________________ own potential areas of competitive advantage.
______________________________________________
______________________________________________ Reflection Questions
Has your company ever created a meaningful
______________________________________________ advantage over your competition?

______________________________________________ Was this advantage sustainable? If not, what

could you have changed to make it sustainable?
______________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 28
Three Basic Differentiation Advantages
• There are three basic differentiation

module 1
advantages. The first is a product advantage.
A product can differentiate itself from the
competition by its durability, reliability,
performance, or features. For example, Maytag
has famously advertised its product’s durability
through its Maytag repairman commercials
where the repairman is bored because he
never needs to repair Maytag products. This

Module 2
emphasizes Maytag’s product differentiation
in the durability of its products.

Notes

Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

Three Basic Differentiation Advantages (Continued)

• The second differentiation advantage is a
service advantage. A company can differentiate
itself through a service advantage the same
way it differentiates itself through a product
advantage, by providing a service that is
valuable to its customers and its competitors
cannot easily copy. For example, Best Buy
developed an ad campaign around the idea
that a Wal-Mart customer would call Best
Buy to get advice about a product he or she is
considering purchasing from Wal-Mart. The
ad emphasized Best Buy’s service advantage
in knowledgeable staff over Wal-Mart.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 29
Three Basic Differentiation Advantages (Continued)
• The third way a company can differentiate

module 1
itself is through a brand advantage. For
companies with strong brand names, their
brand advantage lies in the ability to attract
customers and provides another dimension of
appeal for customers. For example, a Harley-
Davidson owner might only purchase a Harley-
Davidson motorcycle because he or she feels
that a true biker would only ride a Harley-

Module 2
Davidson motorcycle.

Notes

Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 30
Action Item Five:
Instructions: Write down at least one area where you think that you have a competitive advantage over

module 1
your competition.

Cost Advantages

Product Cost Advantage: (i.e., your product costs are lower than your competitors’)______________

___________________________________________________________________________________

Module 2
Marketing Cost Advantage: (i.e., you have multiple product lines that allows you to achieve cost
savings through synergy in your marketing programs)_______________________________________

___________________________________________________________________________________

Course review
Differentiation Advantages

Product Advantage: (i.e., your product provides a meaningful, sustainable advantage with product
attributes over your competition)________________________________________________________

___________________________________________________________________________________

Service Advantage: (i.e., your product provides a meaningful, sustainable advantage with service
features over your competition)_________________________________________________________

___________________________________________________________________________________

Brand Advantage (i.e., your brand provides a meaningful, sustainable advantage over your
competition)_________________________________________________________________________

___________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 31
Review
• Determine a competitive advantage:

module 1
– Cost advantage:
a) Product cost advantage (often due to scale)
b) Marketing cost advantage (often due to
line extensions)
– Differentiation advantage:
a) Product differentiation advantage
b) Service differentiation advantage

Module 2
c) Brand differentiation advantage

Notes

Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

Conclusion
• Competitive analysis helps you to identify and
target your areas of competitive advantage
so that you can maintain a meaningful,
sustainable advantage over your competition.
As a result of this course, you should have
a better idea of the attractiveness of your
industry: your benchmark competitors,
where you can find competitive intelligence,
what areas you should examine to conduct a
competitive analysis. Lastly, you should know
how to select an area of competitive advantage
to emphasize.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 32
Retention Quiz
Please circle one answer per question.

module 1
1. What are two basic types of competitive advantage?
i. Cost
ii. Differentiation
iii. Brand
iv. Product

Module 2
a. i, ii
b. i, iii
c. ii, iii
d. iii, iv

2. Which of the criteria of a significant differentiation advantage did Miller’s “Miller Chill” product fail

Course review
to achieve?
a. Differentiated
b. Meaningful to the customer
c. Sustainable
d. Cost-efficient

3. A differentiation advantage that drives customers to choose a product based on the appeal of the company
to its customers is called what?
a. Product advantage
b. Service advantage
c. Brand advantage
d. Differentiation advantage

4. An advantage that large companies have over smaller companies as it pertains to variable cost is based
on what?
a. Production scale advantage
b. Marketing advantage
c. Cost advantage
d. Sustainable advantage

5. What type of an advantage would advertising with multiple line extensions yield?
a. Brand advantage
b. Service advantage
c. Product advantage
d. Marketing cost advantage

Note: To receive credit for this quiz and see an explanation of each correct answer,
take this quiz online in slide 29 of this course at [Link].

Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________

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MES5662013SYN Competitive Analysis: Course Workbook 33
Glossary of Terms

module 1
Brand Benefits—The benefits that a customer receives from purchasing from your brand; benefits can
be separated into three distinct categories: functional, emotional, and identity benefits.

Brand Equity—The value that a brand contains

Module 2
Brand Identity—Includes all of the unique associations that an organization tries to connect with the
brand; these associations represent what the brand stands for (in an ideal world) and lets customers know
what to expect from the brand. Brand identity also includes representations of the brand that you might
think of when you imagine what a “brand” is. This includes things like the brand name, mark,
and brand colors.

Course review
Competitive Analysis—The study of how you compare versus your competition in key areas
of performance

Competitive Position—The relative competitive advantage a firm has in the market compared
to its competitors

Competitive Strategy—The activities to build a sustainable, differentiated position in the marketplace

either through delivering a product or service that meets a customer need or benefit or through operational
efficiencies

Customer Value—Perceived value (benefits – cost) of your company’s product or service to the customer

Differentiation Advantage—Delivering something unique to the customer, beyond simply offering a

low price that is sustainable and not easily copied by competitors; differentiation advantage occurs when
a company sells the product or service at a premium that exceeds the cost of providing the differentiation.

Industry and Market Attractiveness—The appeal of specific industries or markets as it relates

to potential sales of a product or service

Industry Attractiveness—Defining the relative profit potential of an industry using a model such
as Porter’s Five Forces

Low Cost Advantage—Sustaining a lower cost for your product or service than your competitors;
this strategy is effective in mass markets or against larger competitors in a focused market

Market Attractiveness—Assessing the appeal of market opportunities (current and potential) by looking
at market size, potential, growth rate, competitive intensity, and customer reach

Market Demand—Total number of customers who are willing and able to purchase a product at any
given time

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MES5662013SYN Competitive Analysis: Course Workbook 34
Glossary of Terms (Continued)

module 1
Marketing Performance—Measure of how the marketing organization performs against stated goals
and objectives

Marketing Planning—A strategy to achieve marketing objectives that support a corporate or brand
mission; this includes the situation analysis, portfolio analysis and planning, competitive position,
and market position strategies.

Module 2
Market Position Strategies—Developing different marketing plans for dominant share leaders, share
challengers, and share followers

Market Share—The percentage of the total market demand that your company owns

Course review
Product Life Cycle—The course of a product’s sales and profits over time; plotting a portfolio of products
along the product life cycle provides a strategic view of the product lines’ sales, growth potential,
and profitability.

Relative Market Share—Compares an organization’s market share compared to the market share
of the leader in that market

Sales Volume—A select group of potential customers

Congratulations! You have finished this training course. Now head back to the MES Web site listed
below and look for more courses to grow your marketing knowledge:
[Link]/Members/ResearchAndTools/[Link].

CEB marketing Excellence Survey®

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MES5662013SYN 35