PAPER CODE 4.3.

1 - STRATEGIC BRAND MANAGEMENT

MODULE 1
PRODUCT MANAGEMENT

HIGHLIGHTS
Product Planning and New Product Management- Product Portfolio Analysis - Market Attractiveness &
Components of Market Attractiveness – Product Market Strategies - Product Life Cycle Stages and
Corresponding Strategies – Competitor Analysis

Introduction to Product Management

Product management is the practice of planning, developing, marketing, and continuous improvement of a
company’s product or products. The idea of product management first appeared in the early 30s with a memo
written by the president of Procter & Gamble, Neil H. McElroy, where he introduced the idea of a product
manager — a “brand man” completely responsible for a brand and instrumental to its growth. Decades later,
in the 1980s, modern product management started to take shape with the explosive growth of the software
market. Since then, product management has been closely connected to and typically found in companies
creating software.

What Is Product Management? The main objective of product management is the development of a new
product. Its ultimate goal is making sure you’re building the right product and building the product right

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Most notably, product management means linking the development team on the one side with marketing, sales,
and customer success teams on the other side, while ensuring the process is aligned with the business vision.
Product management should translate business objectives into engineering requirements and explain product
functionalities and limitations to commercial teams responsible for marketing, sales, and customer
communication.

Product Planning and New Product Management

Product planning is the process of searching ideas for new products, screening them systematically, converting
them into tangible products and introducing the new product in the market. It also involves the formation of
product policies and strategies.
Product planning includes improvements in existing products as well as deletion of unprofitable or marginal
products. It also encompasses product design and engineering which is also called product development.
Product planning comprises all activities starting with the conception of product idea and ending up with full
scale introduction of the product in the market. It is a complex process requiring effective coordination
between different departments of the firm. It is intimately related with technical operations of the organization,
particularly with engineering, research and development departments.
Any product has two broad objectives immediate objectives and ultimate objectives. Immediate objectives
include satisfaction of immediate needs of consumers, increasing sales, utilizing idle plant capacity, etc.
Permanent or ultimate objectives consist of reduction in production costs, creation of brand loyalty,
monopolizing the market, etc.

Significance and Objects of Product planning

Product planning and development is a vital function due to several reasons. First, every product has a limited
life span and needs improvement or replacement after some time. Secondly, needs, fashions and preferences
of consumers undergo changes requiring adjustments in products.
Thirdly, new technology creates opportunities for the design and development of better products. Product
planning and development facilitate the profitability and growth of business. Development of new products
enables a business to face competitive pressures and to diversity risks. Product is the most important
constituent of marketing mix.
Finding and meeting the needs of customers is the key element in a successful marketing strategy. New product
development has become all the more important in the modern world characterized by technological change
and market dynamics.
New product development brings opportunities but also involves heavy commitment of finance, technology
and even emotional attachment. New product decisions are necessary as well as costly. Many new products
fail causing ruin to business firms.
Product development is a continuous and dynamic function. Continuous adjustments and improvements in the
product arc necessary to minimize costs of production and to maximize sales. High rate of product
obsolescence requires product innovation frequently. At the same time, cost and time scales have increased.
In some products, the gestation period is very long, sometimes longer than the life of the product.

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As a result, the role of R&D expert has become very important. The R&D expert needs to be in touch with
sales persons and actual end users. Successful technological innovation involves great resources as well as
great risks. Product innovators face spectacular successes as well as disastrous failures.
Most of the new product ideas do not become actual products. Many new products achieve limited acceptance
in the market. This is so because firms very often are reluctant to move away from tried and tested products.
Thus, product planning is required for the following reasons:
(i) To replace obsolete products.
(ii) To maintain and increase the growth rate/sales revenue of the firm.
(iii) To utilise spare capacity.
(iv) To employ surplus funds or borrowing capacity.
(v) To diversify risks and face competition.

New Product Management

New product management is the strategic process of bringing a new product or service to market. It involves
a series of steps, from ideation to launch, that ensure the product meets customer needs, aligns with business
goals, and is successful in the marketplace.
Phases of New Product Management
1. Idea Generation and Screening: This involves brainstorming new product concepts, often through
market research, customer feedback, or internal innovation initiatives. The generated ideas are
evaluated to assess their potential for success, considering factors like market demand, feasibility, and
alignment with business objectives.

2. Concept Development and Testing: The promising ideas are refined into detailed product concepts,
including features, benefits, and target market. These concepts are presented to potential customers or
market segments to gauge their interest and feedback.
3. Business Analysis: A thorough analysis of the target market is conducted to understand its size,
demographics, and behavior. The potential profitability of the new product is assessed, including
revenue projections, costs, and return on investment.

4. Product Development: The product's design and specifications are finalized, considering factors like
functionality, aesthetics, and manufacturing feasibility. Physical or digital prototypes are created to
test the product's design and functionality.

5. Test Marketing: The product is introduced to a specific geographic region or target market for testing.
Customer feedback is gathered to identify any issues or areas for improvement.
6. Commercialization: A comprehensive launch plan is developed, including marketing, sales, and
distribution channels. The product is officially launched into the market.

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7. Post-Launch Evaluation: The product's sales, market share, and customer satisfaction are monitored.
Based on feedback and performance data, the product is continuously improved and updated.

Essential Skills for New Product Managers

• Market Analysis
• Strategic Thinking
• Financial Acumen
• Problem-Solving
• Communication
• Innovation

Product Portfolio Analysis

Product portfolio analysis is a method for evaluating a company's products to understand their performance,
growth potential, and market share. It helps businesses make data-driven decisions to improve their portfolio,
strengthen their market position, and optimize their performance.

Benefits of product portfolio analysis include:

• Improved cash flow: Helps businesses identify which products are most profitable and which are losing
money. This allows companies to focus on more profitable products and remove those that are not.
• Better decision making: Helps businesses make informed decisions about how to achieve targets and
maintain a high ROI.
• Faster product launches: Helps companies bring products to market more quickly.
• Reduced investment in unsuccessful products: Helps companies reduce investments in products that
are not successful.

Techniques used in product portfolio analysis include:

• SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
• Market segmentation analysis
• Trend analysis
• Scenario planning
• Sensitivity analysis

Two popular product portfolio analysis matrices are the Boston Consulting Group Matrix (BCG Matrix) and
the GE/McKinsey Matrix.
Boston Consulting Group Matrix (BCG Matrix)
The BCG Growth Share Matrix is a framework for product portfolio management and analysis. It was
published by the Boston Consulting Group in 1970.
The BCG Growth-Share Matrix analyses the products in your portfolio for profitability based on growth rate
and market share.

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In a product portfolio analysis, products are categorised by their position on the matrix. Product value is
determined by the product’s ability to obtain a leading share of its market before growth slows.
The BCG matrix looks like a graph split into four quadrants. These quadrants each represent a certain degree
of profitability:

The four categories of product in the BCG Growth Share matrix:

• Stars: These are products with high relative market share and high industry growth rate. Stars should
receive significant investment, as they have the highest future potential.
• Cash cows: These are products with high relative market share and low industry growth rate. Cash
cows should be milked for cash to reinvest in other products.
• Question marks: These are products with low relative market share and high industry growth rate.
Question marks with the potential to become stars should be invested in more deeply. Question marks
without the potential to become stars should be removed from your portfolio.
• Dog: These are products with high relative market share and low industry growth rate. Dogs (Pets) are
not beneficial to business growth and should therefore be liquidated, divested, or repositioned.

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GE-McKinsey Matrix

The GE-McKinsey matrix, also known as the GE Matrix or the nine-box matrix, is a strategic framework that
helps companies analyze their product portfolios and prioritize investments. It's a tool that can help companies
identify which products and services are most important to their growth, and where to focus their resources.

This framework proposes the analysis of product lines or business units based on two criteria: industry
attractiveness and business or competitive strength. These factors are used to create a 3×3 matrix, with industry
attractiveness on Y-axis and competitive strength on the X-axis.

Business units or products in a portfolio are arranged into nine cells in the matrix and evaluated based on the
two axes or factors. Both industry attractiveness and competitive strength are commonly divided into high,
medium, and low. The arrangement of units in the matrix makes managing them easier.

Y-Axis (Industry Attractiveness): Represents how attractive an industry is, considering factors such as
market size, growth rate, profitability, and barriers to entry.
X-Axis (Business Unit Strength): Assesses how strong a specific business unit or product is in comparison
to competitors within the same industry. Factors include market share, product quality, brand strength, and
distribution network.
The matrix is a 3x3 grid, with Industry Attractiveness on the Y-axis and Business Unit Strength on the X-
axis. Each business unit is placed in one of the nine cells based on its performance in these two areas.
The cells are divided into three broad categories:
• Invest: High attractiveness, high strength (top-right cells).
• Hold: Moderate attractiveness and strength (middle cells).

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• Divest: Low attractiveness, low strength (bottom-left cells).

Steps to Use the GE-McKinsey Matrix:

1. Define the Business Units: Identify the distinct units or products within the company that will be
analyzed.
2. Assess Industry Attractiveness: Evaluate the industry based on relevant criteria like market growth,
competitive intensity, and profitability.
3. Evaluate Business Unit Strength: Measure the competitive strength of each unit using factors like
market share, technological capabilities, and cost efficiency.
4. Place Units in the Matrix: Plot each unit or product on the matrix based on its industry attractiveness
and business strength.
5. Formulate Strategic Recommendations:
o Invest: Units in attractive industries with strong competitive positions should receive
investment and growth resources.
o Hold: Units in moderate categories may not need immediate investment but should be
maintained.
o Divest: Weak units in unattractive industries should be considered for divestment or limited
investment.

Importance / Benefits of GE-McKinsey Matrix

1. Multifactor Analysis: Unlike the simpler BCG Matrix, which only considers market growth and market
share, the GE-McKinsey Matrix evaluates nine factors - a combination of industry attractiveness and
business strength. This provides a more comprehensive view of a company’s strategic positioning.

2. Strategic Resource Allocation: The matrix helps managers determine where to allocate resources most
effectively by identifying which business units or products are worth investing in, maintaining, or divesting.
This is critical for maximizing ROI and focusing on areas with high potential.

3. Prioritization of Business Units: By classifying businesses into three categories—grow, hold, or

harvest—the matrix aids in decision-making. High-potential business units receive investment, while those
with low potential are deprioritized or phased out, helping companies focus on their most promising
opportunities.
4. Flexibility: The GE-McKinsey Matrix can be adapted for use in various industries and for different types
of organizations, whether large multinational corporations or smaller companies. It takes into account
specific business dynamics and external market factors, providing flexibility in strategic planning.

5. Long-Term Strategic Planning: The matrix facilitates long-term strategy by enabling companies to assess
future trends in the business environment, such as industry changes, technological advancements, or
evolving customer preferences. This allows for proactive strategic shifts rather than reactive adjustments.

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6. Broad Assessment of Industry and Competitive Strengths: By focusing on both industry attractiveness
(market growth rate, profitability, competitive intensity) and business strength (market position, core
competencies, brand strength), the matrix helps businesses to perform a thorough analysis of their internal
and external environments.

7. Identifying Weaknesses: It highlights underperforming areas or business units that may be a drain on
company resources. These insights enable businesses to take corrective actions, restructure, or even divest
to improve overall organizational health.

8. Supports Portfolio Diversification: For companies managing a broad portfolio of products or business
units, the matrix helps in making informed decisions about diversification strategies. It aids in balancing
risk by investing in a mix of high and moderate-risk business areas while exiting low-return segments.

9. Clear Visual Representation: Like the BCG Matrix, the GE-McKinsey Matrix presents its analysis in a
visual, grid-based format, making it easy for stakeholders to grasp key insights and support discussions
about strategic priorities.

Market Attractiveness & Components of Market Attractiveness

The term market attractiveness is used to refer to the various opportunities that are offered to any firm or any
organization by the market, by acknowledging multiple factors that are present within the market itself.
Market attractiveness is used to describe the various possibilities of the profitability that any firm or
organization can obtain a competitive market place. Now it is generally preferred to have a better market
attractiveness, because the better the market attractiveness is, the more are the chances of obtaining potential
profitability from that market by making investments in it.
Thus, a better market attractiveness means that it can attract more investors to make investments in one
particular market because it has higher chances of giving back profitability. Thus the market attractiveness is
generally the measurement of the opportunities that a specific market promises.

Components of Market Attractiveness

1. Market Size: The total number of potential customers or the total revenue generated in a particular market.
A large market size offers more opportunities for growth and expansion.

2. Market Growth Rate: The pace at which the market is expanding over time, usually measured in terms
of annual percentage increase in sales or number of customers. High growth rate markets offer opportunities
for increasing market share and revenue.

3. Profitability Potential: The ability to generate profits in the market, often influenced by price elasticity,
cost structures, and industry margins. Markets with high profitability potential attract more investments
and competition.

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4. Competitive Intensity: The level of competition in the market, including the number of players, their
market share, and the degree of differentiation between products. A less competitive market is often more
attractive as it may allow for better pricing power and profit margins.

5. Customer Needs and Trends: The current and future needs, desires, and preferences of customers in the
market, including shifts in consumer behavior. Understanding customer trends helps in creating products
that are better aligned with what the market demands, increasing the likelihood of success.

6. Market Accessibility: How easily a company can enter and operate in the market, which includes factors
like regulatory barriers, distribution channels, and tariffs. Markets that are easier to enter and have fewer
regulatory constraints are more attractive for businesses seeking quick and cost-effective entry.

7. Technological and Innovation Landscape: The presence of advanced technologies and innovation within
the market. Markets that are open to technological advancements can offer competitive advantages to
businesses that are able to innovate.

8. Regulatory Environment: The government policies, regulations, and legal frameworks that govern market
operations. A stable and favorable regulatory environment is more attractive for businesses, reducing risks
and costs.

9. Economic and Political Stability: The general economic and political conditions that affect a market,
including inflation, taxation, and the stability of the government. Stable economies and political
environments minimize risks and uncertainties for businesses, making the market more attractive.

10. Industry Structure: The number of suppliers, buyers, and the overall supply chain dynamics in the market.
An attractive market often has a well-structured and competitive industry landscape, ensuring efficiency in
the supply chain and market operations.

Product Market Strategies

Product market strategies are approaches that a company uses to grow its market presence, improve its
products, and maximize its profitability. These strategies define how a company will compete in the
marketplace by focusing on either its products or the markets it serves.

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Aside from being a plan for building the product, product strategy should provide direction to the product
manager and the whole team and set out the steps necessary to turn the product into success. As such, it
involves all aspects of product creation:
● Development
● Marketing
● Sales
● Support

The product strategy serves as a guide throughout the entire product creation process and is essential for both
inbound and outbound product management. Therefore, it is important for the strategy to be visible to the
entire team and stakeholders. A great product strategy should define the following:
✓ Product Vision: The product vision should determine the 'why' behind the product. It should clarify
why this specific product is being built and why it should matter to people. It needs to capture the
essence of what is to be accomplished with the product and how it will improve the lives of its users.

✓ Target Market/Customer Persona: The next step involves answering the question of 'who.' It is
important to determine the target market, which is the segment of people most likely to use the product.
Additionally, defining the customer persona—representing the ideal customer along with their goals,
challenges, buying motivations, and objectives—will be crucial. This information will guide decisions
on the product's design, communication strategies, and outreach methods.

✓ Product Positioning: Product positioning involves defining how the product fits into the marketplace.
Instead of altering the product itself, positioning focuses on the messaging, the presentation of the

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product to the world, and how the audience will perceive it. However, the key aspect of positioning is
to ensure it is realistic, as it ultimately reflects how users perceive the product.

✓ Product Differentiation: Product differentiation should address how the product differs from other
similar products on the market and what unique values it offers that would motivate customers to
choose it over competitors. Conducting a thorough competitive analysis is necessary to understand the
competition and discover ways to outshine them.

✓ Goals and Initiatives: Finally, the product strategy should include clearly defined, measurable, and
time-bound goals to help the team understand what is to be achieved with the product. Following goal-
setting, it is important to define initiatives, which are the high-level efforts necessary to achieve the set
goals.

Product Life Cycle Stages and Corresponding Strategies

The life cycle of a product is the natural process that a product goes through from its launching on the market
until its eventual disappearance.

1. Introduction Stage
Introduction is the first stage of the product life cycle. During this stage, the product is launched on the market
and attempts are made to capture the attention of the target audience, as consumers are not yet familiar with it
and demand is low.
During this first phase, the price of the product is likely to be high due to production and distribution costs.
Companies will need to invest in advertising and promotion to raise product awareness and generate consumer
interest.

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Marketing strategies during the introduction stage

During the introduction phase, it is important to create brand awareness and generate demand for the product.
Some effective marketing strategies for this phase include:
• Promotions: Offering promotions, such as discounts or free samples, helps to attract customers and
create an incentive to try the product.
• Demonstrations: Showing how the product works is a good way to attract the attention of potential
customers and help them understand how the product can benefit them so that they decide to buy it.
• Influencer marketing: Using influencers on social networks is a good option to promote the product
and create brand awareness. For example, a clothing brand may collaborate with a fashion influencer to
show how to combine items in their store.
• Mass media advertising: Use television, radio and print advertising to reach a broad audience and
create brand awareness. For example, a fast-food brand may launch a TV commercial during a major
sporting event to reach a large audience. This point will also depend on the company’s budget.
• Creating unique brand experiences: Create unique and emotional experiences that consumers
associate with the brand. For example, a clothing brand can organize an event in which it invites its
customers and offers different attractive activities. Once the event is over, you will be able to
disseminate all photos and videos on social networks.

2. Growth Stage
During the growth stage, the product begins to gain popularity and experiences an increase in sales and profits.
However, during this stage there is an increase in the number of competitors in the market. Therefore, it is a
critical moment in which it is necessary to focus on promoting and improving the product in order to continue
growing.
It is important to implement strategies to highlight the product and consolidate the brand image in the market.
Marketing strategies during the growth stage
During the growth phase, the objective is to increase market share and build a loyal customer base. Some
effective marketing strategies for this phase include:
• Product customization: Offer customization options to meet specific consumer needs and desires.
For example, an athletic footwear brand may offer online customization options for consumers to
design their own sneakers.
• Exceptional customer service: Deliver exceptional customer service to build customer loyalty and
increase brand loyalty. For example, an electronics brand may offer free technical support and an
extended warranty for its products.
• Market expansion: Identify new market segments or expand geographically to increase market share.
For example, a coffee brand may expand into new international markets to increase its global presence.

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An example of a textile brand that has experienced a successful growth phase is Zara, the Spanish fashion
retailer. During the 1990s and 2000s, Zara rapidly expanded internationally, opening stores around the world
and increasing its online presence.
The brand has been successful in implementing differentiation strategies, such as the production of small
quantities of clothing with exclusive designs, which has helped to create a sense of exclusivity and novelty
among consumers.
In addition, its “fast fashion” business model has allowed it to quickly adapt to the latest fashion trends and
offer new collections in a short period of time.

3. Maturity Stage
The maturity stage is the longest stage of the product life cycle and is characterized by a slowdown in sales
growth.
During this period, demand begins to stabilize and competitors are well established. The price of the product
may decrease further and companies will have to focus on maintaining customer loyalty and improving
product quality to maintain their position in the market.
Marketing strategies during the maturity stage.
During the maturity stage, the objective is to maintain market share and generate consistent profits. Some
effective marketing strategies for this phase include:
• Product diversification: Introducing new products or services to meet changing consumer needs and
desires and to attract new market segments. In the case of a fashion store, you can add new lines in
your stores, such as: maternity, teenager and plus sizes, (in case you do not already include them).
• Cross-selling: The company can offer complementary or related products to encourage customers to
buy more. For example, a camera brand may offer discounts on camera accessories when purchasing
a new camera.
• Continuous innovation: Constantly improve existing products or services to keep up with market
trends and expectations. For example, a technology brand may regularly update its software and
hardware to improve performance and user experience.
• Value-based content marketing: Emphasize the benefits and value of products or services to
maintain the loyalty of existing customers and attract new customers. For example, a personal care
brand can highlight the natural ingredients and quality of its products in its marketing campaign or
write articles of interest to its target audience in a blog on its website.
• Cost-based competition: Reduce production costs and prices of products or services to remain
competitive in the market. For example, a clothing brand can reduce production costs by using cheaper
materials or outsourcing production to other countries.
During the maturity stage, Kellogg’s implemented several marketing strategies to maintain its position in the
breakfast cereal market. The brand launched an advertising campaign comparing its product with that of its
competitors, highlighting the superior quality and taste of Kellogg’s cereals.

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It also focused on product innovation to meet customer demands, launching new products such as organic and
gluten-free cereals.
Finally, the brand also offered cross-selling promotions to encourage customers to buy more products, such
as discounts on cereal bars and dried fruit when buying a pack of cereals.
These marketing strategies were effective in maintaining Kellogg’s as a leading brand in its category, despite
increasing competition in the marketplace.

4. Decline Stage
The decline stage is the period when the product begins to lose popularity and sales. At this stage, demand
decreases and the strongest competitors succeed in eliminating the product from the market. During this phase,
important decisions must be made, such as whether to continue investing or to withdraw from the market.
Marketing strategies during the decline stage.
During the decline stage, the objective is to maintain profitability and minimize losses. Some effective
marketing strategies for this phase include:
• Exit strategies: Identify opportunities to profitably exit the market, such as the sale of assets or the
orderly liquidation of inventory.
• Cost reduction and discounting: Reduce production prices and overhead to increase profitability. For
example, a brand can reduce costs by switching to cheaper materials and eliminating products that are
not selling well. Another option is to offer discounts to get products to sell.
• Focus on the niche market: Concentrate on a smaller, profitable niche market, rather than trying to
compete in a larger, saturated market. For example, a cleaning products brand may focus on pool
cleaning or boat cleaning.
• Brand repositioning: Changing the brand image and marketing strategy to attract new market
segments or to improve brand perception in the current market. For example, a motorcycle brand may
shift its focus from speed and excitement to safety and reliability.
• Reducing marketing spend: Reduce advertising and promotional spending to maximize profitability
and minimize losses. For example, a brand can reduce spending on traditional advertising and focus
on low-cost or organic digital marketing.
During the 1990s, Kodak faced increasing competition from digital cameras. As technology advanced,
demand for traditional cameras declined, leading Kodak into the decline stage.
To adapt to this situation, the company implemented several marketing strategies, including reducing prices,
diversifying into digital photo printing and selling patents for additional revenue.
Despite these strategies, Kodak eventually filed for bankruptcy in 2012. However, this is a good example that
shows how marketing strategies can help companies to face the decline stage and stay in the market, even if
they are not always enough to save the company.

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Competitor Analysis
Competitive analysis in marketing is a process of researching and analyzing competitors to gain an
understanding of their strengths and weaknesses. The goal is to identify opportunities to optimize the
marketing strategy and gain a competitive edge.
Competitor analysis provides both an offensive and a defensive strategic context for identifying opportunities
and threats. The offensive strategy context allows firms to more quickly exploit opportunities and capitalize
on strengths. Conversely, the defensive strategy context allows them to more effectively counter the threat
posed by rival firms seeking to exploit the firm’s own weaknesses. Through competitor analysis, firms identify
who their key competitors are, develop a profile for each of them, identify their objectives and strategies,
assess their strengths and weaknesses, gauge the threat they pose, and anticipate their reaction to competitive
moves. Firms that develop systematic and advanced competitor profiling have a significant competitive
advantage.

Identifying Current and Potential Competitors

To identify their current and potential competitors, firms have to use both an industry approach as well as a
market approach. The industry approach will yield insights on the structure of the industry and the products
offered by all market participants. The market approach on the other hand, focuses on the customer need and
the firms attempting to satisfy those needs, which will provide the firm with a wider view of current and
potential competitors. Sources of potential competitors include (but are not limited to) firms which compete
in a related product, use related technologies, already target the same market even if with unrelated products,
operate in other geographical areas with similar products and, last but not least, new start-ups organized by
former company employees and/or managers of existing firms. Firms focusing on the same target market with
the same strategy constitute a strategic group and are the closest competitors to firms intending to enter such
a group.
1. Industry-Based Analysis
An “industry” is defined as a group of firms whose products and services are close substitutes of each other.
Industries are primarily classified according to the number of sellers involved and the degree of product
differentiation. Other factors characterizing an industry’s structure are: entry/exit barriers, cost structure,
degree of vertical integration and extent of globalization. Based on number of sellers and product
differentiation, industries are commonly classified as a: monopoly, oligopoly, differentiated oligopoly,
monopolistic competition, or pure competition. Each category is described below.
✓ Monopoly exists when only one firm supplies a given product/service in a certain country or area. A
common example is the distribution of electrical power to residential and commercial customers.
Given that customers have no alternatives, an unregulated monopoly seeking to maximize profits has
a demonstrable incentive to charge a higher price, do little or no advertising and offer minimal service.
A regulated monopoly, on the other hand, is required to charge lower prices and provide more services
in the public interest.
Monopolists might be willing to make some investment in service and technology in a situation where
partial substitutes for their products or services are available or when there exists imminent

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competition. Electric power generation and distribution are good examples of this behavior, with recent
developments in alternative energy sources and technological improvements in electric power use.

✓ Oligopoly consists of a few firms producing basically the same commodity, such as Mobil, Shell and
Sunoco, in the fuel industry. It is difficult for any single company to sell fuel products above the going
price unless it can differentiate its product line in some way.

✓ Differentiated oligopoly refers to an industry in which a few firms produce partially differentiated
products, such as Sony, Canon and Nikon in the digital camera industry. Differentiation is based on
specific product attributes such as quality, special features, styling or services. Typically, competitors
will seek to be the leader firm for a certain attribute, attract customers who value that particular
attribute, and charge a premium for it.

✓ Monopolistic competition refers to a situation where several competing firms in an industry are able
to differentiate their offer in whole or in part. Such is the case of supermarket companies like Wegmans,
Tops and Price Chopper in the supermarket industry in Upstate NY. In this context, competitors
typically target those market segments where they can better meet the customer’s needs and thereby
command a price premium.

✓ Pure competition takes place in industries in which many firms offer the same product/service.
Because there is no differentiation among offers, prices are the same for all firms, such is the case of
most agricultural products sold as commodities (e.g. wheat, cabbage, onions). There is no benefit to
advertising and seller’s profits will only be different to the extent that they can achieve lower costs of
production or distribution.

2. Market-based Analysis
From a market perspective, rather than looking at companies making the same product as its only competitors,
a firm looks for its competitors among those companies that satisfy the same customer need. To avoid falling
into the Marketing Myopia trap, however, and in order to include all actual and potential competitors, this
need has to be defined as broadly as possible.
For example, in the coffee business, a company like Nestle envisions as its direct competitors’ other companies
that sell coffee such as Maxwell House and Taster’s Choice but should also consider its indirect competitors.
These would include any manufacturer that provides coffee makers that compete with its Nespresso coffee
makers such as Keurig and Mister Coffee.
The range of current and potential competitors is broad. On the basis of the degree of product substitution, for
example, companies can face brand competition, industry competition, form competition and generic
competition.
✓ Brand Competition: the firm considers other firms offering a similar product/service to the same
customers at similar prices as its competitors.
Example: Coca Cola would see Pepsi Cola as its main competitor.

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✓ Industry Competition: the firm uses a broader approach and sees as its competitors all firms making
the same product or class of products.
Example: Coca Cola would see all other soda manufacturers as its competitors.

✓ Product Competition: the firm uses an even broader approach and sees its competitors as firms
manufacturing products that supply the same service.
Example: Coca Cola would see all other carbonated beverages manufacturers as its competitors.

✓ Generic Competition: the firm could use a still broader approach and see its competitors as firms
that compete for the same consumer dollars.
Example: Coca Cola would see all other beverages suppliers as its competitors.

Steps in conducting a competitor analysis:

1. Identify the Competitors
2. Analyze Competitor Products and Services
3. Understand Competitor Target Audience
4. Examine Competitor Marketing Strategies
5. Assess Competitor Pricing and Sales Strategy
6. SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)
7. Monitor Competitor Online Presence
8. Benchmarking
9. Evaluate Competitor Partnerships
10. Adapt Your Marketing Strategy

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