Customers Perception of Competitors

The real test of the strength of the competitor is how well he and his products are perceived by target customers. If the customer’s perceptions are negative and he feels that he has to buy the competitor’s product only because of limited choice, then it is perhaps a very comfortable position for any new entrant. For example, until the launch of Maruti, one often heard the customer express a sense of resignation when he said that he had no alternative but to buy an obsolete model of Premier or Ambassador or a high priced car.  In a way, he was indicating a market opportunity which was still available in the automobile industry in India. Likewise, before 1984 the customer often had to wait for as many as nine to ten years to get a new Bajaj scooter. This clearly provided an opportunity to any new entrant. What is important is to assess the customer’s perception about the quality of service provided by the competitors. This quality of service can be measured on the following five parameters:

  • Reliability
  • Responsiveness
  • Empathy
  • Assurance
  • Tangiblity

Further, the customer’s perception of competitor’s overall reliability also needs to be assessed. The concept of overall reliability includes product, service, delivery and even price dependability. It is on these parameters that most Indian companies have lost to foreign companies.

In any given market segment a competitor’s market share is dependent on the customer’s perceptions. Higher market share in a segment reflects a firm’s leadership in that particular segment. It is necessary to note that the market share of any competitor is always to be measured in the served market. For example, a consumer durables manufacturer may market its products in all regions other than the east.  Its market share will have to be examined in all zones other than the eastern region. Likewise, this company may be serving only the major cities in these regions. Therefore, market share will need to be assessed in these cities only.  Hence, a statement like the firm enjoys 40 per cent market share is meaningfulness.

Another area that needs to be examined relates to the relative brand power of the item in its served markets. Relative brand power refers to the degree to which customers feel connected to the firm’s brand as opposed to its competitor.

It is important to study all these aspects because a firm with a strong brand power cannot be dislodged easily in its served markets.

Success often blinds firms and therefore a market analysis may help a firm identify gaps left by the competition. These gaps may be  in distribution, product mix, or the service policy. For example, a firm may continue to market its products to higher income groups and do nothing to take care of other income segments who might also be interested in buying its products. A clever firm can identify this gap and successfully take advantage of this situation. For a long time Unilever refused to accept that there were opportunities in the Indian market to introduce a low priced detergent powder and also in other new product categories. Levers initially fought the Nirma onslaught through the premium quality detergent powder, Surf in an aggressive price promotion mode. These myopic managers could not stop the decline of Levers’ share in the detergent market and Nirma continued to ride a high crest of popularity purely because it was the middle class housewife’s product. It was only when Lever came up with different detergent powders positioned at different market segments based on an analysis of price sensitivity behaviour could it stop the decline.

Likewise, in an industry where the dominant practice is to deliver service only at company outlets, any firm can gain advantage if it were to reverse the practice by delivering at the customer’s end or empowering the customer to self serve and resolve his /her problem. The strategy of installing offsite ATMs nearer to the customer’s place of residence, work, shopping area, airports and railway stations has provided a definite competitive edge to ICICI Bank over all other banks. Similarly, Domino’s Pizza‘s  strategy  of a country wide common toll free number for taking customer orders and delivering standardized or customised pizzas to customers in 30 minutes has given it a distinctive edge in the fast food industry. This was in sharp contrast to the strategy adopted by other fast food firms and restaurants that had no such provisions.

Another parameter of competitor analysis requires the strategist to develop a strategic profile of the principal competing firms in the industry. Taking into consideration the financial structure, perceived strengths and weaknesses, the strength of possible retaliation, and overall performance of the competitor against that of other players in the industry. The assumption in this framework is that any move by a firm are a function of its past and current situation and perceived future. The past is an indicator of a firm’s growth over a period of time and also its competencies. It does indicate the firm’s relative strength in the market and the industry.

  • i just want share my opinions as a costomer. i choose a product that i dont have much knowledges about it based on two main factors: price and user review. Price is very easy to know, but user review, i susually get from : social networking and the brandpower ( if the product have a TOP BRAND attribute).