The Strategic Group Map and The Strategic Canvas
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Transcript The Strategic Group Map and The Strategic Canvas
Competitor Analysis
and
Multimarket Competition
The Role of Competitor Position
in Crafting Strategy
Know Your Rivals
What: their objectives and strategies
Why? to predict their future strategies
• Why? to guide own strategies
What: their strengths and weaknesses
Why? to compare with own strengths and weaknesses
• Why? to evaluate opportunities and threats
–Why? to build and sustain own position
Sources of information
Recorded data, e.g, annual reports; press releases; newspaper articles;
analyst reports; tender offers; regulatory reports; government reports
Observable data, e.g., pricing; advertising and promotion; seminars and
conferences; patent applications; presentations/speeches; trade shows
Opportunistic (anecdotal) data: from suppliers; distributors; customers
and competitors; ex-employees
Hard-to-find information
Overall sales and profits
Sales and profits by market
Sales by main brand
Cost structure
Market share (revenues and volume)
Organization structure
Distribution system
Advertising strategy and spending
Customer/consumer profile & attitudes
Multimarket Competition
What: firms competing against each other in several markets in, e.g.,
different geographical markets for the same products
different parts of a vertical
substitute markets
Why
Increase in related product diversification
Increase in geographic market diversification
Greater use of coordinated worldwide strategies
Results
“Mutual forbearance”: benefit of aggressive action in any market is
reduced because rivals can retaliate in multiple common markets
True for repeated actions (e.g., promotional activities) but not
introduction of innovations
Visual Aids
Multimarket Competitor Chart: displays competitors in common markets
Strategic Group Map: displays clusters of rivals along two dimensions of
industry positioning
Simple Multimarket Competitor Chart
2000
Firm
Operating
Systems
Google
Apple
X
Email
Photo Online Mobile
Editing Adv.
Phone
X
X
X
X
X
2011
Firm
Operating
Systems
Google
Apple
X
Email
Photo Online Mobile
Editing Adv.
Phone
X
X
X
X
X
X
X
X
Global Product-Market Competition
Industry/
Country
Industry/
Country
Industry/
Country
Industry/
Country
Client
Products:
a, c
Products:
c, d
Products:
a, b, c
Products:
b, c, d
Competitor #1
Products:
a
Products:
e
Products:
c, e
Products:
d, e
Products:
a, b, c, d, e
Competitor #2
Competitor #3
Products:
a, e
Competitor #4
Products:
a
Products:
a, e
Products:
a, b
Products:
a, b
Segment Multimarket Competition
Pet Food Industry
Economy
Average
Gourmet
Dog Food
Cat Food
Dry
Wet
Moist
Snack
Strategic Group Maps
A strategic group consists of rival firms with similar competitive strategies
and positioning in an industry
A strategic group map displays clusters of groups within an industry based
on two variables that you choose for their strategic significance.
Some Strategic Variables
Specialization
Brand identification (private label, brand)
Distribution channels
Product quality
Vertical integration
Cost position
Service
Price point
***Outcome variables like profit and market share should not be used to
distinguish competitive groups
Constructing a Strategic Group Map
1. Choose two variables that distinguish competitors
Maximize contrast
Minimize correlation
2. Plot on graph
3. Represent firm/group size with circle proportional to market share
OR
1. Begin grouping firms and then identify variables
2. Position firms on map
3. Represent firm/group size with circle proportional to market share
Example of Strategic Group Map in Stage 1
Luxury Goods Market
Hermes
10
Quality Level
Loro Chanel
Piana
Louis
Vuitton
Tiffany
Burberry
Gucci
1
$350
$500
Price Point
$1500
Luxury Goods Market: Potential Variables
Target customer*
Top tier: (24%) not affected by business cycles
Aspirational: (36%) upper middle class; make luxury purchases “AOAP”
Accessible luxury: (40%) affluent middle class; make occasional luxury
purchases when times are good
Scope of products sold
Degree of vertical integration
Distribution channel
* Research by Bain and Co.
Interpreting the Map
Fiercest rivalry occurs within strategic groups
The closer the clusters, the stronger the rivalry
Firms attempt moves into different segments as industry conditions change
Mobility barriers: group-specific entry barriers that restrict movement
across groups
Identify mobility barriers