Factors influencing competition
Industries have distinctive idiosyncrasies of their own and these idiosyncrasies alter over time. They are often referred to as the dynamics of the industry. No matter how hard a company tries, if it fails to fit into the dynamics of the industry, ultimate success may not be achieved. Porter (1985) sees competition in an industry being governed by five different sets of forces (Figure 6.1).
Citing these five ‘forces’ is rather arbitrary, since a sixth force, government regulation, is often the most significant influence in determining the profitabil ity of an industr y. In fact, when Por ter studied the pharmaceuticals and airline industries he discovered that government regulation
Actually identifying competition may not always be quite straightforward. It is important to be able to correctly identify different types of competitors so that suitable reaction to their marketing strategies and tactics can be put into practice as and when required.
The various bases of competitive advantage are discussed and reference is made to Porter’s strategic thrust typologies. This is then followed by a discussion of the various typologies of competitors that can be identified and the kind of strategy each one employs. Finally, the chapter ends by looking at how to assess competitors’ strengths and weaknesses and the sources of information that should be consulted to make this possible.
Various competitor typologies are considered—leader, challenger, follower, nicher—along with their implications for approach to marketing strategy. Attention is then given to ways and methods of obtaining information about competitors’ actual and planned activities. In particular, attention is given to market signalling actions and their interpretation.