Competitor Analysis | Our Services | Ruby Cha Cha

Competitor Analysis

Competitor analysis is an essential component of any corporate strategy and there’s a strong need to know what your rivals are doing. Researching your rivals and having superior knowledge of them gives you a legitimate competitive advantage.

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“Know your enemy,” said Sun Tzu in The Art of War.

Perhaps this is a stark way of summing up what competitor analysis is, so let’s also turn to the Business Dictionary for a more rounded definition:

“Strategic technique used to evaluate outside competitors. The analysis seeks to identify weaknesses and strengths that a company's competitors may have, and then use that information to improve efforts within the company. An effective analysis will first obtain important information from competitors and then based on this information predict how the competitor will react under certain circumstances."

American academic Michael Porter developed the analysis model 'Porter’s Five Forces' as a framework of competition, to demonstrate how profitability for a brand can be affected from up to five different kinds of competitors (aka the Five Forces).

This in itself raises an interesting question on how broadly or narrowly we can define the marketplace for a brand; and has implications for any research design Ruby Cha Cha applies to understanding a particular brand’s competitive set.

Let’s illustrate Porter’s Five Forces by applying it to Netflix in Australia, to understand where they face competitive pressures. You could easily create quite a broad market definition of ‘Video Entertainment’ or ‘TV and Movie Content’ or ‘Entertainment’ or even ‘Leisure Time Fillers’; but for argument’s sake, let’s say it’s “SVoD / TVoD Providers”.

Threat of Substitutes:

For the SvoD / TVoD industry this would be the likes of Foxtel, the humble (but dwindling) DVD home rental market, TV channels and even the cinema. All of which are competing on the need for visual entertainment.

Threat of New Entrants:

Outside of Australia there are other SVoD / TVoD providers such as Amazon Prime, HBO Go and Hulu and these could be viable competitors for Netflix’s bottom line if they were to launch here.

Bargaining Power of Suppliers:

Netflix relies on being able to secure the distribution rights of films and programming. Their offer can be squeezed by studios or broadcasters who may charge too much for their content or not provide it at all (e.g. HBO do this for their own commercial gain, allowing them to hold a competitive advantage if they become a new entrant).

Bargaining Power of Customers:

In Netflix’s market this is relatively low because there are few alternatives for customers and typically customers will not band together to raise their opinions as a collective.

Industry Rivalry:

This is a typical lens we use when looking at competitors from a market research sense. These are the brands who drive the competitiveness of the industry and are the primary options consumers are choosing between. For Netflix this is iTunes, Stan and Presto.

Using a framework such as Porter’s Five Forces allows us to design a research programme which focuses on the most relevant source(s) of competition for your brand. We start by exploring the wider context through secondary research; hone in by becoming the consumers; and talk to consumers who are making the purchase decisions.

Starting with secondary data sources, we can define the scope of the competitive landscape, get to grips with the identified marketplace and understand what knowledge gaps exist.

Useful secondary research includes:

  • Applying Semiotics: What meanings are associated with the category? This helps us to decide how wide reaching our market definition, and therefore competitive landscape, has to be.
  • Social Media and Media Reviews: Shows us what marketing activity the competition are rolling out and provides insight on what their strategies are.
  • Sales Data: Tells us which product lines are most important and which are growing.
  • Annual Reports: Gives us a review of the corporations recent success stories, short term & longer term goals and financial performance.

Once we know the scope of the competitive set and what they’re up to, it’s time to become the consumer in the market place through some Mystery Shopping Research:

  • What are they doing well on the pathway to purchase?
  • What weaknesses are apparent?
  • How are the sales staff?
  • What is the store layout like?
  • How does the website perform on different devices?

And the final stage is to apply a level of quantification to the stories we’ve uncovered from desk research and Mystery Shopping. Using a focused U&A study on the most important elements which make up the category:

  • Talking to an audience defined by the needs the category fulfills.
  • Covering the relevant brands who will be competing for your bottom line.
  • Investigating the relevant touch points which drive the category.
Ruby Cha Cha ensures that the culmination of all our efforts will be to show you how to capitalise on your strengths, exploit your competitors’ weaknesses, identify the best market opportunities and outline how to defend against identified competitive threats.

Get in touch with Ruby Cha Cha

Get in touch with Ruby Cha Cha