Strategic Marketing Management

The nature and intensity of competition in a market depends upon five main forces - the threat of new entrants, the bargaining power of the suppliers, the bargaining power of the customers, the threat of substitute products, and threats from the present competitors. Competition enables a company to perform better than its rivals in the marketplace. In order to formulate effective strategies, a company has to have extensive knowledge about the competitors. Competitor analysis helps a company to identify the key competitors in the market, their strengths, weaknesses, and what makes the competitors successful.

This analysis enables the company to discover the reasons for a customer selecting their product rather than the competitors' products, and thereby helps it to provide superior value to the customers. However, some companies overlook such an important analysis in their management process. The absence of competitor analysis in a company can be attributed to overconfidence, confusion, legal concerns, and misinterpretation of information on the part of the management.