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Sunday, November 22, 2009
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ISSUE 53
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Heading them off at the pass.
Fred Wergeles, Fred@IntelStrategy.com
Your company, a growing mid-tier consumer products manufacturer, is planning to introduce a new product in the next few months. There are considerable risks in introducing what you expect to be a “game changer” – an innovative leap in the market.
Your marketing department is working overtime to plan the launch at an upcoming trade show – product demonstrations, press releases, testimonials, and endorsements from beta testers. Everything is in place to make the best impression with the media and your customers.
But have you forgotten a critical aspect of your product launch? Have you neglected an essential piece of your carefully planned success strategy?
Anticipating competitor moves
Not only will your customers, industry experts, and journalists be watching your presentations; your competitors surely will be scrutinizing your product and making plans of their own. They are not going to remain idle while you redefine the market – they will do their utmost to limit the impact your product will have on their market share.
But how will they respond? Is there a way to predict their actions? Can you anticipate their moves and head them off at the pass?
Competitor response modeling
One useful technique used by experienced competitive intelligence (CI) practitioners is a competitor response model. It provides a framework for predicting competitors’ reactions and resulting strategies before they are implemented. Companies also use the competitor response model to warn them of their competitors’ activities, plan their own counterstrategies, and neutralize likely competitor responses.
Most likely, the resources needed to apply this model already exist within your company: market research, the product launch strategy, and detailed information on your competitors. The technique involves a structured interdisciplinary exercise to analyze all the available information:
- Define the universe of your competitors – both traditional and potential new players
- Identify and analyze your competitors’ market objectives
- Generate various hypotheses and scenarios for each competitor
- Analyze and rank likely competitor responses
- Identify key indicators of competitors’ responses
- Develop contingency plans
A case study
Let’s say your company is ready to introduce a new portable audio player. Not only will you need to evaluate the Apple iPod and other MP3 players currently on the market, but you should also look at potential rivals offering satellite radio.
Will they begin to offer personal receivers as well as car radios? Will your competitors take advantage of emerging audio technologies to leapfrog your product? You will need to assess each of your rival’s market strategies and determine the strengths and weaknesses of each product.
Which competitor will feel most threatened by your new product? Which ones have the capability to respond to your product entry? How have they responded to challenges in the past?
By using the competitor response model, companies can better understand their competitors’ motivations, goals, and capabilities. The model also enables your company to rehearse various scenarios and devise counterstrategies to stay one step ahead of the competition. This CI technique is an effective and low-cost way of ensuring your product launch will achieve its intended sales goals.
About the author
Fred Wergeles is the President of Fred Wergeles & Associates LLC, a Connecticut-based consulting firm specializing in Competitive Intelligence and Strategic Planning. He serves as the Coordinator of the Connecticut Chapter of the Society of Competitive Intelligence Professionals, and was recently presented with SCIP’s Catalyst Award for his contributions to the CI profession. Fred also teaches a class in Competitive Intelligence at the University of Hartford Barney School of Business. He can be reached at (860) 408-9093 or via e-mail at Fred@IntelStrategy.com
[PRINTER FRIENDLY VERSION]
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