competitor analysis and competitive advantage

Marketing-orientated businesses need to do more than just meet customer needs. To succeed and prosper, a business also needs to meet customer needs and wants better than the competition. In other words - the business needs to seek competitive advantage.

A competitive advantage is a clear performance differential over the competition on factors that are important to customers

Competitor actions have a direct effect on the profitability of a business. These may include:

• Price cuts

• Launching a rival product

• Aggressive expansion of production to increase market share

• Inclusion of significant (possibly costly) modifications to a product which other competitors must also undertake

The diagram below shows the impact of varying levels of competitor action on the profits of a business: