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Competitive Intelligence: How to Analyze Sales of Mature Market Divisions

Business theorists use the term frame-breaking change to describe tsunami-like moments in a business area, which is important to include in all competitive intelligence work. When frame-breaking change occurs, all the old rules of the game (and success factors) cease to apply and the existing product families or industries generally cease to exist.

Mature markets tend to be more susceptible than other types of markets to frame-breaking change. Just think of the (vinyl) record industry. Thanks to the digitizing of music and the storing of tunes as digital files, the need and usefulness of vinyl records and record players all but disappeared.

When you see a competitor trying to extend the life of a mature product line, dig deeper to make sure you understand what’s happening and the reason or strategy behind it. Conduct additional research to answer the following three questions:

  • Is the competitor number one or two in the market? If not, any efforts on its part to extend the life of a mature product line are likely to fail. Generally, lower-ranked companies have higher costs due to lower volumes, which leads to lower economies of scale when applying fixed costs per product.

    If a back-of-the-pack competitor tries to extend the life of a declining product, that usually means they’re limited on cash or have bad strategy. Only the leaders (who are usually the low-cost producers because of historically high volumes) can afford to try to stretch out a dying product (their cost is much lower in most cases).

    Additionally, as the phenomenon of experience curves reveals, the manufacturer that has produced the most products can usually produce them at the lowest costs. (To find out more about experience curves, check out Perspectives on Experience by the Boston Consulting Group.)

  • Is the competitor extending the life of the product to take advantage of economies of scope? Economies of scope involve multiple products that utilize many of the same components. For example, if a company makes a camera and a projector and is using the same lens in both, the combined volume of the lenses may keep its costs lower than those of competitors in each product area.

  • Is the competitor extending a product beyond its normal life cycle so it can hold off on developing new products to keep short-term profits higher? This type of strategy is high risk and may indicate that the competitor has other problems you may need to investigate.

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