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5.3.1.7. Phase 2 Tools: Competitors

"Spiderweb" Chart

Another effective way to conduct competitor benchmarking is to ask about key attributes on a quantitative scale. An example from Ecuador tourism[1] is below. This output is the result of a series of quantitative survey questions that asked outbound tour operators (channel partners) to rank a set of competitor countries on attributes that are important in the sector.


Spider Diagram Ecuadorian Tourism

This is an example of a spider diagram used to rank competitors in a market. Each firm is graded on their relative level of experience, comfort, security and value.

Cost, Quality, Flexibility and Service Analysis

A useful framework for structuring this type of research is the Cost, Quality, Flexibility and Service model (CQFS).[2] These attributes are then compared to the competition to identify what the benchmark is for each category. Due to trade-offs, it is impossible for a value chain or firm to win in all four areas, but an advantage is necessary in one or two of the attributes in order to win the market. This tool is designed to identify the criteria needed to just “play the game” versus the criteria needed to “win the game”. As is seen in the graphic below, firms and value chains from different countries can choose to compete on different factors. In the case of the Indian market, Afghanistan had fortuitously followed a strategy that both matched its strengths and was quite different from the strategy of its competitors. For example, given huge economies of scale and good logistics, U.S. products competed mainly on a good price and reliable delivery for a mediocre product. On the other hand, the vast array of DFN available in Afghanistan allowed its exporters to pursue a different strategy; a huge selection of high quality and premium priced products. This difference in the basic positioning actually set products from the two countries apart in the perceptions of buyers despite the fact that they were sold next to each other in wholesale and retail outlets. A brief explanation for each of these attributes follows:

  • Cost: roughly translates to price
  • Quality: meets or exceeds customer expectations for key non-price product attributes
  • Flexibility: broad range of products and able to change product mix rapidly
  • Service: product is there where and when it is required.

To contribute to the market activation strategy to enter the Indian market, the team conducted the following analysis of Afghanistan compared to a few key competitor countries to clearly understand their value proposition in the market and how the Afghan DFN value chain could at least match their performance or differentiate itself by focusing on different attributes. The key learning from this analysis is that Afghanistan was by default pursuing a strategy different from its competitors and one that appeared defensible based on its cost disadvantages of being a landlocked country with poor infrastructure.


CQFS Analysis: Afghanistan versus Key Competitors

Criteria
 
Countries
Afghanistan
India
U.S.
Iran
Cost
 
 
 
 
Quality
       
Flexibility
       
Service
       
Strategy Summary
Afghanistan currently wins with high quality based on a natural bran and a wide range of DFN. Transport & logistics difficulties drive up costs and make timely delivery difficult. India wins by keeping costs (and quality) low while providing their limited range of products to wholesalers where and when it is needed. The second largest exporter of raisins in the world, economies of scale and excellent logistics systems allow the US industry to reliably and inexpensively a narrow range of generic goods globally. Iran grows some but not nearly all the products that Afghanistan has to offer the market. Commercial farming methods and sea access to the Indian market give the Iranians a cost advantage while delivering a nearly identical product.
Legend
Qualifying
Winning

Footnotes

  1. Nature-Oriented Tourism in Ecuador: An Assessment Applying the Value Chain and Nature, Wealth and Power Frameworks, Fries, Robert; Correa, Marcela; Pool, Douglas; Rodriquez, Arnaldo, 2006.
  2. CQFS Framework created by Professors Ken Homa and Ricardo Ernst, Georgetown University – McDonough School of Business.