How to Use Competitor Response Modeling to Forecast Competitor Actions Accurately

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How to Use Competitor
Response Modeling to
Accurately Forecast Potential
Competitor Actions
A Complimentary Webinar from Aurora WDC
12:00 Noon Eastern /// 18 September 2013
~ featuring ~
Fred Wergeles Dr. Craig Fleisher

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Fred Wergeles
Fred Wergeles is the founder and Principal of Fred Wergeles & Associates
LLC, a consulting practice that specializes in Strategic Planning and
Competitive Intelligence process improvement. He has over 25 years of
experience managing intelligence collection and analysis in support of
strategic decision making in both the federal government and a Fortune 100
corporation. He has advised companies in a diverse array of industries,
including utilities, telecommunications, insurance and financial services,
pharmaceuticals, advanced manufacturing, consumer products, and high
tech start-ups. Fred is an adjunct professor at the University of Hartford and
the President of a non-profit organization providing business analysis to
entrepreneurial start-ups. He is the Chair of the Connecticut SCIP chapter
and received the SCIP Fellows Award in 2012.
Email: fred@intelstrategy.com
The Intelligence Collaborative is the online learning and networking
community powered by Aurora WDC, our clients, partners and other friends
and dedicated to exploring how to apply intelligence methods to solve real-
world business problems.
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more about Aurora at http://AuroraWDC.com – see you next time!

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Questions, Commentary & Content

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Agenda
► What is the Competitor Response Model?
► How can it help?
► Brief review of the analytical process
► How to use the results
► Summary, Q&A and Discussion

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What Does the Future Hold?
Good, Bad or Ugly -- Is It
Impossible to Predict What's
Ahead for the U.S. Economy?
Which Countries Are
Economic Winners
and Losers?
Nanotechnology's
Obstacles Are
Tremendous
Consumers Are
Paralyzed Over
Tax Doubt
Consumers Remain
Baffled By Health Law,
Poll Shows
Uncertainty Is Certain Next Year
Business Strategy in an
Uncertain Economy: Grow
for Today, or Grow for
Tomorrow?
Companies Fret Over
Uncertain Outlook
Direction of Dollar
Is Unclear
Lack of Grand Bargain
Complicates Obama's
Priorities

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“What’s going to happen next?”
"The only function
of economic
forecasting is to
make astrology
look respectable."
John Kenneth Galbraith

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What is a Competitor Response Model?
► Analytic tool to forecast potential
competitor actions
► Anticipate potential market reactions
► Identify key indicators of competitor
activity
► Helps companies plan product/marketing
strategies and counterstrategies

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“Any war plan that depends on the cooperation
of the enemy, is likely to fail.”
► How will our competitors react to our
new product launch?
• How will our competitors position their products
prior to our launch ?
• How will our competitors try to limit the success
of our new product ?

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The Competitor Response Modeling Process
Identify
Competitors
Goals
Objectives
Develop
Hypotheses
Scenarios
“What-ifs”
Analyze
Capabilities
Can They
Achieve their
Objectives ?
Develop
Possible
Response
Set
Prepare
Contingency
Strategies
Identify Key
Indicators

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Assembling the Parts of the Puzzle

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Case Study: Quick Serve Restaurants
► Major fast food brands are battling for their
share of the highly contested breakfast
market: SBUX, McD, DD, Subway
► Wendy’s, Burger King and Taco Bell are the
new upstarts in the breakfast category
► 64% of Americans visited a quick-service
restaurant once for breakfast in 2011
► Over the years, each company has introduced
new items and strengthened existing items in
order to maintain market share and profits
► More recently, each company has dabbled in
using social media to promote its breakfast
offerings

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Case Details – “A New Wrinkle”
► Burger King is planning to launch
new premium coffee drinks and a
fortified “all-in-one” nutritional
breakfast meal – the
“Mega-Croissanwich”
► BK intends to launch a splashy
multi-media marketing blitz
including social media, TV, radio,
and newspaper spots.
The pre-launch buzz suggests this new entry may be a
game changer, striking a chord with the health-conscious,
on-the-go, all-important 18-40 demographic.

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CRM Step #1:
Identify Competitors & Other Players
► Traditional
► Non-Traditional
► Other Stakeholders (Influencers)

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CRM Step #1:
Define Market Objectives
► Market Share vs. Profit Margins
► Increase Revenues, Cash Flow
► New Customer Segments
► Image
► Innovation Leader
► Differentiation through product performance
► Low Cost provider
► Others
► Become #1 or #2 in every category
► Advocacy, Policy leader

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CRM Step #2:
Generate Hypotheses - Scenarios
► “Crystal Ball”
► Past Analogies
► Successes
► Failures
► But, avoid mirror imaging
► Leadership Analysis
Hypotheses:
Given their market objectives, what
might the competitors do?
Scenarios:
How, When, Where could they do it?
• Brainstorming with a creative team is key
• Explore all options
• There are no incorrect “answers”

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CRM Step #3:
Competitor Capabilities
► Financial Strength
► Manufacturing Capacity
► Distribution Capabilities
► Technological Resources
► Marketing & Sales Capabilities
► Management Team Experience
► Innovation and Market Leadership
► Alliances

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CRM Step #4:
“Triage”: Prioritizing the Responses
► Identify resources likely to be applied
to competitive responses
► Identify special circumstances,
conditions
► Eliminate hypothetical responses that
are not viable
► Rank potential responses
► Likelihood
► Impact
► Timing

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CRM Step #4:
Prioritize Potential Responses
Competitor or
Stakeholder
Product Objective Potential Response(s) Likelihood Impact Timing Rank
Traditional:
McDondalds
Egg McMuffin
Biscuit sandwiches
McGriddles
maintain or expand
share of customers'
breakfast QSR
spending
Additional advertising
Additional promos for curr. menu
"Me Too" nutritional sandwich
Abandon market – introduce truly
health conscious breakfasts
High
High
Moderate
Low
Moderate
Moderate
High
High
Near-term
Near-term
Mid-term
Near-term
Non-traditional:
Local Sit-down
Restaurant
Traditional breakfast menu
Add health conscious options
Offer more
comfortable (but more
expensive) experience
Additional (health conscious)
advertising in local papers
Additional promos for current & new
menu offerings
Moderate
Moderate
Low-moderate
Low-moderate
Near-term
Near-term
Stakeholder:
Center for
Science in the
Public Interest
Health Newsletter
Policy Advocacy
"organized voice of the
American public on
nutrition, food safety,
health and other
issues"
Campaign against the “Mega-
Croissanwich”
"Wall of Shame"
Low-to-
Moderate
Low-Moderate Near-term

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CRM Step #4:
Prioritize Potential Responses
Competitor or
Stakeholder
Product Objective Potential Response(s) Likelihood Impact Timing Rank
McDondalds
Egg McMuffin
Biscuit sandwiches
McGriddles
maintain or expand
share of customers'
breakfast QSR
spending
Additional advertising
Additional promos for curr. menu
"Me Too" nutritional sandwich
Abandon market – introduce truly
health conscious breakfasts
High
High
Moderate
Low
Moderate
Moderate
High
High
Near-term
Near-term
Mid-term
Near-term
Local Sit-down
Restaurant
Traditional breakfast menu
Add health conscious options
Offer more
comfortable (but more
expensive) experience
Additional (health conscious)
advertising in local papers
Additional promos for current & new
menu offerings
Moderate
Moderate
Low-moderate
Low-moderate
Near-term
Near-term
Center for
Science in the
Public Interest
Health Newsletter
Policy Advocacy
"organized voice of the
American public on
nutrition, food safety,
health and other
issues"
Campaign against the “Mega-
Croissanwich”
"Wall of Shame"
Low-to-
Moderate
Low-Moderate Near-term

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CRM Step #5:
Develop Intelligence Indicators
► How will scenarios play out?
► Under what circumstances?
► Identify specific “precursor” events
► Early Warning Indicators
► Develop Monitoring System
► Develop Alert Process

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CRM Step #6:
Develop Counterstrategies
► Plans in place to react to Intelligence
Indicators
► Prepare responses
► Offensive
► Defensive
► “War Gaming”

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Fred Wergeles
Thank you!
Now how about a little Q&A?
Email: fred@intelstrategy.com
The Intelligence Collaborative is the online learning and networking
community powered by Aurora WDC, our clients, partners and other friends
and dedicated to exploring how to apply intelligence methods to solve real-
world business problems.
Apply for a free 30-day trial membership at http://IntelCollab.com or learn
more about Aurora at http://AuroraWDC.com – see you next time!

How to Use Competitor Response Modeling to Forecast Competitor Actions Accurately

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