A structure which describes the current status of a product in a market is called competitive structure. This structure indicated the following:
• Number of competitors
• Levels of demand and supply in the market
• Ease of entry into the market
• The relative strengths of all the competitors
Competitive structure may also refer to a system to evaluate the services or goods of an organization with the goal of searching the way to compare these services or goods to similar type of offerings in a competitive market.
Companies use the study of competitive structure to analyze their offerings while potential investors use this method to access their chances of success in response to the current market state.
Examples of how companies use the competitive structure:
• Using the parameter- ease of entry into a new market- a company venturing into energy sector can find out about the companies which are leaders in this sector and the exclusive way they have got hold of the market, making it difficult for new firms to enter.
• Using the parameters- consumer base, consumer demographics and spending habits- a company making toilet papers can find the preference of the consumers in relation to the offerings of its various competitors. This information can help the company to make the necessary changes to its own offerings, so that the offering stands out in the market.
• Using the parameter- number of competitors- a company producing toilet papers can find the number of competitors in a particular area (where the company wants to launch its product) which also produce the same type of product. Furthermore, this study can be done on different scales-like finding out the number of competitors in a state or a zone or a country or on a global level. Also other parameters- demand and supply of the product- can be included in the study.
Hence, this concludes the definition of Competitive Structure along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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