Competitive situation matrix is used as a tool to analyze market dynamics of a particular industry. This tool helps in analyzing competitors, taking into consideration various parameters such as price, availability of products, quality of services and overall market share. It also provides an overview of how a particular industry fares in terms of competition.
A competitive situation matrix consists of rows and columns. Generally, the columns represent different competitors and the rows represent different market-related parameters. In order to ensure better understanding of the present market situation, the columns can be separated into categories such as price, market share, product availability etc. The market-related parameters also vary for different industries. It can include product features, brand recognition, quality of services, customer satisfaction and pricing plans.
In the context of competition, the information regarding competitors needs to be updated timely. This is because, any changes in competitor’s behaviour can affect the market dynamics drastically. This requires continuous monitoring of competitor’s actions and strategies. After obtaining the updated information about all the competitors, the same can be placed in the appropriate columns.
Using a competitive situation matrix to analyze the competition helps businesses in taking effective strategic decisions. Firstly, it helps to understand the present market position of the business. This helps in investigating which parameters are working in favour of the business and where the business is lagging behind its competitors. Secondly, businesses can get an idea of the key strategic strengths of their competitors and can capitalize on these differences. Thirdly, businesses can use the information to compare their pricing plans and other offerings with that of their competitors.
Furthermore, analyzing the competitive situation matrix provides insights into the overall market dynamics of the industry. This helps business strategists in determining which segments of the industry have higher growth potential and provide better opportunities for the business.
Overall, a competitive situation matrix is a powerful tool for understanding and analyzing the market dynamics of a particular industry. It helps in keeping a close track of the competition and noting any changes in the competitive behaviour of their competitors. This helps in assessing their current market position and taking effective strategic decisions in order to survive in the competitive environment.
