Competitor identification and competitor analysis: a broad‐based managerial approach

Abstract Managerial myopia in identifying competitive threats is a well‐recognized phenomenon (Levitt, 1960; Zajac and Bazerman, 1991). Identifying such threats is particularly problematic, since they may arise from substitutability on the supply side as well as on the demand side. Managers who focus only on the product market arena in scanning their competitive environment may fail to notice threats that are developing due to the resources and latent capabilities of indirect or potential competitors. This paper brings together insights from the fields of strategic management and marketing to develop a simple but powerful set of tools for helping managers overcome this common problem. We present a two‐stage framework for competitor identification and analysis that brings into consideration a broad range of competitors, including potential competitors, substitutors, and indirect competitors. Specifically we draw from Peteraf and Bergen's (2001) framework for competitor identification to develop a hierarchy of competitor awareness. That is used, in combination with resource equivalence, to generate hypotheses on competitive analysis. This framework not only extends the ken of managers, but also facilitates an assessment of the strategic opportunities and threats that various competitors represent and allows managers to assess their significance in relative terms. Copyright © 2002 John Wiley & Sons, Ltd.