Brand partiy perception on the German automotive market - a
comparative analysis of brand clusters
Dorothee Bialdyga
Leeds Metropolitan University, UK
Abstract
Purpose- The main purpose of this paper is to validate particular brand clusters of
the German automotive market, which were already identified within a qualitative
research approach. Furthermore, information shall be provided whether different
levels of perceived brand parity with regard to particular brand clusters exist.
Design/methodology/approach- The results are based on two quantitative online
surveys. The first survey was carried out in the period of 4th of May 2012 to 12th of
May 2012 with a sample of n=111. With hierarchical, agglomerative clustering
procedures seven brand clusters were validated of which four are presented in this
paper. The second survey was carried out in the period of 2nd October 2012 to 12th
October 2012. In order to control the data collection process as best as possible, the
service of a panel provider was used and a quota-sample of n=320 was achieved.
Four main brand clusters were analysed.
Contribution to the body of knowledge- The paper provides two contributions: from
a methodological point of view it quantitatively validates the brand clusters, which
have been identified within prior qualitative research. Furthermore, the results shed
light on the consumers’ parity perceptions for particular brand clusters on the
German automotive market, which may support brand managers in their task of
positioning their brand uniquely.
Research limitations/implications- A limitation is of course the constricted application
to online samples. Therefore the sample of the first survey does not fulfill the need
for representativeness. Despite dedicated efforts in the second survey not all quotas
were reached.
Key Words: perceived brand parity, German automotive market, quantitative
research, cluster analysis,
Introduction
In the last two decades there has been a plethora of research and publications in the
field of branding which has significantly enhanced our understanding of the field.
However, there is still a nebulous around understanding and applying the concept
due to the rising number of brand failures. A number of findings have highlighted the
concern of parity where products are perceived to be generically similar.
According to Muncy (1996) perceived brand parity is defined as “... the overall
perception held by the consumer that the differences between the major brand
alternatives in a product category are small.” Muncy (1996, p.411) furthermore
claims that “parity can be seen as the opposite of differentiation.” Some authors
follow this viewpoint and describe perceived brand parity as a lack of brand
differentiation (Kocyigit and Ringle 2011; Chenet et al 2010; Lantieri et al 2009; Ogba
265
and Tan 2009, Hlavinka and Gomez 2007; Jensen and Hansen 2006; Razi et al
2004). But while brand differentiation is usually related to a specific brand, parity
concerns a whole product class (Muncy 1996). This object reference is the most
important difference when comparing the construct of perceived brand parity to
other constructs of brand research. While brand awareness, brand knowledge, and
brand equity apply to individual brands (Fischer et al 2010), brand parity concerns
the whole product class. Consequently perceived brand parity does not diverge
across brands within one product category.
Also this seems relatively unimportant for the automotive market at first sight, as
brand differentiation has been seen as strength of the German automotive market
(Gottschalk 2005, p.16), this topic becomes essential when watching the trends on
the German automotive market.
In the past decades, the automotive sector experienced a rapid growth leading to a
fragmented market, which is divided into various segments, lines, body types and
models (Becker 2007, p.28). In order to differentiate and thereby be more
successful, the manufacturers of the big car brands serve nearly each market
segment (Ebel et al. 2004). This strategy leads to quite homogenous markets with
regard to product quality and thereby diminishing uniqueness of car brands.
Furthermore, an ongoing consolidation of the automotive industry can be observed.
The number of car manufacturers declined from thirty-six in 1970 to twelve in 2010
(Becker 2007 p.77, Wallentowitz 2009 p.25, Schömann 2012 p.24). As the number of
brands did not decline in the same extent, more brands are consolidated within one
manufacturer. Consequently common part strategy is conducted in order to reduce
costs. Applying common part strategy across brands leads to an assimilation of the
cars in terms of technical features and quality aspects.
As brand parity refers by definition to one product category it is highly important to
exactly define the relevant product category for which brand parity is to be
measured. In most research the automotive market as a whole is seen as one
product category. Due to the high diversity within the automotive market, ranging
from low priced small cars up to expensive luxury vehicles this classification seems
not to be suitable for parity explorations. Furthermore, it is important for the
marketing managers to have information about the consumers’ parity perceptions
regarding their brand in comparison with their direct core competitors.
Therefore, this research aims to find reasonable brand parity clusters on the German
automotive market. Based on results of preliminary focus group discussions a
quantitative survey is undertaken in order to confirm the identified brand clusters. By
conducting another quantitative panel survey, the level of perceived brand parity
within the particular clusters is measured.
Data collection and data analyses
Five focus group discussions, with five to eight car drivers each, were executed in
May 2011in order to learn about the consumers’ perception of the German
automotive market. Each focus group discussion lasted 1.5 to 2 hours. Four groups
were created with people who had signalled a higher perception of brand parity in
advance and an additional control group was formed made up of people having a
266
lower parity perception. Enabling techniques were applied and a family formation
scenario was constructed exclusively for this purpose. Participants formed brand
clusters, with the brands inside the clusters being homogenous while the clusters
towards each other were heterogeneous regarding similarity.
In an aim to confirm the brand clusters formed in the qualitative survey a
quantitative survey was conducted in the period of 4th to 12thof May 2012. An online
questionnaire was administered to n=113 participants via snowball sampling.
Participants were asked to rate 42 brands91 regarding six pairs of opposites referring
to product (low quality vs. high quality, conventional design vs. extravagant design),
price (low price vs. high price) and brand image (commodity good vs. status symbol,
boring vs. adventurous, ordinary vs. something special).
The brand clusters are confirmed using a cluster analysis which groups individuals
or objects into clusters. Elements in the same cluster are more similar to one
another than to elements in other clusters (Hair et al 2006, p.555). The aim “is to
maximize the homogeneity of elements within the clusters while also maximizing the
heterogeneity between the clusters” (Hair et al 2006, p.555). A hierarchical
agglomerative cluster analysis applying five different clustering algorithms was
executed and compared.
Finally, in the time between 2nd and 12th October 2012 an online questionnaire
including 18 questions (lasting approx. 20 minutes) was administered to a quota
sample with n=320 by contacting the target persons using a professional accesspanel provider. This approach guarantees a highly professional data collection
method, therefore increasing the likelihood for high-quality data. Based on this data
set detailed analyses of the consumers’ brand parity perceptions with regard to the
automotive market in general and for four important brand clusters were performed
applying three different approaches of measuring consumers’ brand parity
perception. However, as the focus of this paper lies on confirming the clusters, only
a very limited extract of the results of the final panel survey are presented.
Results
The quantitative results satisfactorily confirmed both, the composition of the brand
clusters and also the characteristics of the clusters. The following table shows a
comparison of the composition of the brand clusters regarding the results of the
qualitative and the quantitative research.
Additionally, the characteristics of the brand clusters were also confirmed. A
comparison of the means of each cluster for each variable provides information
about the particular cluster characteristics.
91
267
The questionnaire included all brands that were mentioned in a minimum of two focus group discussions
Field time
Table 1: Overview data collection and data analyses
Q u a l i t a t i v e Quantitative survey I Final quantitative panel
survey
survey
th
th
May 2011
4 to 12 of May 2012 2nd and 12th October 2012
Net Sample 5 groups with n=113
5-8 car drivers
each group
D a t
collection
n=320
aF o c u s g r o u p•
discussions
a p p l y i n g•
e n a b l i n g•
techniques.
O n l i n e • Online questionnaire
questionnaire
Quota sampling using a
•
Snowball sampling
p ro f e s s i o n a l a c c e s s Rating of 42
panel provider
brands regarding •
Questionnaire included
six pairs of
18 closed questions
opposites referring
to product, price,
brand image
A p p l i e d longitudinal and H i e r a r c h i c a l A range of bivariate and
a n a l y s i n g cross-sectional agglomerative cluster multivariate methods such
methods
analysis
analyses
as correlations, nonparametric tests, explorative
factor analyses and a simple
form of structural equation
modelling (not presented in
this paper)
Table 2: Cluster definitions
Cluster name
Pragmatic
Affordable
Cluster definition –
Cluster definition –
Qualitative research
Quantitative survey I
Dacia, Lada, Lancia, Suzuki, Dacia, Lada, Kia
Tata, Kia
C i t r o e n , F o r d , P e u g e o t , Toyota, Renault, Citroen, Fiat, Ford,
Renault, Opel, Toyota, Fiat, Honda, Hyundai, Lancia, Mazda
Honda, Mazda, Mitsubishi, Mitsubishi, Nissan, Opel, Peugeot,
Nissan, Hyundai, Seat, Suzuki Seat, Skoda, Suzuki
S t a t u s - Mercedes-Benz, BMW, Audi, Mercedes-Benz, BMW, Audi
orientated
Volvo
Exclusive
268
R o l l s R o y c e , M a y b a c h , , Aston Martin, Bentley, Bugatti, Ferrari,
Jaguar, Lotus, Bentley, Ferrari, Jaguar, Lamborghini, Lotus, Maserati,
Lamborghini, Maserati, Aston Maybach, Porsche, Rolls Royce
Martin, Bugatti, Porsche,
Graph 1: Overview brand cluster means
The table below presents the summary of the cluster description of the focus group
discussions and the cluster descriptions referring to the quantitative cluster analysis
based on the graph above.
Table 3: Cluster descriptions
Cluster description –
Cluster description –
Qualitative research
Quantitative survey
Pragmatic
“The brands in this cluster are This cluster has the lowest ratings of
Dacia, Lada, all associated with poor quality all clusters for each variable. The
Kia
and cheap price. They elicit brands within this cluster are of very
rather negative emotions such low quality for a very low price. They
as a lack of prestige”
are nothing special and rather boring
and ordinary also in terms of design.
Cluster name
269
Affordable
“ I n c o m p a r i s o n t o t h e This cluster clearly exceeds the cluster
T o y o t a , pragmatic cluster, this cluster described above in terms of quality
R e n a u l t , does not show a lack of and price. This cluster also achieves
Citroen, Fiat, seriousness and does not elicit higher ratings for the image attributes
Ford, Honda, such negative emotions. In and the design. Nevertheless it is still
H y u n d a i , terms of perceived emotional located at the lower end of the scale
L a n c i a , i m a g e t h e b r a n d s a r e regarding all variables.
M a z d a perceived as down to earth
M i t s u b i s h i , brands, a little bit boring as
Nissan, Opel, they do not offer anything
P e u g e o t , special. When it comes to
Seat, Skoda, discussions about price,
Suzuki
participants stress more the
costs of service and spare
parts and they talk rather
about the price performance
ratio, than about the pure
price. In terms of quality
opinions differ, some think that
the quality is sufficient; some
think the quality is poor.”
S t a t u s - “With brands of this cluster, Very high quality is attributed to this
orientated
participants associate high cluster. The brands within this cluster
M e r c e d e s - q u a l i t y a n d h i g h p r i c e . even come very close to the exclusive
Benz, BMW, R e g a rd i n g t h e e m o t i o n a l car bands in terms of quality. They
Audi
image brands within this also achieve the second highest mean
cluster are seen as a little bit for price of all clusters and are seen as
snobbish but they also seem more as a Status Symbol than a
to envy the luxury brands.”
commodity good. However in contrast
to the exclusive car brands, these
brands are allocated only slightly
above the middle of the scale
according to the boring and ordinary
image attributes and the conventional
design attribute.
Exclusive
“The brands within this cluster This cluster outperforms all other
Aston Martin, seem to be very emotional clusters on all variables. Beside the
B e n t l e y , charged. The brands show a high quality and the high price that are
B u g a t t i , positive emotional image of attributed to this cluster, the brands
F e r r a r i , luxury and prestige…”
within this cluster are clearly seen as
J a g u a r,
Status Symbols and something really
Lamborghini,
special according to both image and
L o t u s ,
design
Maserati,
Maybach,
Porsche,
Rolls Royce
270
In order to measure the level of perceived brand parity, three different approaches
were applied:
1. A simple global question was asked: “Overall, how similar do you think the brands
within this group are?” (Scale from 1 to 7, whereby 1 means “not similar at all” and 7
means “very similar”)
2. Respondents were asked to rate four statements of a previously validated parity
scale.
3. A multi-item question consisting of 24 items was asked: “How similar do you think
the brands of this group are in terms of the following items” (Scale from 1 to 7,
whereby 1 means “not similar at all” and 7 means “very similar”). Items refer to all
four areas of the marketing mix.
The key result is that all three approaches revealed the same pattern: The cluster
with the highest perceived brand parity was the status-orientated cluster, followed
by the exclusive cluster. For the pragmatic cluster the third highest parity perception
was measured and the affordable cluster is the cluster with the lowest level of
perceived brand parity:
Conclusion
The brand clusters are confirmed with regard to composition and characteristics.
Different levels of perceived brand parity with regard to particular brand clusters on
the German automotive market were identified and validated.
Directions for further research are to explore the differences in parity perceptions
among particular consumer subgroups as this will give marketing managers valuable
insights for positioning their brand according to the needs of their target group.
A limitation is of course the constricted application to online samples. Therefore the
sample of the first survey does not fulfill the need for representativeness. Despite
dedicated efforts in the second survey not all quotas were reached.
271
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Identifying competitors: challenges for start-up firms
Magdalena Krzyżanowska
Kozminski University, Poland
Abstract
Jolanta Tkaczyk
Kozminski University, Poland
This study addresses the problem of start-up firms identifying their competitors. It
explores how entrepreneurs in creative industries become conscious of the existence of
competitors and how they change their mode of operation when affected by their
competition. The main research questions are: 1) What phases comprise the process of
identifying competitors by entrepreneurs in creative industries? 2) What are the
characteristics of marketing myopia in creative industries? 3) Will creative entrepreneurs
be able to build competitive advantage?
The authors answer these questions on the basis of research conducted among young
start-up entrepreneurs taking part in the Entrepreneurship in Creative Industries project in
Warsaw, Poland during 2012. The analysis is based on three sources of data: 1)
application forms submitted by entrepreneurs during the selection of the project
participants; 2) evaluation forms filled in during the course of the project by the selected
entrepreneurs; and 3) in-depth interviews with the project participants. The qualitative
analysis is conducted with the use of Atlas.ti software.
This study provides clear implications on how to avoid underdevelopment of competitor
orientation for start-up managers. Being complementary to the authors’ research on
understanding customers in creative industries, it delineates conclusions on the
determinants of market orientation implementation in these sectors.
Key Words: competitors, start-up firms, creative industries, competitor orientation
Introduction and objectives
Creative industries refer to sectors in which development is achieved on the basis of
individuals’ knowledge and creativity. In a narrow understanding, they include cultural
institutions, while according to a wider definition - adopted in this study, they refer to
types of activity like advertising, architecture, arts and crafts markets, industrial design,
fashion design, media services, software, the performing arts, publishing, film, music, and
television (DCMS 1998).
The creative industries belong to the fastest growing sectors in the developed countries
(Falk et al. 2011), and great hopes are pinned on their potential in terms of both economic
and social progress (Chaston & Sadler‐Smith 2012). They are often perceived, however,
as risky undertakings, whose market success is short-lived (Burrows & Ussher 2011). For
such reasons, the conditions of their operations become an important area of scientific
research.
Initially the research was conducted mainly in two directions: the motivations of individual
entrepreneurs operating in creative industries, and the macroeconomic advantages of
234
developing this kind of activity (Parkman et al. 2012). Subsequently, the issue of business
orientation was tackled as a condition of efficient operations in creative industries,
particularly in micro and small businesses. The results of these research projects indicate
that even businesses operating on a small scale have competencies for development of
entrepreneurial orientation (e.g. Chaston & Sadler‐Smith 2012), or simply have already
developed a market orientation (e.g. Tkaczyk & Awdziej 2012).
However, the actual adaptation of creative enterprises to market conditions remains an
open question. This is because the ‘directional’ declarations are one thing, and the
implementation of market tasks related to such declarations is another. This discrepancy
is well illustrated by the results of the research on buyers’ identification made by
entrepreneurs from creative industries (see: Tkaczyk & Krzyżanowska 2013). The authors
argue that the current state of the research provides an incomplete picture of market
orientation development within creative industries.
Therefore, this study presents the issue of developing the elements of a market
orientation, which is the customer orientation in new ventures operating in creative
industries. The aim of the study addresses the problem of competitor identification by
start-up firms. It explores how entrepreneurs in creative industries become conscious of
the existence of competitors and how they change their mode of operation when affected
by their competition. The main research questions are: 1) What phases comprise the
process of identifying competitors by entrepreneurs in creative industries? 2) What are the
characteristics of marketing myopia in creative industries? 3) Will creative entrepreneurs
be able to build competitive advantage?
The answers to these questions are closely related to the formation of businessmen’s
mental models, serving as the phenomena categorization, the evaluation of their
consequences, as well as the basis for undertaking actions (Prahalad 1986).
In this research, the authors focused on the competitive occurrence perception to
determine the perspectives on gaining the competitive advantage by businesses starting
up operations in the creative industries. Due to this subject, its assumptions were
adopted with reference to the research on start-ups, market orientation and mental
models.
Background
New ventures are interpreted in this study in the narrowest way, i.e. as the enterprises
only entering the market (Shepherd, 1996). Such entities face the necessity of
establishing the foundations of their development, including the recognition of operational
conditions in both the market and the macro environment. A distinctive factor influencing
their operations, particularly in case of micro and small businesses, is the liability of
smallness. This means that such enterprises have limited financial resources, limited
market power and a small customer base at their disposal (Kraus et al. 2010).
An accompanying condition is the liability of newness, consisting of a lack of relationships
with market partners and a lack of experience. Both of these factors result in the relatively
low formalisation of actions undertaken by these enterprises and the simplistic form of
marketing that is used – often on the intuition basis (Hill & Wright 2000). The other
significant consequence is the fundamental importance of the business owner in the
process of choosing the course of action and its market implementation. The
235
entrepreneurs’ attitudes toward marketing and their engagement in marketing operations
determine the results of the actions undertaken (Kraus et al. 2010).
As the development of micro and small businesses is phased in character, in the initial
stage entrepreneurs often focus on the creation of an offer and the acquisition of buyers,
and only afterwards do they extend the range of their operations (Carson, Gilmore 2001).
It can mean the insufficient recognition of the competitive determinants of operation,
because of the necessity to use sizable resources and spend a considerable amount of
time (Bressler n.d.). It is a particularly meaningful threat to the accomplishment of the
task, which consists of identifying areas of potential competitive advantage for a new
venture. The level of customer orientation development is therefore an important feature
of actions taken within new ventures that may affect the efficiency of those actions.
The market orientation is the concept, whose understanding in this study is based on the
synthetic version, combining two original concepts dating from 1990 by Narver, Slater
and Kohli & Jaworski (Homburg & Pflesser 2000; Gotteland et al. 2007). This means that
the market orientation is, on one hand, expressed with such formation of the enterprise’s
organizational culture that creates the most efficient and effective ways of satisfying
customer needs - the cultural aspect (Narver & Slater 1990). On the other hand, it
consists in taking actions connected with the acquisition of knowledge on buyers’
present and future needs. This refers to the organisation of marketing research, the
distribution of this knowledge within the company and its utilisation in the process of
influencing the market - the behavioural aspect (Kohli & Jaworski 1990).
The market orientation consists of three components (Narver & Slater 1990):
• Customer orientation – pursuing an understanding of the nature of customer
needs and creating products or services of value that is significant for them;
• Competitor orientation – striving to identify goals, resources and strategies of
current and potential competitors;
• Functional coordination – seeking the best utilisation of resources possessed
by an enterprise in creating the value significant for customers.
Considering the kind of customer needs - either cognizant or incognizant - that
enterprises want to satisfy, two types of the market orientation can be distinguished:
reactive and active (Narver et al. 2004). The reactive market orientation consists of
focusing on existing needs that are expressed by customers. The active market
orientation lies in an attempt to predict accurately the evolution of customer needs and to
convince them toward new products or services.
The indispensable condition of developing the competitor orientation is to identify them
accurately. In case of small and new ventures, it is determined by the way the competitive
situation is shaped in entrepreneurs’ mental models. A mental model of a dynamic
system, such as the configuration of competitive condition, is understood as ‘a relatively
enduring and accessible, but limited, internal conceptual representation of an external
system (historical, existing or projected) whose structure is analogous to the perceived
structure of that system’ (Doyle 1999).
A mental model is, in other words, the accumulation of knowledge and beliefs on a
specific topic. It is characterised by a certain level of permanence and a given entity can
be aware of its existence and also influence its shape. The model is a cognitive structure
accumulating information, which is based on concepts, ideas and other language-like
236
components. It refers to occurrences external to the entity, but due to the inter-subjective
nature of this structure is prone to errors and omissions (Doyle 1998).
The essence of the mental model’s importance in the process of decision-making by
entrepreneurs is that such models are both active and passive in their nature, i.e. they
influence business owners’ experience and they are shaped by market occurrences
(Chermack 2003). It can be therefore stated that in the case of entrepreneurs operating in
creative industries, the way their mental models are shaped on one hand affects whether
and how competitors are identified. On the other hand, a definite way and range of
analysis influences the formation of mental models.
The issue of competitor identification has been addressed so far in the comparative way.
This is the attention paid to the perception of a competitive situation by managers,
confronted with the perception of the same situation by customers (De Chernatony 1994),
as well as the managers’ perception in the context of objective criteria for isolating
strategic groups (e.g. Osborne et al. 2001). The accuracy of competitors’ identification as
a factor influencing the results of company operations is a current object of interest for
marketing researchers (e.g. Clark 2011; Krzyżanowska & Tkaczyk 2012; Krzyżanowska &
Moszoro 2011).
According to the authors’ knowledge, the accuracy in recognizing the competitive
situation by entrepreneurs starting up operations in creative industries has not been
studied yet. In accordance with Chaston (2008), one central idea of this study is that
entrepreneurs starting businesses in creative industries are inclined toward fulfilling
creative aspirations. Furthermore, a majority of them have no market experience. In view
of this, the pervading question is to what extent the aforementioned conditions make the
correct analysis of the competitive situation more difficult.
Research approach and methods
The choice of research method is consistent with the postulate expressed by (Chaston &
Sadler‐Smith 2012): ‘...much more research is required concerning entrepreneurial and
managerial cognition, but useful insights on this issue will probably not be generated by
using purely quantitative research methodology.’
As the main research method, the authors chose a qualitative and quantitative content
analysis of documents gathered during the Entrepreneurship in Creative Industries
project, conducted by Kozminski University in 2011-2013. This project included five
phases:
- Recruitment
- Selection
- Diagnosis of training needs
- Training, and
- Advice for established enterprises.
The content analysis can be identified as the technique of reasoning through systematic
and objective identification of each particular feature of the text (Stone et al. 1966). The
analysis process consisted of three steps: 1) submission of 81 applications by the
participants during the first phase of the project (recruitment); 2) completion of 81
evaluation forms during the fourth phase of the project (training); and 3) individual in237
depth interviews with 16 selected participants during the fourth phase of the project. To
perform the analysis, Atlas.ti software was used.
The analysed applications were filled by the project participants in the first stage and
used for selecting the most promising ventures. Business plans required for obtaining
grants were developed only after the training phase of the project was completed. The
analysis was conducted for the applications submitted by only those participants who
won grants at the end of the fourth stage. This gave the authors an opportunity to
compare how the business concepts and the competitors’ perceptions changed between
the stages of applying for participation in the project and its implementation.
The entrepreneurs who qualified for the project, and therefore for the analysis, intended to
start their businesses in a variety of branches belonging to creative industries, as shown
in Table 1.
Table 1. Creative industries branches in the project
Number of
Branch
participants
Film and video
12
Art and graphic design
9
architecture
8
Publications and publishing
activity
8
Electronic media
8
Handicraft
7
Music
7
Fashion design
7
Photography
5
Industrial design
4
Antiques and art market
3
Theatre
2
Computer games
1
Total
81
Source: own
The project was aimed at enhancing the development of new, dynamic and growing
companies operating in the creative industries in the metropolitan area of Warsaw. The
target group included individuals intending to start their own businesses. Preference was
given to persons professionally inactive, unemployed and permanently unemployed,
women, persons aged 45+, and the disabled. As the project was financed from the
Human Capital Operational Programme funds, Measure 6.2, support and promotion of
entrepreneurship and self-employment, the classic framework of support was adopted in
the programme for use in this measure.
In the recruitment phase, as many as 2,100 applications were accepted, of which 160
individuals qualified for the second phase. Of these, 81 persons were awarded nonrepayable financial support in the form of a grant worth PLN 40,000 to start-up the
business. The demographic structure of the participants was 48 females and 33 males;
29 married persons, including 23 with children to support; 43 unemployed; and 37
graduates of art schools. The average participant was 38 years old with median 35 years.
238
The average job seniority was 10 years with median 9 years. Seventeen persons had
previous experience in running their own businesses. In April 2013 the project is in the
fifth phase of realisation.
The recruitment application consisted of 18 parts to be completed by each participant.
For the purpose of this study, the authors chose two descriptive sections for further
analyses: the business concept, and the market and participant demographics. In the
descriptive sections, each candidate was requested to write down answers of up to 1,000
characters, including spaces, to the following questions:
•
•
Describe the essence of your business concept. What does it consist of?
Who will be your customer? Who will be your competitor? In what area will you
operate?
The same group of participants was asked to complete the evaluation form in the fourth
stage of the project. The form consisted of five parts: examining the changes in the
business concept as influenced by the training process, the perception of the
environment including customers, as well as the financial, technological, human, and
relational resources, and the competencies of the project participants.
A group of 16 participants, who were purposefully selected from various creative
branches within the project, was individually interviewed. The interviews were of an
informal nature and semi-structured. The participants described the history of their
venture, explaining at what stage of the concept development they were at the moment,
what successes they had achieved, and what the biggest problem in their opinion was.
The content analysis of the collected material proceeded according to the sequence of
the following activities: 1) definition of the set of analysis categories; 2) assignment of text
fragments to the specified categories; and 3) interpretation.
Findings and conclusions
The analysis of the submitted applications indicated considerable problems with
identification of competitors. Although explicitly requested to identify competitors for their
venture, 16 entrepreneurs did not refer to this category at all, describing only their
business concepts, their future customers and their scope of operations. All these
respondents were graduates of art schools and were primarily focused on the uniqueness
of their offer.
The frequency analysis of words used in applications for the description of business
concepts and competitors showed that the words ‘competition’ and ‘competitor’ were
used much less than the words ‘firm’, ‘client’ and ‘market’. The frequency list for key
words is presented in Table 2.
239
Table 2. Frequency of key words in respondents’ applications
Number of
Key word
occurrences
Firm
137
Client
125
Market
69
Person
61
Competition
54
Customer
46
Area
45
Offer
38
Service
35
Product
33
Activity
30
Price
19
Competitor
19
In the analysis of applications, four ways of describing competitors were identified:
- Lack of any description
- Indication of no existing competitors
- Very general description of competitors
- Very detailed description of competitors
Only the graduates of art schools, mainly young people, were found to lack any
competitive descriptions. An indication of no competitors was depicted in the following
ways:
At present I don’t have a direct competition in the market.
As for the Internet, the competition in the Polish market is insignificant.
The competition is only emerging and in fact exists only outside of Poland.
Domestic competitors don’t operate actively.
There is not too much competition.
For dance classes/courses there is no competition.
In this topical area there is no competition.
I have noticed lack of competition in the Polish market.
I have no competitors.
In this area there are no direct competitors.
The description of competitors - if noticed by respondents - was either very general or
quite detailed. The more specific characteristics were provided by entrepreneurs with
certain business experience, having business partners and a non-artistic education.
Graduates of art schools, as well as the youngest and the oldest participants of the
project, described competitors in more general ways. The examples of competitors’
general descriptions are presented in Table 3.
240
Table 3. Exemplary general descriptions of competitors
The competition is represented by other art historians.
The competition includes graphic designers and small advertising agencies, but
they are more expensive.
The main competition consists of manufacturers already operating in the market,
having well-established position.
Competition: marketing agencies. There are few firms of a similar profile, which
results from low awareness of social networking needs.
The main competition includes music schools and culture centres having in their
offer teaching instrument playing.
Competition is the grey zone, i.e. teachers offering services with no business
activity.
We reckon with possible competition and this is why we want to secure our
designs through patents.
My competitors will be other coffee houses and patisseries, but none of them
offers such combination of consumption with art.
For my business the competition includes recording studios of similar profile.
The general descriptions of competitors indicated the general area of competition
occurrence, but the respondents were unable to mention any particular companies or
data regarding the described market. They named categories of competitors, mainly
focusing on direct rivals and neglecting substitutive or potential ones.
The examples of competitors’ detailed descriptions are presented in Table 4.
Table 4. Exemplary detailed descriptions of competitors
The competition will be companies dealing with film production; in this moment
there are about 10 branch leaders.
Exemplary competitors: Dreamsound, Cafe Ole, Post Meridian, Studio Zet.
The competition for my business will be other newly-established clothing firms,
such as: Mamapiki, Nennuko, DreamNation, Wearso.
There are many competitive companies: 70% manufacture wooden sites, about
20% offer steel wire equipment and about 10% are importers from Europe and
East.
At present there are three firms in the Polish market that offer similar services.
Vena-Art - stereograph of this company serves only big, international
productions; 3D Image - this company focuses rather on equipment
manufacturing, although services are also included in their offer; and 3D Mind
Films. All of them operate countrywide.
There are 8,948 architects in Poland. In Warsaw there are 10 big architectural
firms with more than 50 employees offering services to biggest clients. Mediumsized businesses employ 10-50 people and their number is several dozens. The
separate category includes newly-established, small, but dynamic firms.
There are only about 70 e-shops offering men’s fashion in Poland, and the
majority of them lacks a distinctive positioning, for example f-planet,
fashioncorner, modmod. Such players as answear, markafoni, allegro reach
other segments. Polish designers position their brands as luxurious in terms of
price. A potential threat is connected with foreign professional e-shops, having
an attractive offer and able to send their products to Poland at smaller and
smaller cost - e.g. asos, topman.
241
In the detailed competitor descriptions, the respondents were able to either name
competitive companies or mention quantitative data about the market, sometimes both of
them. Such characteristics of competitors indicated the maturity of their business
approach, as well as their thorough and well-considered business concept.
The distribution of the various competitors’ description among the respondents in
presented in Chart 1.
Chart 1. Distribution of various competitors’ descriptions among respondents
Very general descripHons of compeHtors
Very detailed descripHons of compeHtors
IndicaHon of no exisHng compeHtors
Lack of any descripHon
18%
13%
52%
18%
The distribution of ways in which competitors were described was consistent with the
authors’ expectations. The project was to a large degree targeted at graduates of art
schools and people who needed training in the field of running their own business. The
conclusions from the analysis confirmed the usability of the training phase of the project.
In the part of their applications regarding the business concept, the participants could
indicate distinguishing marks for their businesses. Only 9 respondents used the term
‘competitive advantage’. Among the mentioned advantages, the leading ones were
related to an unique offer, price and better understanding of the market.
The competitive advantage is:
-Having a unique product. In Poland there are no equivalents provided on the level of
quality adopted by the business owners.
-Standardisation of the offer: lower cost, transparency of the offer, faster purchase and
realisation.
-Unexploited market niche: the first- mover advantage, the product in the growing phase.
-Better understanding of customer needs, thanks to the owners’ managerial skills,
experience and business knowledge.’
‘The competitive advantage is guaranteed through my deep rooting in so-called
environment of potential customers, stemming from my wide professional experience,
close network of acquaintances among cultural animators, cultural institutions, artists and
contractors of various professions.’
242
‘The competitive advantage of the shop will be achieved through a true presentation of
products - trend description, easiness of navigation, technical details, quality of
packshots, quality and quantity of product shots, access information, and helpdesk - as
well as the secure payment.’
Competitive advantages:
-Combination of design with performance
-Measurable artistic value for a competitive price
-Long-term business contacts in other parts of the country, based on friendly
relationships, which allows rallying round and taking bigger challenges together
-Lower costs – owned premises.’
‘Competitive advantages: quick production thanks to the use of modern software
facilitating AutoCAD LT 2012 development, compliance with customer expectations and
innovation, artistic touch.’
As for the graduates of art schools, if they mentioned any competitive advantage, it was
usually connected with their knowledge and skills:
‘My competitive advantage is practical knowledge of the fashion design market, and
qualifications in the field of clothing patterns, printing, and colouring.’
In the fourth phase of the Entrepreneurship in Creative Industries project, training on
marketing, finance, and entrepreneurship was provided to the participants who
afterwards were asked to complete the evaluation forms. Having analysed the parts of the
forms related to the concept of business and the environment perception, the researchers
concluded that only one entrepreneur failed to point out competitors for his business. In
case of 10 respondents, the business concepts were considerably redefined - for
example, from an art gallery to a coffee house - while the next 35 participants decided to
extend their operations through the modification of the offered product range. In all these
cases, the perception of competitors also changed. The absolute majority of
entrepreneurs were then able to give a more detailed description of their competitors.
Just after the business start-ups, 16 in-depth interviews were conducted. The
respondents emphasized the significant impact of training on the market perception
including competitors. The majority of art school graduates evaluated this impact as big
and very big. A lower importance of training for the perception of both competitors and
their own business concept was indicated by those respondents who had previously run
businesses. Despite the increased awareness and acquired knowledge, part of the
business owners even after start-up was still focused on their product and the act of
creating it.
Having analysed the available materials, it was found that the marketing myopia in the
case of creative industries may consist to a large degree from: 1) excessive focus on
product and client, and 2) ignoring competitors.
The focus on product or client is a typical feature in creative industries. Ignoring
competitors can be derived from either the overestimated confidence in one’s own
prediction abilities - from the belief that rivals’ behaviour can be easily anticipated - or a
243
limited perspective - from the effect of a fixed way of problem analysis that does not allow
identifying new phenomena.
Considering art school graduates being typical business owners in creative industries,
and analysing the data collected during the project realisation, the following process of
identifying competitors in this sector is suggested:
1.
Focus on distinguishing aspects of an offer and its client: competitors remain
unnoticed.
2.
Perception of competitors without regard to their importance: there are
competitors, but they have no influence on the unique offer.
3.
Perception of general category of direct competitors.
4.
Perception and detailed analysis of influences from direct, substitutive and
potential competitors.
Limitations and further research
The main limitation of this research was the choice of the Entrepreneurship in Creative
Industries project participants as the study subjects. This project was, due to its general
recruitment provisions, targeted at people requiring particular informative and financial
support, without which the big part of planned ventures would not have been launched at
all. Also, some part of support would have started only in the future after accumulating
the necessary financial resources. The situations in which the project participants found
themselves had a considerable influence on their perception of the environment, with
special regard to the description of competitors.
The triangulation of data and methods was adopted in an attempt to overcome the
limitations of the conducted research. The materials used for the research was collected
in two stretches of time: before the participants received grants and after they started
their businesses. The recruitment application forms and the project evaluation forms filled
out by participants, as well as the transcripts of interviews conducted with selected
participants, were used for both qualitative and quantitative content analysis.
An interesting area for further research would be comparing these achieved results with
other industries, as well as verifying whether the precise descriptions of the competitive
environment made in the early stage of planning new businesses have an impact on their
future success.
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