Who Are Your Competitors?

Automotive Industries,  June, 2001  by Greg Janicki

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Boy, it used to be easy to target new business. All you had to do was reference your competitor file for the particular product you were pitching, rummage through the supplier list, and voila, you understood whom you were up against. If only things were so clear today.

Yes, the competitive environment has become murky, but not because more competitors are in the market. In fact, you could argue that there are even fewer companies "making" the part you want to sell. The market is demanding because today's industry is no longer defined by what you make, or what your competitors make for that matter. Instead, the market is defined by a mix of consumer values, OEM strategies and supplier competencies that are less predictable than the stock market.

While some suppliers still define their market by what they make (e.g. "we are a door handle supplier") most are broadening their market definition to reflect a more flexible and dynamic strategy. That strategy recognizes that suppliers can define their market by their customers, "we are a Tier 2 supplier"; by technologies, "we are an injection molder"; by component, "we are an interior supplier"; or by value proposition, "we supply safety." However, while defining your market by more than what you make gives you more opportunity, it also opens you to more competition.

Take the air bag market, for example. If suppliers define their market as simply air bag modules (parts), then the competitors are limited to about five or six suppliers. If the "market" expands to air bag systems, then electronics enter the picture along with more competitors (with unique market expertise). The next market evolution is restraint systems, and with it comes seat belts and all of their suppliers and competencies. Finally, the market becomes "safety." And this is when all heck breaks loose. Who are the competitors now? The injection molders who make energy-absorbing pillar trim? What about the headlamp suppliers whose HID lamps increase visibility? Is there an innovation in someone's lab that will create a complete shift in the safety market? New technologies can, and have, shifted markets in very dramatic ways. Just as plastics redefined the interiors market decades ago, so may obstacle detection systems alter the safety market -- after all, who needs air bags and seat belts if vehicles can "a void" a crash.

It is the classic buggy whip scenario. If you make a part the market no longer needs, you're dead. The alternative is to find a way to take your competencies, spin them a new way and create a new market. What many suppliers fail to do, however, is react to the changes quickly enough. The companies that can react to change, or better yet, influence it, are your real competitors. The trouble is they're just not your competitors yet.

Expanded Market Definition Boosts Competition/Opportunity
Market                         No of Competitors  Market Value (N.A.)
Air Bag Modules                5-10 Companies     $1.8 billion
Air Bag Systems                15-20 Companies    $3.2 billon
Restraints active and passive  25-30 Companies    $4.8 billion
Safety Devices                 100s of Companies  $10s of billions

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