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Competitor Profile Matrix

CPM is a great tool and technique to analyze the rival groups and get to know their strengths and weaknesses. It doesn’t merely help you examine the current competitors but also the potential competitors. An analysis of the competition helps you in making effective development strategies, as well as assist you in implementing them, monitoring them and eventually improvizing them as per the feedback and results. 

It is always better to keep the profiles of each competitor separate and this is the only way you can keep the information organized. The profiling will require you to keep basic information including name, location, as well as advanced level data including their strengths and weaknesses that you may think of. Keep the profile updated and complete because this is the way you may also get to know about industry trends.
Understanding Competitor Profile Matrix
Companies usually use the CPM approach to understand their competition and gain insight into the industry and market. What the matrix does is it helps you identify success factors of the industry and then compare the performance of each of the competition on the scale. This will also help you undrstand where you understand in comparison to your competition and give ways for your to make necessary adjustments. 

Critical Success Factors

Critical Success Factors or CSF is a scheme that helps you take high level decisions and be directed towards excellence. These frameworks also include internal and external factors to be analyzed and examined. The dynamics of this framework may vary in different industries. Below you will find a list of success factors that we have used for demonstration, however you can add more factors that will help you gain more insight and thus take appropriate steps. A general list of CSF is given below:
 

Share in the market

Associations and Unions

Influence over suppliers

Quality of the product

Workforce strength and quality

Availability of suppliers

Tactical direction

Facilities and accessibility to them

Supply chain efficiency

Customer care

Capacity to produce

Integration in supply chain model

Brand equity

Value added features

Delivery time

Brand status

Competitiveness of prices

Digital branding

Customer satisfaction

Minimum costing

Digital media focus and engagement

Financial stand

Product line

E-commerce strength

Reserves of cash

Complementary services and products

Credentials of Management

Profitability

Product and service integration

Level of Innovation

Turnover in inventory

Product advertisement

Advancement in culture

Retention of employees

Marketing strength

Production strength

Salary range

Advertising strength

Leanness of production

Innovation strength per employee

Technological capabilities

Suppliers

Per Employee incurred cost

Advertising spent

Distribution strength and network

Research and Development

Sales capacity

Product aesthetics

Patenting

Satisfaction of employees

Vertical integration strength

New patenting

Budgeting activities

CSR activities

Product revenue

Distribution channels

Franchise vise sales

New product development

Authority on distributors

Support from parent entity
 
 

Weight

Each factor mentioned above has a rating in terms of its significance. These range from 0.0 that refers to the least significant factor to 1.0 that refers to a highly important factor. So, the more the weight in terms of number, the more is the significance of the factor in the industry and market. Assigning weight to each factor is crucial because not all the factors can be equally important in an industry; one element has to be more significant than the other in order to succeed. However, the sum of all of these weights should be equal to one in the end. Technically, no factor should be given a weight of more than 0.3. 

Rating

The ratings that come under CPM framework refer to the capability of the company in each area and factor. They are assigned the ratings as per the below measurements:
1 – Major weakness
2 - Minor weakness
3 – Minor strength
4 – Major strength
These are subjective ratings as per your observation and understanding of each company. This can be made better to achieve effective results if benchmarks and best practices are set already. This will help you give proper rating as per the standards of the industry, which will mean how bad or good they are doing in terms of the industry benchmarks. 
Score and Total Score
This is calculated by multiplying the rating with the weight. Each factor leads to a score by the company and then the total score is calculated by adding them all up. The firm that has a total score that is the highest among all will be the strongest in the industry and is performing well as compared to competitors. 

Benefits of CPM

• The comparisons are more accurate and relevant to the industry because similar factors are used to analyze all the companies.
• The results are demonstrated on a matrix so it is easy to understand and is visually not a strain. 
• The results of this matrix are an effective tool that leads to decision making. This means that companies are in a better position to make effective strategies to either strengthen their core competencies or work on the aspects they lag behind.  

How to Use the Tool

Below exhibit will help you understand how to add in weight and ratings in the factors you have built and how to calculate the scores. 
 

Critical Success Factor

Weight

Rating

Score

Rating

Score

Rating

Score

Reputation of brand

0.50

2

1

3

1.5

1

0.5

Integration features

0.20

4

0.8

3

0.6

1

0.2

Variety of products

0.15

3

0.45

1

0.15

2

0.3

Cost incurrence

0.15

1

0.15

3

0.45

4

0.6

Total

1.00

-

2.4

-

2.7

-

1.6

 

Step 1 – Explore the critical success factors

• As a starter, you can always use the factors we have mentioned here and then think about more factors that you can include as per the industry you are operating in. 
• Why would consumers prefer one company over the other?
• What are the resources and core competencies of the firms?
• What are the competitive advantages that they companies have?
• What makes one company succeed and the other fail?

Step 2 – Allocate weight and rating 

• If you are dubious on how to assign weights and rating, the best solution is to make a comparison on the best and the worst companies. It is obvious that companies doing well than the others will employ initiatives that are breakthrough and unique in the market and are sure to lead them to success. They will use the relevant resources to get these activities done. 
• It is always better to be in discussion with other managers while assigning the weights and ratings. 

Step 3 – Make comparison of scores and take decisions

• The comparison of scores will help you understand where the company’s focus lies or what their weaknesses are. You will see if the market share is the focus of the company or sales is. 

Example

Below example will help you understand the above concept better. It is a profile matrix of the leading smartphones operating systems including Apple’s iOS, Google’s Android and Microsoft’s Windows Phone.

CPM Example

Critical Success Factor

Weight

Rating

Score

Rating

Score

Rating

Score

Share in the market

0.14

4

0.56

2

0.28

2

0.28

Likeability of product

0.11

4

0.44

4

0.44

2

0.22

Innovation in models

0.07

3

0.21

4

0.28

2

0.14

Aesthetics

0.06

3

0.18

3

0.18

3

0.18

Product reputation

0.06

3

0.18

3

0.18

2

0.12

Strength of channels of distribution

0.10

4

0.4

2

0.2

3

0.3

Utility

0.12

3

0.36

3

0.36

3

0.36

Customizability

0.05

4

0.2

2

0.1

2

0.1

Marketing strength

0.03

2

0.06

4

0.12

2

0.06

Brand equity

0.09

4

0.36

4

0.36

3

0.27

Cultural openness

0.01

4

0.04

2

0.02

2

0.02

Cloud

0.11

4

0.44

2

0.22

2

0.22

Rate of Failures

0.05

1

0.05

4

0.2

3

0.15

Total

1.00

-

3.48

-

2.94

-

2.42
 

According to this matrix, the results suggest that Mercedes has the strongest standing in the industry with a fair portion of channels, share and other features. Moreover, Audi is better in frequency updates and marketing. Lastly BMW is comparatively weak in all these factors. Thus, strategies of all three will be developed on the basis of these results. This demonstrates the effectiveness of CPM model and how you can quantitatively calculate the scores of a variety of success factors that are crucial in the industry for brand and product success. For starters, you can use these factors and enrich them as per the industry dynamics.