ANALYSIS OF THE OFFER: WHAT IT CONSISTS OF AND HOW IT IS DONE - DUDAS - 2025

The analysis of the offer aims to establish the conditions and quantities of a good or service that are intended to be sold in the market. The offer is the quantity of products that are made available to the consuming public (market) in certain quantities, prices, times and places.

The analysis of the offer allows to evaluate strengths and weaknesses and implement strategies to improve competitive advantage. A historical, current and future review of the supply should be carried out to establish how many goods the competitors have delivered, how many they are delivering and how many they will be able to offer to the market.

The conditions under which said offer is handled must also be analyzed, in order to have the minimum elements necessary to establish the possibilities that the project's good or service will have, depending on the existing competition.

What does it consist of?

The analysis of the offer is intended to determine the quantity of the good that the producers, constituted in competition, are able to offer to the market, as well as the conditions in which they would be willing to make said offer.

Studying the offer of a product is analyzing the competition that must be faced. The more knowledge that is obtained from the competitors, the better judgment elements will be available to design the marketing strategies that increase the success of these products in the market.

Factors determining the offer

The analysis of the offer must take into account the factors that determine it and that condition the quantities offered. These factors are:

Price of the product

The quantity offered of a product grows according to its price increase. Higher prices generate higher profits, making them more attractive to bidders. However, consumers can decrease the quantity demanded, generating an excess supply.

This creates strong competition, causing the price to decrease until it reaches an equilibrium point with a given price.

If the price of the product is lowered, the quantities supplied are reduced and demand increases. This can lead to price increases to a new equilibrium.

Technology

The incorporation of technology leads to cost reduction and increases in the quantity produced, since greater efficiency is achieved.

Availability of inputs and their prices

When inputs are scarce, the quantity of goods produced is limited. Likewise, if their price increases there will be an increase in the cost of the product of which they are part.

Meddling in the market

By applying subsidies and taxes, the State disrupts the supply of products. Any tax increases costs and, consequently, the supply contracts. A subsidy creates the opposite effect: it reduces the cost of production and increases supply.

Competition

As the number of companies in an industry increases, each of these will tend to decrease its supply.

Competitive environment

A direct competitor is any company that markets a product similar to ours in the same geographic area. An indirect competitor is the company that offers a different or substitute product in relation to ours.

For example, there is indirect competition between a butter manufacturer and a margarine manufacturer who sell to the same customers. There is also indirect competition between the manufacturer of glasses that competes indirectly with the manufacturers of contact lenses.

The competitive environment for supply analysis can be one of the following:

Competitive offer

The bidders are in free competition. Such is the number of suppliers of the same item that their market share is determined by quality, price and the service offered to the consumer.

Oligopolistic offer

A few bidders dominate the market and determine supply and prices. An example is the new car market.

Monopoly offer

There is only one provider of the service or product. Dominate the market completely by implanting price, quality and quantity. The classic case is state monopolies.

How is the offer analysis done?

It is done through the following steps:

- Gather information from primary sources.

- Collect information from secondary sources.

- Analyze the information of the offer.

- Determine the competitive position.

Gather information from primary sources

You need to know both the quantitative and qualitative elements that influence the offer. Market research is carried out with consumers, through discussion groups and questionnaires, providing valuable information about the offer.

You should get answers to questions like these:

- Who are the main competitors?

- What is the range of products and services offered?

- Are competitors profitable? Are they expanding or shrinking?

- How long have they been in business?

- What are the positive and negative attributes according to customers?

- How do current customers see us compared to the competition?

- How can you differentiate the company from its competitors?

- What is your marketing and promotion strategy?

- What are your pricing structures?

- Do they operate in the same geographical area?

- What is your market share percentage?

- What is your sales volume?

Gather information from secondary sources

Secondary sources contain information related to competitors for a purpose and are available for public access. Examples of this are books, magazine articles, and sales brochures.

Marketing reports are also considered secondary sources, as is all content that can be found on the Internet.

Other secondary sources are:

- Advertising, which shows the price and information of the products and, in addition, provides an indicator of the promotional plan of the competition.

- Annual reports, which offer financial information, including sales volume, increase in income and total market share.

- The own sales force.

- Direct observation of products in stores.

Analyze the offer information

Once all the information on the offer has been collected, it is analyzed to establish product information and marketing strategies, and to identify the strengths and weaknesses of the competition.

The competitive position of a product or service is determined by its price and how well it differs from the competition.

The product attributes are listed in order of importance, and a comparative table is prepared showing whether each of the competitors has them or not.

Determine competitive position

Finally, the product is evaluated against that of the competition. How does the product compare with that of the closest competitor? What attributes are unique to each product?

The more unique attributes the product has, the stronger the competitive position in the market.

Example

The logistics management of the XYZ company is asking its suppliers for a quote for the purchase of the ABC supply, required for the production of packaging. This quote must include at least the following information:

- Supply price.

- Delivery time in days.

- Credit days to pay.

Quotations are received from three suppliers. With this information, the following quote evaluation table for ABC supply is made:

The logistics manager must select the bidder from whom this supply will be purchased, based on the following considerations:

- Price is the most important attribute, since it is essential for the company to generate the highest profitability in the sale of packaging.

- The time of existence of the ABC supply in the inventory will be 15 days.

- The financial capacity of the company is very solvent.

When analyzing the offer in the table, the manager chooses the AA supplier for offering the best price, having a delivery time less than 15 days of existence of the supply and offering a competitive payment term.

References

1. Bacca Urbina (1990). Market study Part II Chapter 2.6. Project evaluation. McGraw-Hill 2nd. Edition.
2. Susan MaGee (2018). How to Conduct and Prepare a Competitive Analysis. Edward Lowe Foundation. Taken from: edwardlowe.org.
3. Michael Kerr (2018). How to Write a Market Analysis. Bplans Starting a business made easy. Taken from: articles.bplans.com.
4. Soledad Orjuela Córdova, Paulina Sandoval Medina (2002). Market study guide for project evaluation. University of Chile. Faculty of Economic and Administrative Sciences. Taken from: emprendeunefa.files.wordpress.com
5. Raymond Hehman (1984). Development and execution of marketing strategies. Editorial Norma. Second reprint 1991.