Final answer:
Marketing managers analyze competitors with similar products and marketing mixes, assessing market power, product similarity, barriers to entry, and bases of competition like price and advertising.
Step-by-step explanation:
Marketing managers focus their competitive analysis primarily on competitors, firms that offer similar products and marketing mixes. The analysis includes understanding how much market power each competitor has and how similar each firm's products are to one another. In addition, the analysis considers the barriers to entry for new firms and how firms compete, whether it's on the basis of price, advertising, product differentiation, and other factors. For instance, in monopolistically competitive markets or oligopolies, significant product differentiation and marketing might be required to establish a recognizable brand and compete effectively.
Figure 7.2 from the reference material illustrates the range of different market structures including Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly, each with varying levels of competition and market power.
Aside from advertising, monopolistically competitive firms can increase demand for their products through innovation, quality improvement, customer service, and more.