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Lecture 6

This document outlines the principles of marketing with a focus on creating competitive advantage through understanding competitors and customers. It discusses competitor analysis, competitive strategies, and the importance of balancing customer and competitor orientations. Key concepts include identifying competitors, assessing their strengths and weaknesses, and implementing various competitive strategies such as cost leadership, differentiation, and focus.

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Muniba Khan
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2 views29 pages

Lecture 6

This document outlines the principles of marketing with a focus on creating competitive advantage through understanding competitors and customers. It discusses competitor analysis, competitive strategies, and the importance of balancing customer and competitor orientations. Key concepts include identifying competitors, assessing their strengths and weaknesses, and implementing various competitive strategies such as cost leadership, differentiation, and focus.

Uploaded by

Muniba Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Principles of Marketing

Creating Competitive
Advantage
Learning Objectives
After studying this chapter, you should be able
to:
1. Discuss the need to understand competitors
as well as customers through competitor
analysis
2. Explain the fundamentals of competitive
marketing strategies based on creating value
for customers
3. Illustrate the need for balancing customer
and competitor orientations in becoming a
truly market-centered organization
Chapter Outline

1. Competitor Analysis
2. Competitive Strategies
3. Balancing Customer and
Competitor Orientations

18-3
Competitor Analysis

Identifying Competitors

Competitors can include:


• All firms making the same product or
class of products
• All firms making products that supply
the same service
• All firms competing for the same
consumer dollars
18-4
Competitor Analysis

Identifying Competitors

Competitor myopia refers to a firm


focusing on what it considers to be its
direct competition and not being aware
of indirect or new competitors

18-5
Competitor Analysis

Identifying Competitors

Industry point of view refers to


competitors within the same industry

Market point of view refers to


competitors trying to satisfy the same
customer need or build relationships
with the same customer group

18-6
Competitor Analysis

Identifying Competitors

Market point of view is considered to


provide a broader set of actual and
potential competitors

18-7
Competitor Analysis

Assessing Competitors

• Competitor’s objectives
• Competitor’s strategies
• Competitor’s strengths and
weaknesses
• Competitor’s actions and reactions

18-9
Competitor Analysis

Determining Competitor’s Objectives

Competitor’s objectives include:


• Profitability
• Market share growth
• Cash flow
• Technological leadership
• Service leadership
18-10
Competitor Analysis

Identifying Competitor’s Strategies

A strategic group is a group of firms in an


industry following the same or similar
strategy in a given target market
• Competition is most intense within a strategic
group
• Competition among strategic groups is due to
overlapping customers and lack of perceived
differentiation and expansion of one strategic
group into new segments
18-11
Competitor Analysis
Identifying Competitor’s Strategies
Companies need to understand the competitor’s
ability to deliver value to its customers
• Product quality
• Product features
• Customer service
• Pricing policy
• Distribution coverage
• Sales force strategy
• Promotion programs
• Financial strategies
• R&D
18-12
Competitor Analysis
Assessing Competitor’s Strengths and Weaknesses
Companies learns about their competitors through:

• Primary data
• Secondary data
• Personal experience
• Word of mouth
• Benchmarking is the comparison of the
company’s products or services to competitors
or leaders in other industries to find ways to
improve quality and performance
18-13
Competitor Analysis

Estimating Competitor’s Reactions

Marketing managers need to develop an


understanding of a given competitor’s
mentality, culture, values, and way of
doing business to anticipate how the
competitor will react to the company’s
marketing strategies

18-14
Competitor Analysis

Selecting Competitors to Attack and Avoid

Customer value analysis determines the


benefits that target customers value and how
customers rate the relative value of various
competitor’s offers.
• Identification of major attributes that customers
value and the importance of these attributes
• Assessment of the company’s and competitors’
performance on the valued attributes

18-15
Competitor Analysis

Close or Distant Competitors

Close competitors resemble the


company the most

18-16
Competitor Analysis
Good or Bad Competitors

Good competitors:
• Increase total demand
• Share costs of market and product
development
• Legitimize new technologies
• Serve less attractive market segments
• Provide more product differentiation

18-17
Competitor Analysis

Good or Bad Competitors

Bad competitors:
• Try to buy shares rather than earn in
the market
• Take large risks
• Create disruption

18-18
Competitor Analysis
Designing a Competitive Intelligence System

• Identifies competitive information and the best


sources of this information
• Continually collects information
• Checks information for validity and reliability
• Interprets information
• Organizes information
• Sends key information to relevant decision
makers
• Responds to inquiries about competitors
18-19
Competitive Strategies

Approaches to Marketing Strategy

Stages of approaches to marketing


strategy include:
• Entrepreneurial marketing
• Formulated marketing
• Intrepreneurial marketing

18-20
Competitive Strategies

Approaches to Marketing Strategy

Entrepreneurial marketing involves visualizing an


opportunity and constructing and implementing
flexible strategies
Formulated marketing involves developing formal
marketing strategies and following them closely
Intrepreneurial marketing involves the attempt to
reestablish an internal entrepreneurial spirit and
refresh marketing strategies and approaches

18-21
Competitive Strategies

Basic Competitive Strategies

Michael Porter’s four basic competitive


positioning strategies
• Overall cost leadership
• Differentiation
• Focus
• Middle-of-the-roaders
18-22
Competitive Strategies

Basic Competitive Strategies

Overall cost leadership strategy is


when a company achieves the lowest
production and distribution costs and
allow it to lower its prices and gain
market share

18-23
Competitive Strategies

Basic Competitive Strategies

Differentiation strategy is when a


company concentrates on creating a
highly differentiated product line and
marketing program so it comes across
as an industry class leader

18-24
Competitive Strategies

Basic Competitive Strategies

Focus strategy is when a company


focuses its effort on serving few
market segments well rather than
going after the whole market

18-25
Competitive Strategies

Basic Competitive Strategies

Porter believed that companies that


pursued a clear strategy would achieve
superior performance and that
companies without a clear strategy
would not succeed

Porter considered them to be “middle-


of-the-roaders”
18-26
Competitive Strategies
Basic Competitive Strategies

Michael Treacy and Fred Wiersema suggest


companies can gain leadership positions
by delivering superior value to their
customers in three strategies or “value
disciplines”
• Operational excellence
• Customer intimacy
• Product leadership
18-27
Competitive Strategies

Basic Competitive Strategies

Operational excellence refers to a


company providing value by leading its
industry in price and convenience by
reducing costs and creating a lean and
efficient value delivery system

18-28
Competitive Strategies

Basic Competitive Strategies

Customer intimacy refers to a company


providing superior value by
segmenting markets and tailoring
products or services to match the
needs of the targeted customers

18-29
Competitive Strategies

Basic Competitive Strategies

Product leadership refers to a company


providing superior value by offering a
continuous stream of leading edge
products or services. Product leaders
are open to new ideas and solutions
and bring them quickly to the market.

18-31

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