Marketing Class 13 - Creating Competitive Advantange

Principle of marketing
Creating Competitive Advantage
Class 13 (Chapter 13)

Creating Competitive Advantage
Topic Outline
After studying this chapter, you should be able
to:
1. Learn how to understand competitors as well as
customers via competitor analysis.
2. Learn the fundamentals of competitive marketing
strategies based on creating value for customers.
3. Realize the need for balancing customer and
competitor organizations in order to become a truly
market-centered organization.
Definition
Competitive Advantage:
An advantage
over competitors
gained by offering consumers greater
value than
competitors offer.
Intel Story
 Has dominated the
• Heavy focus on
chip industry product and
 Success is directly advertising innovation
related to Intel’s and R&D investments
Intel’s competitive • Changing market
strategy needs have challenged
 Strategy focuses on Intel to adapt
superior value and • Intel is capitalizing on
product leadership the Internet now
Definition
Competitive Analysis:
The process of identifying key
competitors; assessing their objectives,
strategies, strengths and weaknesses,
and reaction patterns; and selecting
which competitors to attack or avoid.
Steps in Analyzing
Competitors
230-year-old
Encyclopedia
Britannica
viewed itself as
competing with
your publishers
of printed
encyclopedias.
Big mistake! Its
real competitors
were software
encyclopedias
and the Internet.
Competitor Map
Competitor Analysis
Steps in the • Determining competitors’

Process: objectives
• Identifying competitors’
Identifying strategies
Competitors – Strategic groups
Assessing • Assessing competitors’
Competitors strengths and weaknesses
Selecting – Benchmarking
Competitors to • Estimating competitors’
Attack or Avoid reactions
Competitor Analysis
Steps in the • Strong or weak competitors

Process: – Customer value analysis
• Close or distant competitors
Identifying – Most companies compete
Competitors against close competitors
Assessing • “Good” or “Bad” competitors
Competitors – The existence of competitors
Selecting offers several strategic benefits
Competitors to
Attack or Avoid
Competitive Strategies
How to compete?
Basic Winning Competitive

Strategies: Porter
 Overall cost leadership
 Lowest production and
distribution costs
 Differentiation
 Creating a highly
differentiated product line
and marketing program
 Focus
 Effort is focused on serving
a few market segments
Competitive Strategies
How to compete?
Basic Competitive Strategies:

Value Disciplines
1. Operational excellence
 Superior value via price and convenience
2. Customer intimacy
 Superior value by means of building strong
relationships with buyers and satisfying
needs
3. Product leadership
 Superior value via product innovation
Hypothetical
Market Structure
Hypothetical
Market Structure
 Market Leader – A company or player that has the largest

total sales or revenue or market share. They dominate the
market in sales, customer loyalty, image, promotion
spending and etc..
 Market Challenger – A current non-market leader that is
actively trying to move up within the industry
 Market Follower – A company that allows other dominant
firms to lead the way within the marketplace
 Market Nichers – A company that target a market that not
many or no competitors is serving but still profitable
Hypothetical
Market Structure
Competitive Competitive
Positions Strategy
• Expanding the total demand
Market Leader – Finding new users
Market – Discovering and promoting new
product uses
Challenger – Encouraging greater product usage
• Protecting market share
Market considerations
Follower – Continuous innovation
• Expanding market share
Market Nicher – Profitability rises with market share
Competitor Strategy
Positions Strategy
Market Leader • Option 1: challenge the market leader
– High-risk but high-gain
Market – Sustainable competitive advantage over
Challenger the leader is key to success
• Option 2: challenge firms of the same
Market
size, smaller size or challenge regional
Follower or local firms
Market Nicher • Full frontal vs. indirect attacks
Competitor Strategy
Positions Strategy
Market Leader • Follow the market leader
– Focus is on improving profit instead of
Market market share
Challenger – Many advantages:
Market • Learn from the market leader’s
experience
Follower • Copy or improve on the leader’s
Market Nicher offerings
• Strong profitability
Competitor Strategy
Positions Strategy
Market Leader • Serving market niches means
targeting sub-segments
Market • Good strategy for small firms
Challenger with limited resources
Market • Offers high margins
Follower • Specialization is key
– By market, customer, product, or
Market Nicher marketing mix lines
Balancing Customer and Competitor
Orientations
Companies can become so competitor

centered that they lose their customer
focus.
Types of companies:
1. Competitor-centered companies
2. Customer-centered companies
3. Market-centered companies
STRATEGY ALTERNATIVE:
Product-Market Expansion Grid
Product-market expansion grid:
 Portfolio planning tool for identifying company growth
opportunities
Five forces driving profitability
STRATEGY ALTERNATIVE:
Five forces driving profitability
Strategies for SBU’s

Porter: • Treacy and Wiersema:
Overall cost leadership  Operational excellence
Differentiation  Product leadership
Focus  Customer intimacy
Gantt chart for scheduling the term project

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Principle of marketing

Creating Competitive Advantage

Class 13 (Chapter 13)

Steps in the • Determining competitors’

Steps in the • Strong or weak competitors

Basic Winning Competitive

Basic Competitive Strategies:

 Market Leader – A company or player that has the largest

Companies can become so competitor

Strategies for SBU’s

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