3.2 Competitive Advantages Chapter 3: The Competitive Market.
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Transcript of 3.2 Competitive Advantages Chapter 3: The Competitive Market.
3.2 Competitive Advantages
Chapter 3: The Competitive
Market
Sustainable Competitive Advantage Methods by which a business holds onto
its customers, in spite of the competition
Four types of sustainable competitive advantage Developing a unique selling proposition Lowering production costs Servicing a niche market Creating customer loyalty
Developing a Unique Selling Proposition A unique selling proposition (USP) is
the one thing that a company’s product has that competing companies do not have and are not likely to develop
Does a company have a USP? They need to ask: “Why would my target
customer buy from me instead of from my competitor?”
Developing a Unique Selling Proposition
If the answer to the question is something that CAN be duplicated by the competitor, then the company does NOT have a USP “I advertise more” “I deliver” “I produce the product in green”
Developing a Unique Selling Proposition
If the answer to the question is something that CANNOT be duplicated by the competitor, then the company DOES have a USP
EXAMPLES: “This is a patented design” “I licensed the rights to the name and
image of that character “The supplier will only sell to me”
Lowering Production Cost
Using cost-efficient and high-technology manufacturing systems to reduce the costs associated with its products can create a sustainable competitive advantage
E.g. Business can reduce production costs by building a plant in a country that has: Lower resource costs Fewer taxes Lower cost of living
Servicing a Niche Market
A competitive advantage can be achieved if a marketer recognizes an opportunity to create a niche market and takes advantage of that opportunity
E.g. creating software packages for specific markets like billing software for dentists
Creating Customer Loyalty Consumer loyalty can also be referred to as
relationship marketing
The consumer develops a strong relationship with the product or retailer and will not consider another brand or store
E.g. buying Honda or Heinz ketchup
Loyalty will hold up unless if the favoured product or retailer makes a mistake
Non-Sustainable Competitive Advantages Competitive advantages that can be
used by competitors to shift sales in their direction Promotion Placement Quality Benefits of use Price Design features
Promotion A company can obtain a competitive
advantage through promotion if it can create top-of-mind awareness top-of-mind awareness means that the
consumer is most likely to think about one brand of a product before he/she thinks of another
This is a major goal of marketers and advertisers
E.G.- Tim Horton’s ROLL UP THE RIM
Your Turn…
Take a moment and write down as many advertising slogans as you can think of…
Which ones do you know…?
Think Different
Apple Macintosh
When you care to send the very best
Hallmark
Which ones do you know…?
“Where’s the beef?”
Wendy’s
http://www.spike.com/video/wendys-commercial/2423864
Which ones do you know…?
Look, Ma, no cavities
Crest
M’m! M’m! Good! Campbell’s
Soup
Which ones do you know…?
Snap! Crackle! Pop
Kellogg’s Rice Krispies
Which ones do you know…?
Because I’m worth it! L’Oreal
Placement The more placement a product has the
more competitive that product can be
If a product has exclusive distribution in a market, it has a very competitive edge
The big retail stores that specialize in a specific product category such as books (e.g. Chapters), hardware, or pet supplies are called category killers
Why?--
Quality A company can compete with other
products in its category by being the best of its type
A company must decide to offer either a product that is of high quality or of low quality—“you don’t want to be stuck in the middle”
Why? -
Quality
High Price,High Quality
Low Price,Low Quality
Benefits of Use The value of the product is not the
product itself, it is what the product will do for the customer
e.g. car – good mileage or prestige
A product that can do more or perform better than another product will have a competitive advantage
Price If a customer believes that one product
is equal to another then the cheaper product has a competitive advantage
Only focusing on price as a way of obtaining a competitive advantage will cause problems for that company
Why?-
Design Features
Design features and changes in design have to catch consumers’ interests and a design that a consumer prefers provides a product with a competitive advantage
E.g. Unique design of a car