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Chapter Eighteen

Creating Competitive Advantage

Copyright 2014 by Pearson Education, Inc. All rights reserved

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Creating Competitive Advantage

Competitor Analysis

Competitive Strategies

Balancing Customer and CompetitorOrientations

Topic Outline


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Competitive advantages require delivering

more value and satisfaction to target

consumers than competitors do

Competitive marketing strategies are how

companies analyze their competitors and

develop value-based strategies for

profitable customer relationships

Todays Companies


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Competitor analysis is the process of identifying,

assessing, and selecting key competitors

Competitor Analysis

Copyright 2014 by Pearson Education, Inc. All rights

reserved

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Competitor Analysis

Competitors can include:

All firms making the same product orclass of products

All firms making products that supplythe same service

All firms competing for the sameconsumer dollars

Identifying Competitors


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Competitor Analysis

Assessing Competitors

Competitorsobjectives

Profitability Market share growth

Cash flow

Technologicalleadership

Service leadership

Competitorsstrategies

Strategic groupoffers the strongestcompetition


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Competitor Analysis

Assessing Competitors

Competitorsstrengths andweaknesses

What can ourcompetitorsdo?

Benchmarking

Estimatingcompetitors

reactions

What will ourcompetitorsdo?


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Competitor Analysis

Customer value analysisdetermines the benefits

that target customers value and how customers

rate the relative value of various competitors

offers

Identification of major attributes that customers

value and the importance of these values Assessment of the companys and competitors

performance on the valued attributes

Selecting Competitors to Attack and Avoid


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Competitor Analysis

Close or distant

competitors Good or bad competitors



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Competitor Analysis

Finding uncontested market spaces



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Competitor Analysis

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 decisionmakers

Responds to inquiries about competitors

Designing a Competitive Intelligence System


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Entrepreneurial marketinginvolves visualizing anopportunity and constructing andimplementing flexible strategies

Formulated marketinginvolves developing formalmarketing strategies and following themclosely

Intrepreneurial marketinginvolves the attempt to

reestablish an internal entrepreneurial spiritand refresh marketing strategies andapproaches

Approaches to Marketing Strategy


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Michael Porters four basic

competitive positioning strategies

Basic Competitive Strategies

Overall costleadership

Differentiation

FocusMiddle of the

road


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Overall cost leadership strategy:

a company achieves the lowest productionand distribution costs and allows it to

lower its prices and gain market share



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Differentiation strategy:

a company concentrates on creating a highly

differentiated product line and marketingprogram so it comes across as an industryclass leader

Focus strategy:

a company focuses its effort on serving fewmarket segments well rather than going

after the whole market



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A company that pursued a clear strategy

would achieve superior performance

Companies without a clear strategy,middle of the road,would not

succeed



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Michael Treacy and Fred Wiersema suggestcompanies can gain leadership positions

by delivering superior value to their

customers in three strategies or value

disciplines:

Operational excellence Customer intimacy

Product leadership


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reserved

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Operational excellencerefers to a company

providing value by leading its industry inprice and convenience by reducing costs

and creating a lean and efficient value

delivery system



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Customer intimacyrefers to a company

providing superior value by segmentingmarkets and tailoring products or services

to match the needs of the targeted

customers



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Product leadershiprefers to a company

providing superior value by offering acontinuous stream of leading-edge

products or services. Product leaders are

open to new ideas and solutions and bring

them quickly to the market.



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Market

leaderstrategies

Market

challengerstrategies

Marketfollower

strategies

Marketnicher

strategies

Competitive Positions


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Expand total

demand

Protect their

current market

Expand market

share

Market Leader Strategies


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Expand total demand by developing:

New users

New uses

More usage of its products

Market Leader StrategiesExpanding Total Demand


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Protect current market by:

Fixing or preventing weaknesses thatprovide opportunities to competitors

Maintain consistent prices that provide

value Keep strong customer relationships

Continuous innovation

Market Leader StrategiesProtecting Market Share


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Expand market share by:

Increasing profitability with increasingmarket share in served markets

Producing high-quality products

Creating good service experiences Building close relationships

Market Leader StrategiesExpanding Market Share


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Challenge the leader with

an aggressive bid for

more market shareSecond mover advantage:

challenger observes

what has made theleader successful and

improves on it

Market Challenger Strategies


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Play along with competitors and not rock the

boat

Copy or improve on leaders products and

programs with less investment

Bring distinctive advantages

Must keep costs and prices low or quality andservices high

Market Follower Strategies


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Ideal market niche is big enough to beprofitable with high growthpotential and has little interest

from competitorsKey to market niching is specialization

Market

Customer Product

Marketing mix

Market Nicher Strategies


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Balancing Customer and Competitor

Orientations

Companies need to continuously adapt

strategies to changes in the competitive

environment Competitor-centered company

Customer-centered company

Market-centered company


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Competitor-centered companyspends most

of its time tracking competitors moves

and market shares and trying to find waysto counter them

Advantage is that the company is a fighter

Disadvantage is that the company isreactive


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Customer-centered companyspends most of

its time focusing on customer

developments in designing strategiesProvides a better position than competitor-

centered company to identify

opportunities and build customer

relationships


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Market-centered companyspends most of

its time focusing on both competitor andcustomer developments in designing

strategies


Kotler Pom 15e 18

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