Chapter 18: Creating Competitive Advantage

 

Objectives
  • •Learn how to understand competitors as well as customers via competitor analysis.
  • •Learn the fundamentals of competitive marketing strategies based on creating value for customers.
  • •Realize the need for balancing customer and competitor organizations in order to become a truly market-centered organization.
 
 

 

Please Open The Following Figures In Different Windows and Leave Them Open:

Animated Figure 18-1 , Animated Figure 18-2

 

Case Study
Intel
  • •Has dominated the chip industry
  • •Success is directly related to Intel’s competitive strategy
  • •Strategy focuses on superior value and product leadership
 

 
  • •Heavy focus on product and advertising innovation and R&D investments
  • •Changing market needs have challenged Intel to adapt
  • •Intel is now capitalizing on the Internet

 

Definitions
•Competitive Advantage
  • §An advantage over competitors gained by offering consumers greater value than competitors offer.
 
 

 

Definitions
•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.
 

 

Competitor Analysis
Steps in the Process:

  • •Identifying Competitors

  • •Assessing Competitors

  • •Selecting Competitors to Attack or Avoid

 

 
 
  • •Firms face a wide range of competition
  • •Be careful to avoid “competitor myopia”
  • •Methods of identifying competitors:
  1. §Industry point-of-view
  2. §Market point-of-view
       Competitor maps can help  

 

 

Competitor Analysis
Steps in the Process:

  • •Identifying Competitors

  • •Assessing Competitors

  • •Selecting Competitors to Attack or Avoid

 

 

 
  • •Determining competitors’ objectives
  • •Identifying competitors’ strategies
  1. §Strategic groups
  • •Assessing competitors’ strengths and weaknesses
  1. §Benchmarking
  • •Estimating competitors’ reactions
 

 

 

Competitor Analysis
Steps in the Process:

  • •Identifying Competitors

  • •Assessing Competitors

  • •Selecting Competitors to Attack or Avoid

 

 

 
  • •Strong or weak competitors
  • §Customer value analysis
  • •Close or distant competitors
  • §Most companies compete against close competitors
  • •“Good” or “Bad” competitors
  • §The existence of competitors offers several strategic benefits
 

 

 

Competitor Analysis
•Designing Competitive Intelligence Systems
§A Well-Designed CI System:
  •  Identifies types and sources of competitive
     information
  •  Continuously collects information
  •  Checks reliability and validity of information
  •  Interprets and organizes information
  •  Distributes information to decision makers and responds to queries
 
 

 

Competitive Strategies
•Approaches to Marketing Strategy
  • §No single strategy is best for all companies
  • §Marketing strategy and practice often passes through three stages:
  1.  Entrepreneurial marketing
  2.  Formulated marketing
  3.  Intrepreneurial marketing
 
 

 

Competitive Strategies
•Basic 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
•Basic Competitive Strategies: Value Disciplines
  • §Operational excellence
     Superior value via price and convenience
  • §Customer intimacy
       Superior value by means of building strong
 relationships with buyers and satisfying needs
  • §Product  leadership
     Superior value via product innovation
 
 

 

Competitive Strategy

Competitive Positions

  • Market Leader
  • •Market Challenger
  • •Market Follower
  • •Market Nicher
 
•Expanding the total demand
  • §Finding new users
  • §Discovering and promoting new product uses
  • §Encouraging greater product usage
•Protecting market share
  • §Many considerations
  • §Continuous innovation
•Expanding market share
  • §Profitability rises with market share
 

 

 

Competitive Strategy

Competitive Positions

  • Market Leader
  • •Market Challenger
  • •Market Follower
  • •Market Nicher

 
  • •Option 1: challenge the market leader
  • §High-risk but high-gain
  • §Sustainable competitive advantage over the leader is key to success
  • •Option 2: challenge firms of the same size, smaller size or challenge regional or local firms
  • •Full frontal vs. indirect attacks
 

 

 

Competitive Strategy

Competitive Positions

  • Market Leader
  • •Market Challenger
  • •Market Follower
  • •Market Nicher

 
  • •Follow the market leader
  • §Focus is on improving profit instead of market share
  • §Many advantages:
  1. Learn from the market leader’s experience
  2. Copy or improve on the leader’s offerings
  3. Strong profitability
 

 

 

Competitive Strategy

Competitive Positions

  • Market Leader
  • •Market Challenger
  • •Market Follower
  • •Market Nicher

 
  • •Serving market niches means targeting subsegments
  • •Good strategy for small firms with limited resources
  • •Offers high margins
  • •Specialization is key
  • §By market, customer, product, or 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
 
 

Chapter 18: Creating Competitive Advantage

 

Study Guide
  • Concepts Check

 

Study Guide
  • Concepts Challenge

 

 
  • Chapter Outline

 

 
  • Video Case

 

 
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Chapter 18: Creating Competitive Advantage

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