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18-1Copyright 2012 Pearson Education, Inc.

Publishing as Prentice Hall

i t s good and

good for you

Chapter Eighteen

Creating Competitive Advantage

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18- 2Copyright 2012 Pearson Education, Inc.


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

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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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Copyright 2012 Pearson Education, Inc.


Competitor Analysis

Assessing Competitors

Competitorsstrengths andweaknesses

What can ourcompetitorsdo?

Benchmarking

Estimatingcompetitors

reactions

What will ourcompetitorsdo?

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Competitor Analysis

Customer value analysis determines 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 thesevalues

Assessment of the companys and competitors

performance on the valued attributes

Selecting Competitors to Attack and Avoid

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Competitor Analysis

Strong or weak competitors

Close or distant competitors Good or bad competitors


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Competitor Analysis

Finding uncontested market spaces


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18- 11Copyright 2012 Pearson Education, Inc.Publishing as Prentice Hall

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 marketing involves visualizing anopportunity and constructing andimplementing flexible strategies

Formulated marketing involves developing formalmarketing strategies and following themclosely

Intrepreneurial marketing involves the attempt toreestablish 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 is when a company

concentrates on creating a highly

differentiated product line and marketingprogram so it comes across as an industry

class leader

Focus strategy is when a company focuses its

effort on serving few market segments wellrather 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

No clear strategy is


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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 valuedisciplines:

Operational excellence

Customer intimacy

Product leadership


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Operational excellence refers 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 intimacy refers 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 leadership refers 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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Market leader is the firm with the largestmarket share and leads the market price

changes, product innovations, distributioncoverage, and promotion spending

Market challengers are firms fighting to

increase market share


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Market followers are firms that want tohold onto their market share

Market nichers are firms that serve smallmarket segments not being pursued byother firms


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Expand total

demand

Protect theircurrent 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

Brings distinctive advantages

Must keep costs and prices low or quality andservices high

Market Follower Strategies

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Balancing Customer andCompetitor 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 company spends 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 company spends 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 company spends most of

its time focusing on both competitor andcustomer developments in designing

strategies

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18 36Copyright 2012 Pearson Education Inc

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States of America.



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