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Chapter Eighteen
Creating Competitive Advantage
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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
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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
Selecting Competitors to Attack and Avoid
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Competitor Analysis
Finding uncontested market spaces
Selecting Competitors to Attack and Avoid
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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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Competitive Strategies
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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Competitive Strategies
Michael Porters four basic
competitive positioning strategies
Basic Competitive Strategies
Overall costleadership
Differentiation
FocusMiddle of the
road
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Competitive Strategies
Overall cost leadership strategy:
a company achieves the lowest productionand distribution costs and allows it to
lower its prices and gain market share
Basic Competitive Strategies
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Competitive Strategies
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
Basic Competitive Strategies
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Competitive Strategies
A company that pursued a clear strategy
would achieve superior performance
Companies without a clear strategy,middle of the road,would not
succeed
Basic Competitive Strategies
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Competitive Strategies
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
Basic Competitive Strategies
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reserved
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Competitive Strategies
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
Basic Competitive Strategies
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Competitive Strategies
Customer intimacyrefers to a company
providing superior value by segmentingmarkets and tailoring products or services
to match the needs of the targeted
customers
Basic Competitive Strategies
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Competitive Strategies
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.
Basic Competitive Strategies
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Competitive Strategies
Market
leaderstrategies
Market
challengerstrategies
Marketfollower
strategies
Marketnicher
strategies
Competitive Positions
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Competitive Strategies
Expand total
demand
Protect their
current market
Expand market
share
Market Leader Strategies
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Competitive Strategies
Expand total demand by developing:
New users
New uses
More usage of its products
Market Leader StrategiesExpanding Total Demand
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Competitive Strategies
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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Competitive Strategies
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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Competitive Strategies
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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Competitive Strategies
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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Competitive Strategies
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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Balancing Customer and CompetitorOrientations
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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Balancing Customer and CompetitorOrientations
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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Balancing Customer and CompetitorOrientations
Market-centered companyspends most of
its time focusing on both competitor andcustomer developments in designing
strategies
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Balancing Customer and CompetitorOrientations
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