Creating Competitive Advantage

Creating Competitive Advantage

Topic Outline
• Competitor Analysis
• Competitive Strategies
• Balancing Customer and Competitor
Orientations
 Creating Competitive Advantage
Competitor analysis: Identifying key competitors; assessing
their objectives, strategies, strengths and weaknesses and
reaction patterns and selecting which competitors to attack or
avoid.

• 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
 Competitor Analysis

Competitor analysis is the process of identifying,

assessing, and selecting key competitors
 Competitor Analysis
Identifying Competitors

Competitors can include:

• All firms making the same product or class
of products
• All firms making products that supply the
same service
• All firms competing for the same
consumer dollars
 Competitor Analysis
Assessing Competitors

Competitor’s Competitor’s
objectives strategies
• Profitability • Strategic group
• Market share growth offers the strongest
• Cash flow competition
• Technological
leadership
• Service leadership
 Competitor Analysis
Assessing Competitors

Competitor’s Estimating
strengths and competitor’s
weaknesses reactions
• What can our • What will our
competitors do? competitors do?
• Benchmarking
 Competitor Analysis
Selecting Competitors to Attack and Avoid

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 these values
• Assessment of the company’s and competitors’
performance on the valued attributes
 Competitor Analysis
Selecting Competitors to Attack and Avoid

• Strong or weak competitors

• Close or distant competitors
• Good or bad competitors
• Finding uncontested market spaces (Try to create
products and services for which there are no direct competitors. Called
a ‘blue-ocean strategy,’ the goal is to make competition irrelevant.)
 Competitor Analysis
Designing a Competitive Intelligence System

• 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 decision makers
• Responds to inquiries about competitors
Competitive Strategies
Basic Competitive Strategies

Michael Porter’s four basic

competitive positioning strategies

Overall cost
Differentiation
leadership

Middle of the
Focus
road
 Competitive Strategies
Basic Competitive Strategies

Overall cost leadership strategy is when a

company achieves the lowest production
and distribution costs and allows it to
lower its prices and gain market share
 Competitive Strategies
Basic Competitive Strategies

Differentiation strategy is when a company

concentrates on creating a highly
differentiated product line and marketing
program so it comes across as an industry
class leader
Focus strategy is when a company focuses its
effort on serving few market segments
well rather than going after the whole
market
 Competitive Strategies
Basic Competitive Strategies

Porter believed that a company that pursued

a clear strategy would achieve superior
performance and that companies without
a clear strategy would not succeed

Porter considered no clear strategy to be

“middle of the road”
Competitive Strategies
Competitive Positions
Market Market
leader challenger
strategies strategies

Market Market
follower nicher
strategies strategies
 Competitive Strategies
Competitive Positions

Market leader is the firm with the largest market

share and leads the market price changes,
product innovations, distribution coverage, and
promotion spending
Market challengers are firms fighting to increase
market share
Market followers are firms that want to hold onto
their market share without rocking the boat
Market nichers are firms that serve small market
segments not being pursued by other firms
 Competitive Strategies
Market Leader Strategies

• Expand total demand

• Protect their current market
• Expand market share
 Competitive Strategies
Market Leader Strategies
Expanding Total Demand
Expand total demand by developing:
• New users
• New uses
• More usage of its products
 Competitive Strategies
Market Leader Strategies
Protecting Market Share

Protect current market by:

• Fixing or preventing weaknesses that
provide opportunities to competitors
• Maintain consistent prices that provide
value
• Keep strong customer relationships
• Continuous innovation
 Competitive Strategies
Market Leader Strategies
Expanding Market Share

Expand market share by:

• Increasing profitability with increasing
market share in served markets
• Producing high-quality products
• Creating good service experiences
• Building close relationships
 Competitive Strategies
Market Challenger Strategies

Challenge the leader with an aggressive bid for

more market share

Play along with competitors and not rock the

boat
 Competitive Strategies
Market Nicher Strategies

Ideal market niche is big enough to be

profitable with high growth potential and
has little interest from competitors
Key to market niching is specialization
• Market
• Customer
• Product
• Marketing mix
 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
 Balancing Customer and
Competitor Orientations

Competitor-centered company spends most

of its time tracking competitor’s moves
and market shares and trying to find ways
to counter them
• Advantage is that the company is a fighter
• Disadvantage is that the company is
reactive
 Balancing Customer and
Competitor Orientations

Customer-centered company spends most of

its time focusing on customer
developments in designing strategies

Provides a better position than competitor-

centered company to identify
opportunities and build customer
relationships
 Balancing Customer and
Competitor Orientations

Market-centered company spends most of

its time focusing on both competitor and
customer developments in designing
strategies
Balancing Customer and
Competitor Orientations