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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.
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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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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 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
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 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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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 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
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
No clear strategy is
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 valuedisciplines:
Operational excellence
Customer intimacy
Product leadership
Basic Competitive Strategies
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18- 18Copyright 2012 Pearson Education, Inc.Publishing as Prentice Hall
Competitive Strategies
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
Basic Competitive Strategies
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Competitive Strategies
Customer intimacy refers 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 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.
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
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
Competitive Positions
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Competitive Strategies
Market followers are firms that want tohold onto their market share
Market nichers are firms that serve smallmarket segments not being pursued byother firms
Competitive Positions
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Competitive Strategies
Expand total
demand
Protect theircurrent 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
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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Balancing Customer andCompetitor Orientations
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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Balancing Customer andCompetitor Orientations
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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Balancing Customer andCompetitor Orientations
Market-centered company spends most of
its time focusing on both competitor andcustomer developments in designing
strategies
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Balancing Customer andCompetitor Orientations
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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.
Copyright 2012 Pearson Education, Inc.
Publishing as Prentice Hall