principles of marketingtheocharis katranis, mbaspring semester 2013 principles of marketing...

Principles of Marketing Theocharis Katranis, MBA Spring Semester 2013

Principles of Marketing

Theocharis Katranis

Lecture 11

Spring Semester 2013

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Today’s Lecture1. We will discuss the need to understand competitors as well as customers through competitor analysis.

2. We will explain the fundamentals of competitive marketing strategies based on creating value for customers

3. We will illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization.

4. We will discuss how the international trade system and the economic, political-legal, and cultural environments affect a company’s international marketing decisions.

5. We will describe three key approaches to entering international Markets

6. We will explain how companies adapt their marketing mixes for international markets.

7. We will identify the three major forms of international marketing organization.

Principles of Marketing Theocharis Katranis, MBA, Spring Semester 2013

Competitors AnalysisLecture 11

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Competitor Analysis is the process of identifying key competitors; assessing their objectives, strategies, strengths and weaknesses, and reaction patterns; and selecting which competitors to attack or avoid.

Definition:


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Definition:

Competitive Advantage

Competitive advantage is an advantage over competitors gained by offering consumers greater value than competitors do.


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Competitive Marketing Strategies

Definition:

Competitive Marketing Strategies are strategies that strongly position the company against competitors and that give the company the strongest possible strategic advantage.


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Competitor Analysis

1. Identifying Competitors

2. Assessing Competitors i.e. Competitor objectives, Strategies, Strengths, Weaknesses, Reactions

3. Selecting Competitors to Attack or Avoid I.e. Strong or Weak competitors, close or distant, Good or Bad (follow rules),

4. Designing a Competitive intelligence system


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Competitive Strategies

1. Overall cost leadership – The company works hard to achieve the lowest production and distribution costs.

2. Differentiation – The company concentrates on creating a highly differentiated product line and marketing program.

3. Focus – The company focuses its efforts on serving a few market segments well rather than going after the whole market.


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Competitive Positions

1. Market Leader – The firm in an industry with the largest market share

2. Market Challenger – A runner-up firm that is fighting hard to increase its market share in an industry

3. Market follower – A runner-up firm that wants to hold its share in an industry without rocking the boat

4. Market nicher – A firm that serves small segments that the other firms in an industry overlook or ignore.


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Balancing Customer and Competitor Orientations

Whether a company is a market leader, challenger, follower, or nicher, it must watch its competitors closely and find the competitive marketing strategy that positions it most effectively.


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Company Orientations

1. Competitor-centered company

2. Customer-centered company

3. Market-centered company


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1. Competitor-centered company

Competitor-centered company is a company whose moves are mainly based on competitors’ actions and reactions.


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2. Customer-centered company

Customer-centered company is a company that focuses on customer developments in designing its marketing strategies and on delivering superior value to its target customers.


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3. Market-centered company

Market-centered company is a company that pays balanced attention to both customers and competitors in designing its marketing strategies.


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Porter’s Strategies


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The Global Marketplace

Companies that go global may face highly unstable government and currencies, restrictive government policies and relations, and high trade barriers.

Corruption is also an increasing problem – officials in several countries often award business not to the best bidder but to the highest briber.


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The Global Marketplace

Global firm – Definition:

Global firm is a firm that by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.


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Looking at the Global Marketing Environment

Before deciding whether to operate internationally, a company must consider the following:

1. The International Trade System

2. Economic Environment

3. Political-Legal Environment

4. Cultural Environment


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1. The International Trade System

1.1 Trade Restrictions

1.2 Government Quotas – Limits in imported quantities

1.3 Government Tariffs on certain imported products

1.4 Exchange Controls – Exchange rates against other currencies1.5 Nontariff Trade Barriers – Restrictive Product Standards – China’s Banking Services

1.6 The World Trade Organization and GATT – (General Agreement on Tariffs and Trade)


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2. The Economic Environment

Industrial/Agricultural Country - High/Low Income Country – Manufacturing Country – Exporting Country (Manufactured goods and services)


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3. The Political-Legal Environment

A company should consider factors such as the country’s attitudes towards international buying, governmental bureaucracy, political stability and monetary regulations.


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4. Cultural Environment

A company should understand country’s norms and taboos, country’s cultural traditions and business behavior.


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Deciding whether to go global

Major questions to be considered:

1. Can the company learn to understand the preferences and buyer behavior of consumers in other countries?

2. Can it offer competitively attractive products?

3. Will it be able to adapt to other countries’ business cultures and deal effectively with foreign nationals?

4. Do the company’s managers have the necessary international experience?

5. Has the management considered the impact of regulations and the political environments of other countries?


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Deciding which Markets to Enter

A company should consider the following:

1. How many markets it wants to enter.

2. What types of markets it wants to enter.

3. Also market size, market growth, cost of doing business, competitive advantage, risk level.


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Deciding which Markets to Enter


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Deciding How to Enter the market

1. Exporting

2. Joint Venture

2.1 Licensing

2.2 Contract Manufacturing

2.3 Management Contracting

2.4 Joint Ownership

3. Direct Investment


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1. Exporting – Definition:

Exporting is entering a foreign market by selling goods produced in the company’s home country, often with little modification.


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2. Joint Venture – Definition:

Joint Venture is entering foreign markets by joining with foreign companies to produce or market a product or service.


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2.1 Joint Venture by Licensing – Definition:

Joint Venture by Licensing is a method of entering a foreign market in which the company enters into an agreement with a licensee in the foreign market.


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2.2 Joint Venture by Contract Manufacturing

It is a joint venture in which a company contracts with manufacturers in a foreign market to produce the product or provide its service.


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2.3 Joint Venture by Management Contracting

It is a joint venture in which the domestic firm supplies the management know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than products.


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2.4 Joint Venture by Joint Ownership

It is a joint venture in which a company joins investors in a foreign market to create a local business in which the company shares joint ownership and control.


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3. Direct Investment

Direct Investment is entering a foreign market by developing foreign-based assembly or manufacturing facilities i.e. HP company that opened a second factory near Delhi to make PC for the local market.


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Deciding on the Global Marketing Program

Companies should consider the following:

1. Standardized Global Marketing

2. Adapted Global Marketing

3. Straight Product Extension

4. Product Adaptation

5. Product Invention

6. Communication Adaptation

7. Dual Adaptation


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1. Standardized Global Marketing

Definition:

Standardized Global Marketing is an international marketing strategy for using basically the same marketing strategy and mix in all the company’s international markets.


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2. Adapted Global Marketing

Definition:

Adapted Global Marketing is an international marketing strategy for adjusting the marketing strategy and mix elements to each international target market, bearing more costs but hopping for a larger market share and return.


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3. Straight Product Extension - Definition

Straight Product Extension is marketing a product in a foreign market without any change.


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4. Product Adaptation – Definition:

Product Adaptation is adapting a product to meet local conditions or wants in foreign markets.


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5. Product Invention – Definition:

Product Invention is creating new products or services for foreign markets.


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6. Communication Adaptation – Definition:

Communication Adaptation is a global communication strategy of fully adapting advertising messages to local markets.


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Companies should consider also the following:

1. Price Issues

2. Promotion Issues

3. Distribution Channels Issues

3.1 Channels Between Nations

3.2 Channels Within Nations


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3.1 Channels Between Nations – Definition:

Channels Between Nations moves company products from points of production to the borders of countries within which they are sold.


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3.2 Channels Within Nations

Channels Within Nations moves the products from their market entry points to the final consumer.


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Deciding on the Global Marketing Organization

Companies can:

1. Have an Export Department

2. Have International Divisions or Subsidiaries

2.1 Be Geographical Organizations

2.2. Be International Subsidiaries

3. Be Global Organizations


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Summary – Lecture 111. We discussed the need to understand competitors as well as customers through competitor analysis.

2. We explained the fundamentals of competitive marketing strategies based on creating value for customers

3. We illustrated the need for balancing customer and competitor orientations in becoming a truly market-centered organization.

4. We discussed how the international trade system and the economic, political-legal, and cultural environments affect a company’s international marketing decisions.

5. We described three key approaches to entering international Markets

6. We explained how companies adapt their marketing mixes for international markets.

7. We identified the three major forms of international marketing organization.


Chapters 18 and 19

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END of Lecture 11

Thank you for your attention

principles of marketingtheocharis katranis, mbaspring semester 2013 principles of marketing...

Documents

mbaspring semester

key competitors

competitors analysislecture

weak competitors

market segments

market nicher

market challenger

market follower