Download CREATING COMPETITIVE ADVANTAGE

P. & Armstrong, G., 2006, Principles of
Marketing, New Jersey: Pearson Education, Inc., Ch.17
Kotler,
After attending the session, students should be
Able to:
1. Discuss the need to understand competitors as
well as customers through competitor analysis.
2. Explain the fundamentals of competitive
marketing strategies based on creating value to
customers.
3. The need for balancing various orientations in
becoming a truly market-centered organization.



COMPETITIVE ADVANTAGE = an advantage
over competitors gained by offering consumers
greater value, either through lower prices or by
providing more benefits that justify higher prices.
COMPETITOR ANALYSIS = the process of
identifying key competitors; assessing their
objectives, strategies, strengths and weaknesses,
and reaction patterns; and selecting which
competitors to attack or avoid.
COMPETITIVE MARKETING STRATEGIES =
strategies that strongly position the company
against competitors and that give the company the
strongest possible strategic advantage.
Identifying the company’s competitors
Assessing competitors’ objectives, strategies,
strengths and weaknesses , and reaction
patterns
Selecting which competitors to attack or avoid

Industry concept of competition: group of
firms that offer a product or class of products
that are close substitutes for one another.

Market concept of competition: companies
that satisfy the same customer need.

DETERMINING COMPETITORS’
OBJECTIVES



Each competitor has a mix of objectives
Knowing a competitor’s mix of objectives reveals
whether the competitor is satisfied with its current
situation and how it might react to different
competitive actions.
A company also must monitor its competitors’
objectives for various segments.

IDENTIFYING COMPETITORS’ STRATEGIES


Strategic group = group of firms in an industry
following the same or a similar strategy in a given
target market.
Although competition is most intense within a
strategic group, there is also rivalry among groups
due to:
 Some of the strategic groups may appeal to
overlapping customer segments.
 The customers may not see much difference in the
offers of different groups.
 Members of one strategic group might expand into new
strategy segments.

ASSESSING COMPETITORS’ STRENGTHS &
WEAKNESSES


Company normally learn about their competitors’
strengths and weaknesses through secondary data;
conduct marketing research with customers,
suppliers, and dealers; personal experience, and
word of mouth.
Conduct benchmarking = the process of comparing
the company’s products and processes to those of
competitors or leading firms in other industries to
find ways to improve quality and performance.

ESTIMATING COMPETITORS’ REACTIONS


Marketing managers need a deep understanding of a
given competitor’s mentality if they want to
anticipate how the competitor will act or react.
Each competitor reacts differently:
 THE TIGER COMPETITOR
 THE LAID BACK COMPETITOR
 THE SELECTIVE COMPETITOR
 THE STOCHASTIC COMPETITOR

STRONG or WEAK COMPETITORS

CLOSE or DISTANT COMPETITORS

“GOOD” or “BAD” COMPATITORS
 Market leader = the firm in an industry with
the largest market share.
 Market challenger = a runner-up firm that is
fighting hard to increase its market share in an
industry.
 Market follower = a runner-up firm that wants
to hold its share in an industry without rocking
the boat.
 Market nicher = a firm that serves small
segments that the other firms in an industry
overlook or ignore.
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 so that it comes across
as the class leader in the industry.
3. Focus. The company focuses its efforts on
serving a few market segments well rather
than going after the whole market.
Strategies –called value discipline– for delivering
superior customer value :
1. Operational excellence. The company provides superior
value by leading its industry in price and convenience. E.g.
Wal-Mart
2. Customer intimacy. The company provides superior value
by precisely segmenting its markets and tailoring its
products or services to match exactly the needs of targeted
customers. E.g. British Airways
3. Product leadership. The company provides superior value
by offering a continuous stream of leading-edge products or
services. E.g. Microsoft



EXPANDING the total DEMAND
 MORE USAGE
 NEW USERS
 NEW USES
EXPANDING MARKET SHARE
PROTECTING MARKET SHARE
 PREVENT OR FIX WEAKNESSES
 CONTINUOUS INNOVATION

DEFENSE STRATEGIES
1.
2.
3.
4.
5.
6.
POSITION DEFENSE. Occupying the most desirable market
space in the mind of the consumers, making the brand almost
impregnable.
FLANK DEFENSE. Erect outposts to protect a weak front or
possibly serve as an invasion base for counterattack.
PREEMPTIVE DEFENSE. Attack before the competitor starts its
offence.
COUNTEROFFENSE DEFENSE. The leader meet the attacker
frontally.
MOBILE DEFENSE. The leader stretches its domain over new
territories that can serve as future centers for defense & offense
through market broadening & market diversification.
CONTRACTION DEFENSE. Giving up weaker territories &
reassigning resources to stronger territories.


DEFINING THE STRATEGIC OBJECTIVE
AND OPPONENT(S)
CHOOSING A GENERAL ATTACK
STRATEGY





FRONTAL ATTACK
FLANK ATTACK
ENCIRCLEMENT ATTACK
BYPASS ATTACK
GUERRILLA WARFARE




COUNTERFEITER: DUPLICATES THE
LEADER’S PRODUCT & PACKAGE AND
SELLS IT ON THE BLACK MARKET
CLONER: EMULATES THE LEADER’S
PRODUCT, NAME, PACKAGING WITH
SLIGHT VARIATIONS
IMITATOR: COPIES SOMETHINGS FROM
THE LEADER BUT MAINTAINS
DIFFERENTIATION
ADAPTER: TAKE THE LEADER’S
PRODUCTS AND ADAPTS OR IMPROVES
THEM


MULTIPLE NICHING IS PREFERABLE TO
SINGLE NICHING
THREE TASKS
CREATING
 EXPANDING
 PROTECTING NICHES




COMPETITOR-CENTERED COMPANY – a
company whose moves are mainly based
competitors’ actions and reactions.
CUSTOMER-CENTERED COMPANY – a company
that focuses on customer developments in designing
its marketing strategies and on delivering superior
value to its target customers.
MARKET-CENTERED COMPANY – a company that
pays balanced attention to both customers and
competitors in designing its marketing strategies.
Customer centered
No
No
Product orientation
Yes
Customer orientation
Competitor
centered
Yes
Competitor orientation
Market orientation