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Creating Competitive Advantage

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Creating Competitive Advantage Chapter 18 Objectives Learn Major Goals of Marketing Learn how to understand competitors as well as customers via competitor analysis. – PowerPoint PPT presentation

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Title: Creating Competitive Advantage


1
Creating Competitive Advantage
  • Chapter 18

2
Objectives
  • Learn Major Goals of Marketing
  • Learn how to understand competitors as well as
    customers via competitor analysis.
  • Learn the fundamentals of competitive marketing
    strategies based on creating value for customers.

3
c
Intel
  • Has dominated the chip industry
  • Success is directly related to Intels
    competitive strategy
  • Strategy focuses on superior value and product
    leadership
  • Heavy focus on product and advertising innovation
    and RD investments
  • Changing market needs have challenged Intel to
    adapt
  • Intel is capitalizing on the Internet now

4
Two Major Goals of Marketing
  • 1. Design and Manage a Superior Value-Delivery
    System to Reach and Satisfy Target Customer
    Segments.
  • 2. Gain and Sustain Competitive Advantage.

5
Defining Customer Value
6
Value Chain Analysis
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Support Activities
Margin
Outbound Logistics
Marketing and Sales
Operations
Inbound Logistics
Service
Primary Activities
7
Customer Value-Delivery Network
Customer (you)
Retailer (Sears)
Delivery
Order
Producer (Levi)
Delivery
Order
Vendor (Milliken)
Delivery
Order
Raw Material Supplier (Du Pont)
Delivery
Order
Order
Delivery
8
Definition
  • Competitive Advantage
  • An advantage over competitors gained by
    offering consumers greater value than
    competitors offer.

9
Figure 18-1 Steps in Analyzing Competitors
10
Competitor Analysis
  • Firms face a wide range of competition
  • Be careful to avoid competitor myopia
  • Methods of identifying competitors
  • Industry point-of-view
  • Market point-of-view

Steps in the Process
  • Identifying Competitors
  • Assessing Competitors
  • Selecting Competitors to Attack or Avoid

11
Levels of Competition
12
230-year-old Encyclopedia Britannica viewed
itself as competing with other publishers of
printed encyclopedias. Big mistake! Its real
competitors were software encyclopedias and the
Internet.
13
Discussion Question
  • Create a levels of competition diagram for one of
    the following
  • WalMart
  • McDonalds
  • Nike
  • Starbucks
  • Google

14
Competitor Analysis
  • Determining competitors objectives
  • Identifying competitors strategies
  • Strategic groups
  • Assessing competitors strengths and weaknesses
  • Benchmarking
  • Estimating competitors reactions

Steps in the Process
  • Identifying Competitors
  • Assessing Competitors
  • Selecting Competitors to Attack or Avoid

15
Competitor Analysis
  • Strong or weak competitors
  • Customer value analysis
  • Close or distant competitors
  • Most companies compete against close competitors
  • Good or Bad competitors
  • The existence of competitors offers several
    strategic benefits

Steps in the Process
  • Identifying Competitors
  • Assessing Competitors
  • Selecting Competitors to Attack or Avoid

16
Customer Value Analysis (for Competition)
  • Identify Attributes Customers Value
  • Assess Attribute Importance
  • Assess Company and Competitor Performance
  • Examine Segments on Attribute-by-Attribute Basis
  • Monitor Customer Values Over Time

17
Competitive Strategies
  • Basic Winning Competitive Strategies Michael
    Porter
  • Overall cost leadership
  • Lowest production and distribution costs
  • Differentiation
  • Creating a highly differentiated product line
    and marketing program
  • Focus
  • Effort is focused on serving a few market
    segments

18
Attractiveness of an Industry

Threat of Potential Entrants
Bargaining Power of Suppliers
Bargaining Power of Buyers
Existing Rivalry
Threat of Substitutes
19
Hohner has successfully implemented a focus
strategy to capture an 85 share of the harmonica
market.
20
Competitive Strategies
  • Basic Competitive Strategies Value Disciplines
  • Operational excellence
  • Superior value via price and convenience
  • Customer intimacy
  • Superior value by means of building strong
    relationships with buyers and satisfying needs
  • Product leadership
  • Superior value via product innovation

21
Discussion Question
Firms that follow a customer intimacy strategy
are willing to do almost anything for their
customers. Does such a strategy make sense for
local businesses, or only for national / global
corporations?
British Airways practices customer intimacy with
select frequent flyers
22
Figure 18-3 Hypothetical Market Structure
23
Competitive Strategy
  • Expanding the total demand
  • Finding new users
  • Discovering and promoting new product uses
  • Encouraging greater product usage
  • Protecting market share
  • Many considerations
  • Continuous innovation
  • Expanding market share
  • Profitability rises with market share

Competitive Positions
  • Market Leader
  • Market Challenger
  • Market Follower
  • Market Nicher

24
Competitive Strategy
WD-40 has a knack for developing new uses for its
product. What other brands have adopted a
similar strategy?
WD40
25
Competitive Strategy
  • Option 1 challenge the market leader
  • High-risk but high-gain
  • Sustainable competitive advantage over the leader
    is key to success
  • Option 2 challenge firms of the same size,
    smaller size or challenge regional or local firms
  • Full frontal vs. indirect attacks

Competitive Positions
  • Market Leader
  • Market Challenger
  • Market Follower
  • Market Nicher

26
Pepsi is an example of market challenger that has
chosen to use a full frontal attack
27
Competitive Strategy
  • Follow the market leader
  • Focus is on improving profit instead of market
    share
  • Many advantages
  • Learn from the market leaders experience
  • Copy or improve on the leaders offerings
  • Strong profitability

Competitive Positions
  • Market Leader
  • Market Challenger
  • Market Follower
  • Market Nicher

28
Dial Corporation successfully uses a market
follower strategy
29
Competitive Strategy
  • Serving market niches means targeting subsegments
  • Good strategy for small firms with limited
    resources
  • Offers high margins
  • Specialization is key
  • By market, customer, product, or marketing mix
    lines

Competitive Positions
  • Market Leader
  • Market Challenger
  • Market Follower
  • Market Nicher

30
FedEx and UPS are two competitors in the package
delivery business. What competitive strategy
seems to describe each company?
31
Balancing Customer and Competitor Orientations
  • Companies can become so competitor centered that
    they lose their customer focus.
  • Types of companies
  • Competitor-centered companies
  • Customer-centered companies
  • Market-centered companies

32
Figure 18-4 Evolving Company Orientations
33
Latest thinking on Competition
Monopolist
Competitive Approach
Cooperative Approach
Co-opetition
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