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Summary Marketing Chapters 8-18
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Summary principles of marketing, Kotler chapter 8-18
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Marketing summary semester 2Chapter 18, creating competitive advantage
Competitive advantages require delivering more value and satisfaction to target customers than
competitors do.
Competitive marketing strategies are how companies analyze their competitors and develop value-
based strategies for profitable customer relationships.
Myopia = only focusing on a small part of the environment
- Marketing myopia: for example, only focusing on the product of the 4p’s
- Competitive myopia: for example, focus too narrowly on their competitor
By focusing too narrowly a company risks being blindsided and it passes up opportunities for its own
growth and expansion.
Blue ocean = new market, no competition
Red ocean = existing market, with competition
Competitive strategy Michael Porter:
Lowest cost Differentiation
Broad target Cost leadership Differentiation
Narrow Target Focus Focus
Companies without a strategy are called the ‘middle of the road’, these companies would not
succeed.
Differentiation = setting your company apart from the competition, 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.
Cost leadership = a company achieves the lowest production and distribution costs and allows it to
lower its prices and gain market share.
Focus = when a company focuses its effort on serving a few market segments well.
Treacy and Wiersema suggest gaining leadership positions by delivering superior value to their
customers in three strategies or ‘value disciplines’.
- Operational excellence: reduced costs for themselves and efficiency (Ryan Air).
- Product leadership: providing superior value by leading its industry in price and convenience.
- Customer intimacy: providing superior value by segmenting markets and matching the
targeted customers’ needs.
,Competitor analysis: the process of identifying key competitors, assessing their objectives, strategies,
strengths and weaknesses and selecting which competitors to attack or avoid.
Identifying competitors:
- 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 consumers
Assessing competitors:
- Competitor’s objectives (profitability, market share growth, cash flow, etc.)
- Competitor’s strategies (strategic group offers the strongest competition)
- Competitor’s strengths and weaknesses (benchmarking, what do our competitors?)
- Estimating competitor’s reactions (what will our competitors do?)
Benchmarking = comparing the company’s products and processes to those of competitors or leading
firms in other industries to identify best practices and find ways to improve quality and performance.
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.
1. Identification of major attributes that customers value and the importance of these values
2. Assessment of the company’s and competitor’s performance on the valued attributes
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
,Approaches to marketing strategy:
- Entrepreneurial marketing: involves visualizing an opportunity and constructing and
implementing flexible strategies.
- Formulated marketing: involves developing formal marketing strategies and following them
closely.
- Entrepreneurial marketing: involves the attempt to reestablish an internal entrepreneurial
spirit and refresh marketing strategies and approaches.
Competitive positions:
- 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
- Market followers a rummer-up firm that wants to hold its share in an industry without
rocking the boat
- Market niche a firm that serves small segments that the other firms in an industry
overlook or ignore
The market leader’s strategy: expand total demand, protect their current market, and expand market
share.
The strategy of market challenger: challenge the leader with an aggressive bid for more market
share. Second-mover advantage: challenger observes what has made the leader successful and
improves on it.
The strategy of market followers: play along with the competitors and avoid rocking the boat, copy or
improve on the leader’s products and programs with less investment, bring distinctive advantages,
and keep costs and prices low or quality and services high.
The strategy of market nicher: specialties in the market, customer, product, or marketing mix. An
ideal market niche is big enough to be profitable with high growth potential and has little interest
from competitors.
Companies need to continuously adapt strategies to changes in the competitive environment, but
this can become too much:
- Competitor-centered company: moves are based on competitors’ actions and reactions
- Customer-centered company: spends most of its time focusing on customer
- Market-centered company: spends most of its time on both competitor and customer
developments
Not customer-centered Customer-centered
Not competitor-centered Product orientation Customer orientation
Competitor-centered Competitor orientation Market orientation
, Chapter 8, products, services, and brands: building customer value
Product = anything that can be offered to a market for attention, acquisition, use, or consumption
that might satisfy a want or need.
Service = an activity, benefit, or satisfaction offered for sale that is essentially intangible and does not
result in the ownership of anything.
Pure products only products, for example, soap, rings, sweater
Pure services only services, for example, hairdresser, nail tech
Experiences represent what buying the product or service will do for the customer.
Three levels of product and services:
1. Core customer value: what is the buyer really buying? For example for Zara: warmth,
protection, status
2. Actual product: parts and elements of the product
3. Augmented product: additional consumer services and benefits
Product and service classifications:
- Consumer products
- Industrial products
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