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Samenvatting Principles of Marketing, ISBN: 9781292269610 Marketing
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Summary marketing, quarter 3Chapter 18, creating competitive advantage
Today’s companies:
To win in today’s marketplace, companies must move from a product-and-selling
philosophy to a customer-and-marketing philosophy.
Competitive advantages require delivering more value and satisfaction to target
consumers than competitors do.
Competitive marketing strategies are how companies analyse their competitors and
develop value-based strategies for profitable customer relationships.
Competitive advantage = an advantage over competitors gained by offering consumers greater
value.
To create competitive advantage the following steps are needed:
1. Competitor analysis
2. Competitive strategies
3. Balancing customer and competitor orientations
Competitor analysis
= the process of identifying key competitors; assessing their objectives, strategies, strengths,
weaknesses and selecting which competitors to attack or avoid.
To plan effective marketing strategies, a company needs to find out all it can about its
competitors. It must constantly compare its marketing strategies, products, prices, channels and
promotions with those of close competitors. In this way, the company can find areas of potential
competitive advantage and disadvantage.
Figure 1. Steps in analysing competitors
Identifying
Really broadly, competitors might include all companies that compete for the same consumer
euros. All firms making the same product or class of products, and all firms making products
that supply the same service. Companies must avoid ‘competitor myopia’.
Competitor myopia = when companies define their competition too narrowly and acknowledge
only direct and immediate competitors.
Companies can identify their competitors in different point of views:
Industry point of view
Market point of view
,Assessing
The competitors objectives that a company wants to know are, the relative importance that a
competitor places on current profitability, market share growth, cash flow, technological
leadership, service leadership and other goals.
When a company knows the competitors mix of objectives, they know how a competitor is
satisfied with its current situation and how it might react to different competitive actions.
In most industries/markets, the competitors can be sorted into groups that pursue different
strategies. A strategic group offers the strongest competition.
Strategic group = a group of firms in an industry following the same or similar strategy.
A company needs to look at all the dimensions that identify the strategic groups within the
industry. It must understand how each competitor delivers value to its customers. It needs to
know each competitors product quality, features and mix; customer services; pricing policy;
distribution coverage; sales force strategy; and advertising, sales promotion and online and
social media programmes. It must study the details of each competitors research and
development (R&D), manufacturing, purchasing, financial and other strategies.
To find out what the competitors strengths and weaknesses are they need to answer the
question ‘what can our competitors do?’ To find out the strengths and weaknesses the company
can conduct primary marketing research with customers, suppliers and dealers. They can check
online and social media sites. Or they can try benchmarking themselves against other firms.
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.
Benchmarking is a powerful tool for increasing a company’s competitiveness.
The next thing what a company wants to know ‘what will our competitors do?’ Marketing
managers need a deep understanding of a competitors mentality if they want to anticipate how
that competitor will act or react. Each competitor reacts differently.
Selecting
After selecting major competitors, a company can choose to compete with strong or weak
competitors, close or distant competitors, and good or bad competitors.
A useful tool for assessing competitor strengths and weaknesses is customer value analysis.
Customer value analysis = an analysis conducted to determine what benefits target customers
value and how they rate the relative value of various competitors offers.
In conducting a customer value analysis, the company first identifies the major attributes that
customers value and the importance customer place on these attributes. Next, it assesses its
performance against competitors on those valued attributes. The key to gaining competitive
advantage is to examine how a company’s offer compares to that of its major competitors in
each customer segment.
,An industry contains of good and bad competitors. Good competitors play by the rules of the
industry. Bad competitors break the rules. They try to buy share rather than earn it, take large
risks and play by their own rules.
Rather than competing head-to-head with established competitors, many companies seek out
unoccupied positions in uncontested market spaces. This is called the ‘blue ocean strategy’.
Figure 2. Blue ocean strategy vs. red ocean strategy
Designing a competitive intelligence system:
Identifies competitive information and the best sources of this information.
Continually collect information.
Checks information for validity and reliability.
Interprets information.
Organises information.
Sends key information to relevant decision makers.
Responds to inquiries about competitors.
Competitive strategies
= strategies that strongly position the company against competitors and give it the greatest
possible competitive advantage.
In this phase a company must design broad marketing strategies by which it can gain
competitive advantage.
Approaches to marketing strategy
No one strategy is best for all companies. Each company must determine what makes the most
sense given its position in the industry and its objectives, opportunities and resources. There
are three stages of approaching a marketing strategy:
1. Entrepreneurial marketing, involves visualizing an opportunity and constructing and
implementing flexible strategies.
2. Formulated marketing, involves developing formal marketing strategies and following
them closely.
3. Intrapreneurial marketing, involves the attempt to reestablish an internal entrepreneurial
spirit and refresh marketing strategies and approaches.
Basic competitive strategies
, Michael Porter has four basic competitive positioning strategies they can follow, three of them
are winning strategies and the fourth is a losing one. The winning strategies are:
Overall cost leadership: here the company works hard to achieve the lowest production
and distribution costs. Low costs let the company price lower than its competitors and
win a large market share.
Differentiation: here the company concentrates on creating a highly differentiated
product line and marketing programme so that it comes across as the class leader in the
industry.
Focus: here the company focuses its effort on serving a few market segments well rather
than going after the whole market.
The firm that carries out one of these strategies the best will make the most profits. If firms do
not have a clear strategy you call them middle-of-the-roaders. They do the worst. They try to be
good on all strategic counts but end up being not very good at anything.
Michael Treacy and Fred Wiersma suggest companies can gain leadership positions by
delivering superior value to their customers in three strategies or ‘value disciplines’.
Operational excellence: refers to a company providing value by leading its industry in
price and convenience by reducing costs and creating a lean and efficient value delivery
system.
Customer intimacy: refers to a company providing superior value by segmenting markets
and tailoring products or services to match the needs of the targeted customers.
Product leadership: refers to a company providing superior value by offering a
continuous stream of leading-edge products or services. Product leaders are open to
new ideas and solutions and bring the quickly to the market.
Competitive positions
Companies often use different strategies for different business units or products, depending on
the competitive situations of each. The competitive strategies are based on the roles firms play
in the target market.
Market leader: is the firm with the largest market share and leads the market prices
changes, product innovations, distribution coverage and promotion spending.
Market challengers: ate firms fighting to increase market share.
Market followers: are firms that want to hold into their market share.
Market nichers: are firms that serve small market segments not being pursued by other
firms.
Figure 3. Strategies for market leaders, challengers, followers and nichers.
Market leader strategies
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