Creating Competitive Advantage
Creating Competitive Advantage
Topic Outline
• Competitor Analysis
• Competitive Strategies
• Balancing Customer and Competitor
Orientations
Creating Competitive Advantage
Competitor analysis: Identifying key competitors; assessing
their objectives, strategies, strengths and weaknesses and
reaction patterns and selecting which competitors to attack or
avoid.
• Competitive advantages require delivering more
value and satisfaction to target consumers than
competitors do
• Competitive marketing strategies are how
companies analyze their competitors and develop
value-based strategies for profitable customer
relationships
Competitor Analysis
Competitor analysis is the process of identifying,
assessing, and selecting key competitors
Competitor Analysis
Identifying Competitors
Competitors can include:
• 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
consumer dollars
Competitor Analysis
Assessing Competitors
Competitor’s Competitor’s
objectives strategies
• Profitability • Strategic group
• Market share growth offers the strongest
• Cash flow competition
• Technological
leadership
• Service leadership
Competitor Analysis
Assessing Competitors
Competitor’s Estimating
strengths and competitor’s
weaknesses reactions
• What can our • What will our
competitors do? competitors do?
• Benchmarking
Competitor Analysis
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
• Identification of major attributes that customers
value and the importance of these values
• Assessment of the company’s and competitors’
performance on the valued attributes
Competitor Analysis
Selecting Competitors to Attack and Avoid
• Strong or weak competitors
• Close or distant competitors
• Good or bad competitors
• Finding uncontested market spaces (Try to create
products and services for which there are no direct competitors. Called
a ‘blue-ocean strategy,’ the goal is to make competition irrelevant.)
Competitor Analysis
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
Competitive Strategies
Basic Competitive Strategies
Michael Porter’s four basic
competitive positioning strategies
Overall cost
Differentiation
leadership
Middle of the
Focus
road
Competitive Strategies
Basic Competitive Strategies
Overall cost leadership strategy is when a
company achieves the lowest production
and distribution costs and allows it to
lower its prices and gain market share
Competitive Strategies
Basic Competitive Strategies
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
Focus strategy is when a company focuses its
effort on serving few market segments
well rather than going after the whole
market
Competitive Strategies
Basic Competitive Strategies
Porter believed that a company that pursued
a clear strategy would achieve superior
performance and that companies without
a clear strategy would not succeed
Porter considered no clear strategy to be
“middle of the road”
Competitive Strategies
Competitive Positions
Market Market
leader challenger
strategies strategies
Market Market
follower nicher
strategies strategies
Competitive Strategies
Competitive Positions
Market leader is the firm with the largest market
share and leads the market price changes,
product innovations, distribution coverage, and
promotion spending
Market challengers are firms fighting to increase
market share
Market followers are firms that want to hold onto
their market share without rocking the boat
Market nichers are firms that serve small market
segments not being pursued by other firms
Competitive Strategies
Market Leader Strategies
• Expand total demand
• Protect their current market
• Expand market share
Competitive Strategies
Market Leader Strategies
Expanding Total Demand
Expand total demand by developing:
• New users
• New uses
• More usage of its products
Competitive Strategies
Market Leader Strategies
Protecting Market Share
Protect current market by:
• Fixing or preventing weaknesses that
provide opportunities to competitors
• Maintain consistent prices that provide
value
• Keep strong customer relationships
• Continuous innovation
Competitive Strategies
Market Leader Strategies
Expanding Market Share
Expand market share by:
• Increasing profitability with increasing
market share in served markets
• Producing high-quality products
• Creating good service experiences
• Building close relationships
Competitive Strategies
Market Challenger Strategies
Challenge the leader with an aggressive bid for
more market share
Play along with competitors and not rock the
boat
Competitive Strategies
Market Nicher Strategies
Ideal market niche is big enough to be
profitable with high growth potential and
has little interest from competitors
Key to market niching is specialization
• Market
• Customer
• Product
• Marketing mix
Balancing Customer and
Competitor Orientations
• Companies need to continuously adapt
strategies to changes in the competitive
environment
• Competitor-centered company
• Customer-centered company
• Market-centered company
Balancing Customer and
Competitor Orientations
Competitor-centered company spends most
of its time tracking competitor’s moves
and market shares and trying to find ways
to counter them
• Advantage is that the company is a fighter
• Disadvantage is that the company is
reactive
Balancing Customer and
Competitor Orientations
Customer-centered company spends most of
its time focusing on customer
developments in designing strategies
Provides a better position than competitor-
centered company to identify
opportunities and build customer
relationships
Balancing Customer and
Competitor Orientations
Market-centered company spends most of
its time focusing on both competitor and
customer developments in designing
strategies
Balancing Customer and
Competitor Orientations
