Creating Competitive

Advantage

Chapter 18
 Objectives
• 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.
• Realize the need for balancing customer
and competitor organizations in order to
become a truly market-centered
organization.
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 Definition
• Competitive Advantage
 An advantage over competitors
gained by offering consumers
greater value than competitors
offer.

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 Definition
• Competitive 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.

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 Competitor Analysis
Steps in the • Firms face a wide range of
Process: competition
• Be careful to avoid
• Identifying
“competitor myopia”
Competitors
• Methods of identifying
• Assessing Competitors competitors:
 Industry point-of-view
• Selecting Competitors
 Market point-of-view
to Attack or Avoid  Competitor maps can help

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 Competitor Analysis
Steps in the • Determining competitors’
objectives
Process:
• Identifying competitors’
• Identifying strategies
Competitors  Strategic groups
• Assessing competitors’
• Assessing Competitors
strengths and weaknesses
• Selecting Competitors  Benchmarking
to Attack or Avoid • Estimating competitors’
reactions

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 Competitor Analysis
Steps in the • Strong or weak
Process: competitors
 Customer value analysis

• Identifying • Close or distant

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 Competitor Analysis
• Designing Competitive Intelligence
Systems
 A Well-Designed CI System:
 Identifies types and sources of competitive
information
 Continuously collects information
 Checks reliability and validity of information
 Interprets and organizes information
 Distributes information to decision makers and
responds to queries
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 Competitive Strategies
• Approaches to Marketing Strategy
 No single strategy is best for all
companies
 Marketing strategy and practice often
passes through three stages:
 Entrepreneurial marketing
 Formulated marketing
 Intrepreneurial marketing

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 Competitive Strategies
• Basic Competitive Strategies: 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

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 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

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 Competitive Strategy
Competitive • Expanding the total demand
Positions  Finding new users
 Discovering and promoting new
product uses
• Market Leader  Encouraging greater product
usage
• Market Challenger • Protecting market share
 Many considerations
• Market Follower  Continuous innovation

• Market Nicher • Expanding market share

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 Competitive Strategy
Competitive • Option 1: challenge the
Positions market leader
 High-risk but high-gain
 Sustainable competitive
• Market Leader advantage over the leader is
key to success
• Market Challenger • Option 2: challenge firms
of the same size, smaller
• Market Follower size or challenge regional
or local firms
• Market Nicher
• Full frontal vs. indirect
attacks
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 Competitive Strategy
Competitive • Follow the market
Positions leader
 Focus is on improving
• Market Leader profit instead of market
share
• Market Challenger  Many advantages:
 Learn from the market
• Market Follower leader’s experience
 Copy or improve on the
• Market Nicher leader’s offerings
 Strong profitability

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 Competitive Strategy
Competitive • Serving market niches
Positions means targeting
subsegments
• Good strategy for small
• Market Leader firms with limited
• Market Challenger resources
• Offers high margins
• Market Follower • Specialization is key
 By market, customer,
• Market Nicher product, or marketing mix
lines

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 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

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