competition/marketing strategy

competitive advantage
• An advantage over competitors gained by offering consumers greater value
competitor analysis
• Identifying key competitors: assessing their objectives, strategies, strengths and weaknesses, and reaction patterns; and selecting which competitors to attack and avoid
1 identifying competitors
2 assessing obj, strategy, strength, weaknesses and reaction
3 selecting how to act
4 designing competitive intelligence
• Identifying (competitive analysis)
the company’s competitors (can be defined from an industry/market point of view)
o Competitor myopia
customer myopia
not thinking about outside competitors and getting blindsided by other potential competitors
• Assessing(competitive analysis)
competitors’ objectives, strategies, strengths and weaknesses, and reaction patterns
1 determine objectives
2 identify competition strategy
3 assess strengths and weaknesses
4 estimate competitors reactions
assessing-Determining competitors’ objectives
Each competitor has a mix of objectives – helps to predict their decisions
assessing-Identifying Competitors’ Strategies
Strategic Group
The more two companies strategies overlap the more they compete
Must develop strategic advantages over companies in their strategic groups
assessing-Assessing Competitors’ Strengths and Weaknesses
What can our competitors do?
assessing-Estimating Competitors’ Reactions
What will our company do?
Competition can be like harmony or openly combative(Verizon/tmobile)
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
strategic group
– a group of firms in an industry following the same or a similar strategy
• Selecting
– which competitors to attack or avoid
1 strong/weak
2 good/bad
3 uncontested market spaces
Selecting-Strong or weak competitors
Strong- big advantage… weak – little advantage
Customer value analysis
How companies offer compares to competition – competitive advantage
Selecting-Good or Bad competitors
Competitors help R&D within a market and legitimize technologies
Good-play by the rules… bad- break the rules(take risks, buy instead of earn)
Selecting-Finding Uncontested Market Spaces
“Blue-ocean strategy”- find a product/service for which there are no competitors
“red ocean”-intense and rival competition
Customer value analysis
an analysis conducted to determine what benefits target customers value of various competitors’ offers – find major attributes and assess performance
• Designing a Competitive Intelligence System
o Info about competitors must be collected, interpreted, distributed, and used – can be expensive and timely…Companies need a competitive intelligence system
Competitive Marketing Strategies
• Strategies that strongly position the company against competitors and give it the greatest possible competitive advantage
3 stage approach to marketing strategy and practice
positioning strategies
value disciplines
• Three stage approach to marketing strategy and practice
o Entrepreneurial marketing
o Formulated marketing
o Intrapreneurial marketing
o Entrepreneurial marketing…Three stage approach
– started by a person who lived by their wits and visualizes an opportunity
o Formulated marketing…Three stage approach
– entrepreneur becomes a small company who is relatively successful and must have a more formulated marketing plan, develop formal marketing strategies and adhere to them closely
o Intrapreneurial marketing … Three stage approach
– large and mature companies get stuck in formulated marketing… entrepreneurs have creative and initiative approaches to marketing… recapture some of the spirit which got them to where they are in the first place
o MICHEAL PORTER competitive winning positioning strategies – Basic Competitive Strategies
Overall cost leadership
Overall cost leadership-positioning strategies
works hard to achieve the lowest production and distribution costs to give consumers lower prices than competitors (Walmart, Lenovo)
Differentiation-positioning strategies
– Company focuses on a highly differentiated product line and marketing program so that it comes across as the class leader. Most customers prefer if prices aren’t too high (Nike)
Focus-positioning strategies
– company focuses on serving a few market segments well rather than going after a whole market (Bose, Ritz-Carlton)
Middle-of-the-roaders-positioning strategies
– these companies will not do as well because they do not chose a specific strategy from above. (sears, levi)
o TREACY AND WIERSEMA with 3 different value disciplines – Basic Competitive Strategies
Operational excellence
Customer intimacy
Product leadership –
Operational excellence – value disciplines
leads industry in price and convenience – reliable quality products (Walmart, IKEA, zara)
Customer intimacy – value disciplines
superior value by precisely segmenting its markets and tailoring its products or services to exactly match needs through close relationship(LLBean, Lexus)
Product leadership -value disciplines
company provides superior value by offering a continuous stream of leading-edge products or services (tesla)
• Competitive Positions
strategies based on the roles firms play in the target market
market leader
market challenger
market follower
market nicher
market leader-Competitive Positions
Leads market in price changes, product introductions, distribution coverage, and promotion spending
Competitors focus on the company as a goal to challenge, imitate or avoid
Leaders can grow arrogant and loose their place… blockbuster -> Netflix
Expand total market, protect market share, expand total market
Expand total market -market leader
if an entire market grows the leader will grow the most (fast foods mcds>burgerking) this can happen through new users, new uses, more uses of same products.
o New users – Lego started targeting girls
o New uses – WD-40 “did you know it can…”
o New usages – campbell’s ads to eat all the time
protect market share – market leader
leading firm must protect its current business against competitors… how to avoid?
o Prevent or fix weaknesses. Always fulfill value promise. Engage in strong relationships with customers. Price makes sense with value. “plug holes” so competitors can’t jump in
o Best defense is a good offense – continuously innovation.
o Never satisfied always looking for ways to save money, innovate and win
expand total market -market leader
o Profitability increases as a business gains share relative to competitors in its served market.. more share = more $
o Served market verse total market – lexus has a small share of the total car market but has big share in luxury car market
market nicher-Competitive Positions
– a firm that serves small segments that the other firms I the industry overlook and ignore (10% o market)
By customer, market, quality, price, service, multiple niching
Niche products become so specialized that they can charge a lot more
Ideal niche is big enough to be profitable and has room for growth
Specialization*** this is little interest to the main industry leaders
Ways to niche – specific end customer(type of people), customer size group()neglected by majors), specific customers()sell to a single company), graphic market()sells only to certain region/area), quality price(extreme high or low), service nichers (service no one else can offer) multiple niching (2+niches)
Niching carries major risks – niche can disappear or grow to attract larger customers
market follower-Competitive Positions
– a runner-up firm that wants to hold its share in the industry without rocking the boat (20% of market)
Follow closely, follow at a distance
Not all runner ups want to challenge the leader(kmart and Walmart price war)
Follower advantages
Must still know how to keep customers and win a fair share of the market
Balance between following and enough distance to avoid retaliation
Brings advantages in location services and financing to customers
Follower = target to challengers
Follower advantages – market follower
learn from market leaders experiences and copy/improve with less investment – can be profitable w/o taking over the leader
market challenger-Competitive Positions
a runner-up firm that is fighting hard to increase its market share in an industry (30% of market)
Full frontal attack, indirect attack
Companies numbers 2+ in market – can still be big ( Pepsi, Ford, Target)
Market challengers define which competitors to target and challenge and have a strategic objective – high risk but potentially high reward goal can be to take over or simply get more market share
Second-mover advantage
Challengers can also avoid the giant and target the smaller guys in the market……beer companies will go after local competition before trying to take down samuel adams
Challenger must define objectives clearly
Second-mover advantage – market challenger
– the number 2 can see what the market leader has done to be successful and copy/modify that (lowes closed the gap on home depot) .. ( mcdonalds stole the fast food idea from white castle and became number one )
FRONTAL ATTACK -market challenger
– match competitors price, product, ads, and distribution.. requires lots of money and doesn’t make sense for new products
• Pepsi/coke and Toyota/ford
INDIRECT ATTACK – market challenger
– hit on weaknesses of large companies and fill in the niches
• Redbull hit a different market than pepsi and coke by selling to night clubs and nontraditional distribution points
Balancing Customer and Competitor Orientations
• Must always watch competition closely and figure out competitive marketing strategy that positions it most effectively
• Always be able to adapt
• Competitor-centered company
• Customer – centered company –
• Market-centered company
• Product-centered company
• Product-centered company –
pay little attention to competitors or customers
• Market-centered company
– a company that pays balanced attention to both customers and competitors in designing its marketing strategies
• Customer – centered company –
a company that focuses on customer developments in designing its marketing strategies and delivering superior value to its target customers
• Competitor-centered company
– a company whose moves are mainly based on competitors’ actions and reactions

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