Competitive advantage

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Welcome Creating Competitive Advantage TEAM INNOVATION

Transcript of Competitive advantage

Page 1: Competitive advantage

Welcome

Creating Competitive AdvantageTEAM INNOVATION

Page 2: Competitive advantage

Competitive Advantage An advantage over competitors

gained by offering consumers greater value.

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.

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Competitive Advantage1.Competitor Analysis.

Identifying Competitors

Assessing Competitors

Selecting which competitors to attack or avoid

2.Competitive Marketing Strategies.

Approaches to Marketing Strategies

Basic competitive strategies

Market leader strategies

Market challenge strategies

Market Nicher Strategies

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Competitor AnalysisIdentifying 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 consumer dollars

Competitor A

nalysis

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Assessing CompetitorsCompetitor’s objectives

• Profitability• Market share growth• Cash flow• Technological leadership• Service leadership

Competitor’s strategies

• Strategic group offers the strongest competition

A strategic group is a group of firms in an industry following the same or a similar strategy in a given target market.

Competitor A

nalysis

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Assessing Competitors

Benchmarking is company’s products and processes to those of competitors or leading firms in other industries to identity best practices and find ways to improve quality and performance.

Competitor’s strengths and weaknesses

• What can our competitors do?

• Benchmarking

Estimating competitor’s reactions

• What will our competitors do?

Competitor A

nalysis

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Selecting Competitors to

Attack and Avoid1.Strong

or Weak Competitors 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 A

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Selecting Competitors to Attack and Avoid

2.Close or distant competitors

3.Good or bad competitors

Competitor A

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4.Finding uncontested market space. (Blue ocean strategy)

No direct competition.

Competitor A

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1.Identifies competitive information

2.Continually collects

information

3.Validity and reliability

4.Interprets information

5.Organizes information

6.Sends key information

7.Responds to inquiries

Designing a Competitive Intelligence

System

Competitor A

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Competitive Strategies

Approaches to Marketing Strategy

• Entrepreneurial marketing• Formulated marketing• Intrepreneurial marketing

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Entrepreneurial marketing involves visualizing an opportunity and constructing and implementing flexible strategies

Formulated marketing involves developing formal marketing strategies and following them closely

Intrepreneurial marketing involves the attempt to reestablish an internal entrepreneurial spirit and refresh marketing strategies and approaches

Competitive Stra

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Basic Competitive Strategies

Michael Porter’s four basic competitive positioning strategies:

Overall cost leadership

Differentiation

Focus

Middle of the road

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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

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

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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 them quickly to the market.

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Competitive Positions

Market leader strategies

Market challenger strategies

Market follower strategies

Market nicher strategies

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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

Market nichers are firms that serve small market segments not being pursued by other firms

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Strategies for market leaders, challengers, followers and nichers

Market Leader

StrategiesExpand total

market

Protect market share

Expand market share

Market Challenger Strategies

Full Frontal attack

Indirect attack

Market Follower Strategies

Follow closely

Follow at a distance

Market Nicher

StrategiesBy customer

market quality-price , service

Multiple niching

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Balancing Customer and Competitor Orientations

1.Competitor-centered company

2.Customer-centered company

3.Market-centered company

Companies need to continuously adapt strategies to changes in the competitive environment

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Balancing Customer and

Competitor O

rientations

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 fighterDisadvantage is that the company is reactive

Customer-centered company spends most of its time focusing on customer developments in designing strategies.Provides a better position than competitor-centered company to identifyopportunities and build customer relationships

Market-centered company spends most of its time focusing on both competitor and customer developments in designing strategies.

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Balancing Customer and

Competitor O

rientations

Evolving Company Orientation.

Customer orientation

Market orientation

No

No yes

yes

Product orientation

Competitor orientation

Customer Centered

Com

petit

or C

ente

red

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