Creating Competitive Advantage Dr. Amila Jayarathne

Session Outline

Competitor Analysis

Competitive Strategies

Balancing Customer and Competitor

Orientations

Competitor Analysis

Competitive Advantage An advantage over competitors gained by offering consumers greater value than competitors do.

Competitor 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.

Competitive Marketing Strategies Strategies that strongly position the company against competitors and that give the company the strongest possible strategic advantage.

Why?

To plan effective marketing strategies the 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.

Identifying the company’s

competitors

Assessing competitors’ objectives, strategies,

strengths and weaknesses and reaction patterns

Selecting which competitors to

attack or avoid.

Steps in Analyzing Competitors

Identifying Competitors

Normally, identifying competitors would seem a simple task. But companies actually face a much wider range of competitors.

Companies must avoid competitor myopia.

Different Forms of Competition

Brand Competition

Industry Competition

Form Competition

Generic Competition

Porter’s Approach to Competitive Structure Analysis

Assessing Competitors

Determining Competitors’ Objectives

Identifying Competitors’ Strategies

Assessing Competitors’ Strengths and Weaknesses

Estimating Competitors’ Reactions

Strategic Groups

A group of firms in an industry following the same or a similar strategy.

Selecting Competitors to Attack and Avoid

Strong or weak competitors

Close or distant competitors

Good or bad competitors

Strong or Weak Competitors

The company can focus on one of several classes of competitors. A useful tool for assessing competitor strengths and weaknesses is customer value analysis.

Customer Value AnalysisAnalysis conducted to determine what benefits target customers value and how they rate the relative value of various competitors’ offers.

Strategic Sweet Spot versus Competitors

Competitors’ offerings

Customers’ needs

Company’s capabilities

Sweet spot

When selecting competitors, the company wants to find the “sweet spot” where it meets customers’ needs in a way that rivals can’t.

“Good” or “Bad” Competitors

A company really needs and benefits from competitors. However, a company may not view all of its competitors as beneficial. Good competitors play by the rules of the industry. Bad competitors, in contrast, break the rules.

Finding Uncontested Market Spaces

Rather than competing head to head with established competitors, many companies seek out unoccupied positions in uncontested market spaces (No direct competitors) – Blue Ocean Strategy.

Designing a Competitive Intelligence System

Main types of information about competitors must be collected, interpreted, distributed and used.

Competitive Strategies

• What broad marketing strategies might the company use?

• Which ones are best for a particular company, or for the company’s different divisions and products?

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.

Basic Competitive Strategies

Overall Cost Leadership

Differentiation

Focus

Competitive Positions

40% 30% 20% 10%

Market Leader

Market Challenger

Market Follower

Market Nicher

Competitive Market Positions and Roles

Market Leader Strategies

Market LeaderThe firm in an industry with the largest market share.

Expand Total Market

Protect Market Share

Expand Market Share

Market Challenger Strategies

Market ChallengerA runner-up firm that is fighting hard to increase its market share in an industry.

Full Frontal Attack

Indirect Attack

Market Follower Strategies

Market Follower A runner-up firm that wants to hold its share in an industry without rocking the boat.

Follow at a Distance

Market Nicher Strategies

Market Nicher A firm that serves small segments that the other firms in an industry overlook or ignore.

By Customer, Market, Quality-Price, Service

Multiple Niching

Balancing Customer and Competitor Orientations

Can the company spend too much time and energy tracking

competitors, damaging its customer orientation?

Evolving Company Orientations

Product Orientation

Customer Orientation

Competitor Orientation

Market Orientation

Customer-Centered

Com

petit

or-C

ente

red

No Yes

No

Yes

Summary and Conclusions