Chapter 18: Creating competitive advantage

Behavioural Segementation

- Occasion - User status - Useage rate - loyalty status - benefits sought

second-mover advantage

The challenger observes what has made the leader successful and then improves upon it

Ways to identify competitors

industry point of view - coca cola vs pepsi market point of view - coca cola vs water & tea

Nichers

meets targeted consumers needs better than other firms ideal niche; big enough to be profitable, and growth potential; of little interest to major competitors

Steps in assessing competitors

1. Determining their objectives - relative importance that a competitors places on current profitability, market share growth, cash flow, technological leadership, service leadership and other goals - knowing a competitors mix of objectives reveals whether competitor is satisfied and how it reacts to different actions - a compan must monitor competitors objectives for various segments 2. Identifying their strategies - the more that one firm's strategy resembles another firm's strategy, the more the two firms compete (strategic group). If a firm enters a strategic group the members of that group become its key competitors - understanding how each company delivers value to its customers 3. Assessing their strengths and weaknesses - What can competitors do? gather data on each competitor's goals, strategies, and performance -or try to benchmark themselves against other firms 4. Estimating competitor's reactions - what will our competitors do?

Poter's four basic competitive positioning strategies

1. Differentiation - concentrating on creating a highly differentiated product line and marketing programme so that product becomes class leader Most customers would prefer to own this brand if money were irrelevant 2. Focus - serving only a few market segments well rather than going after the whole market 3. Overall cost leadership - achieving lowest production and distribution cost (only works if price ist the absolute lowest) 4. middle of the roaders (stuck-in-the-middle)- no clear strategy

Three stages of marketing strategy

1. Entrepreneurial - guerilla marketing (marketing by founders) 2. Formulated - adopting the formal marketing tools 3. Intrepreneurial - encourage marketing initiative

Steps in analysing competitors

1. Identify the competitors 2. Assessing competitors' objectives, strategies, strengths and weaknesses, and reaction patterns 3. selecting which competitors to attack or avoid

Competitive positions

1. Market leader - largest market share 2. Market challenger - runner-up firm fighting hard to increase market share 3. Market follower - runner up firm that wants to hold its share in an industry without rocking the boat 4. Market nicher - a firm that serves small segments that other firms have overlooked or ignore

Three value disciplines for delivering superior customer value

1. Operational excellence - leader in price and convenience through efficient value delivery system 2. Customer intimacy - precisely segmenting and tailoring products to exactly match the needs of targeted customers. specialized in satisfying unique consumer needs through close relationship with customers 3. Product leadership - superior value by offering continuous stream of leading-edge products (serve customers who want state of the art products)

Selecting competitors to attack and avoid

1. Strong or weak competitors Customer value analysis; determine the benefits that target customers value and how customers rate the relative value of various competitors' offers - the company wants to find the place in the market where it meets customers' needs in a way rivals can't 2. Close or distant competitors firm wants to compete with close competitors, but not destroy it,since that could bring large companies into niches 3. good or bad competitors competitors share cost of market and product development, help legitimize new technology, serve less attractive segments and lead to more differentiation. Competitors increase total demand 4. Finding uncontested market spaces blue ocean strategy; goal is to make competiton irrelevant (value innovation)

Customer-centered company

A company that focuses on customer developments in designing its marketing strategies and delivering superior value to its target customers.

Market-centered company

A company that pays balanced attention to both customers and competitors in designing its marketing strategies.

Competitor-centered company

A company whose moves are mainly based on competitors' actions and reactions.

market nichers strategies

Almost every industry includes firms that specialize in serving _____. Instead of pursuing the whole market, or even large segments, these firms target subsegments.

Competitive advantage

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

Customer value analysis

An analysis conducted to determine what benefits target customers value and how they rate the relative value of various competitors' offers.

value and satisfaction

Building profitable customer relationships and gaining competitive advantage requires delivering more_____ and ____ to target consumers than competitors do.

competitor myopia

Companies must avoid "__________"A company is more likely to be "buried" by its latent (hidden) competitors than its current ones.

multiple niching

Niching carries some major risks. For example, the market niche may dry up, or it might grow to the point that it attracts larger competitors. That is why many companies practice ________. By developing two or more niches, a company increases its chances for survival.

Company orientations

Product - little attention to both Customer - paying attention to customer + not to competitors Competitor - little attention to customers + attention to competitors Market attention to both

Competitive marketing strategies

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

Positioning statement

To (targeted segment and need) our (brand) is a (concept) that (point of difference)

market follower

can learn from the leader's experience. It can copy or improve on the leader's products and programs, usually with much less investment. Although the follower will probably not overtake the leader, it often can be as profitable. the market follower must keep its manufacturing costs low and its product quality and services high. It must also enter new markets as they open up. must find balance between following closely enough to win customers from the market leader and follow enough of a distance to avoid retaliation

Market leader strategies

expand total market (demand) - leader gains most when total market expands, can also promote new uses of product or more uses protect market share - prevent or fix weaknesses that provide opportunities for competitors. Always fulfill value proposition and the leader should plug holes - but best defense is good offense and best response continuous innovation expand market share - profitability increases as a business gains share relative to competitors in its served market.

Market challenger strategies

full frontal attack - matching the competitor's product, advertising, price, and distribution efforts. It attacks the competitor's strengths rather than its weaknesses. indirect attack - attacking competitors weaknesses or on gaps in the market coverage