Marketing Chapter 17

Front 1

Competitive advantage

Back 1

an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices.

Front 2

Building profitable customer relationships and gaining competitive advantae requires...

Back 2

delivering more value and satisfaction to target consumers than comptitors do

Front 3

Competitive Marketing strategies

Back 3

how companies analyze profitable customer relationships:
1) competitor analysis
2) develop competitive marketing strategies

Front 4

1) competitor analysis

Back 4

the process of identifying key competitors; assessing their objectives, strategies, strenghts and weaknesses, and reaction paterns; and selecting which competitors to attack or avoid.

Front 5

i. identifying competitors

Back 5

a) from the industry point of view
b) from the market point of view: competitors are those trying to satisfy the same consumer need or building relationships with the same customer group
c) prifile the company's direct and indirect competitors by mapping the steps buyers take in obtaining and using the product (COMPETITOR MAP) This analysis highlights competitive opportunities and the challenges a company faces.

Front 6

ii. assessing competitors

Back 6

1. Determine competitors' objectives: knowing a competitor's mix of objectives reveals wether the competitor is satisfied with its current situation and how it might react to different comeptitive actions.
2. Identify competitors' strategies:
STRATEGIC GROUP: is a group of firms in an industry following the same or a similar strategy in a given target market. There's competition in the same group as well as among groups
3. Assessing Competitors' Strenghts and Weaknesses:
Need to gather data, conduct primary marketing research with customers, suppliers or dealers or they can benchmark themselves against other firms. (powerful tool for increasing a company's competitiveness)

Front 7

BENCHMARKING

Back 7

The process of comparing the company's products and processes to those of competitors or leading firms in other industries to find ways to improve quality and performance.

Front 8

iii. selecting competitors to attack and avoid

Back 8

1. Strong / Weak competitors:
a useful tool for assessing competitor strenghts and weaknesses is CUSTOMER VALUE ANALYSIS: Analysis conductedto determine what benefits target customers value and how they rate the relative value of various competitors' offers.
The key to gaining competitive advantage is to take each customer segment and examine how the company's offer compares to that of its major competitor.
2. Close / Distant competitors. eg: Wall Mart for Target, not Nordstrom
3. Good / Bad competitors: good competitors play by the rules of the industry while bad competitors break the rules, sheke the industry. eg: American finds Continental and America West bad comeptitors but Delta and United good. Good competitors attempt to Earn share while bad competitors try to Buy it.

Front 9

competitive intelligence system

Back 9

first identifies the vital types of competitrive information and the best sources of this information.
Then collects it. Next it check it for validity and reliability, interprets it and organizes it in an appropriate way. Finally, it sends key information to relevant decision makers.
This system should be cost-effective (it's expensive!)

Front 10

2) Competitive Marketing strategies

Back 10

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

Front 11

i. Approaches to Marketing Strategy

Back 11

1. entrepreneurial marketing: most companies are started by individuals who live by their wits. They visualize an opportunity, construct flexible strategies on the backs of envelopes, and knock on every door to gain attention.
2. Formulated Marketing: As small companies achieve success, they inevitably move toward more-formulated marketing.
3. Intrepreneurial Marketing: Many large and mature companies get stuck in formulated marketing. These companies sometimes lose the marketing creativity and passion that they had at the start. They now need to reestablish within their companies the entrepreneurial spirit and actions that made them successful in the first place. They need to encourage more initiatve and "intreprenership" at the local level.

Front 12

ii. Basic Competitive Strategies

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WINNING ONES:
1. Overall cost leadership: the company works hard to achieve the lowest production and distribution cost (eg: wall mart)
2. Differentiation: the company concentrates on creating a highly differentiated product line and marketing programs so that it comes across as the class leader in the industry. (eg: IBM)
3. Focus: the company focuses its effort on serving a few market segments well rather than going after a shole market. Eg. Ritz-Carlton.

THE LOOSING ONES: the middle ones... trying to be good at everything and ending up not being good at anything.

ANOTHER CLASSIFICATION: Companies can persue any of these three strategies - called value disciplines- for delivering superior customer value:
1. operational excellence: leading the industry in price and convenience. (cheap and easy)
2. customer intimacy: precisely segmenting its markets and tailoring its products or services to match exactly the needs of targeted customers.
3. product leadership: offering a continuous stream of leading-edge products or services. it aims to make its own and competing products obsolete.

Front 13

iii. Competitive Positions

Back 13

Firms competing in a given target market differ in their objectives and resources. We can examine competitive strategies based on the roles firms play in the target market:
a) Market Leader: the firm in an industry with the largest market share.
STRATEGIES:
I: expend total demand (by developing new users, new uses or more usage of its products)
II: protecting Market Share (the best response is continuous innovation)
III: Expand market share (profitability incrases as a business gains share relative to competitors in its served market)
b) Market Challenger: A runner-up firm that is fighting hard to increase its market share in an industry.
STRATEGIES:
I: Full frontal attack (matching the competitor's product, advertising, price and distrib ution efforts, it attacts competitors strenghts - if the market challenger has fewer resources it makes no sense)
II: indirect attack (attack the competitor's weakenesses or gaps in the competitor's market coverage) eg: dell and ibm
c) Market Follower: A runner-up firm that wants to hold its share in an industry without rocking the boat.
STRATEGIES:
I: Follow closely
II: Follow at distance
d) Market nicher: a firm that serves small segments that the other firms in an industry overlook or ignore. (they benefit on high margins rather than high volume)
STRATEGIES:
I: By customer, market (eg. geographic) quality-price (the low or high end of the market), service (offer services not available by other firms)
II: Multiple niching (by developing towo or more niches, a company increases its chances for survival)

Front 14

COMPETITOR-CENTERED COMPANY

Back 14

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

Front 15

CUSTOMER-CENTERED COMPANY

Back 15

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

Front 16

MARKET-CENTERED COMPANY

Back 16

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

Front 17

Evolving company orientations

Back 17

Companies moved from PRODUCT ORIENTATION to CUSTOMER ORIENTED to COMPETITOR ORIENTED. Today, companies need to be MARKET ORIENTED.