Topic 9: Competitive advantage Flashcards
Discuss the need to understand competitors as well as customers through competitor analysis.
To prepare an effective marketing strategy, a company must consider its competitors as well as its customers. Building profitable customer relationships requires satisfying target consumer needs better than competitors do. A company must continuously analyze competitors and develop competitive marketing strategies that position it effectively against competitors and give it the strongest possible competitive advantage.
Competitor analysis first involves identifying the company’s major competitors, using both an industry-based and a marketbased analysis. The company then gathers information on competitors’ objectives, strategies, strengths and weaknesses, and reaction patterns. With this information in hand, it can select competitors to attack or avoid. Competitive intelligence must be collected, interpreted, and distributed continuously. Company marketing managers should be able to obtain full and reliable information about any competitor affecting their decisions.
Explain the fundamentals of competitive marketing strategies based on creating value for customers.
Which competitive marketing strategy makes the most sense depends on the company’s industry and on whether it is the market leader, challenger, follower, or nicher. The market leader has to mount strategies to expand the total market, protect market share, and expand market share. A market challenger is a firm that tries aggressively to expand its market share by attacking the leader, other runner-up companies, or smaller firms in the industry. The challenger can select from a variety of direct or indirect attack strategies.
A market follower is a runner-up firm that chooses not to rock the boat, usually from fear that it stands to lose more than it might gain. But the follower is not without a strategy and seeks to use its particular skills to gain market growth. Some followers enjoy a higher rate of return than the leaders in their industry. A market nicher is a smaller firm that is unlikely to attract the attention of larger firms. Market nichers often become specialists in some end use, customer size category, specific customer group, geographic area, or service.
Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization.
A competitive orientation is important in today’s markets, but companies should not overdo their focus on competitors. Companies are more likely to be hurt by emerging consumer needs and new competitors than by existing competitors. Market-centered companies that balance customer and competitor considerations are practicing a true market orientation.
