Chapter 6 COMPLETED

Question 1

Competitive Advantage

Answer 1

Some level of superior customer value based on a customer’s preference for performance benefits, the cost of the purchase, and the ease of the purchase

Question 2

Cost advantage

Answer 2

A significantly lower cost position from which to create lower prices while still achieving desirable profit margins

Question 3

Differentiation advantage

Answer 3

A meaningful differentiation that creates desired performance benefits at a level superior to those of competitors

Question 4

Customers won on value vs on price

Answer 4

Customers won by value leads to superior profits, on price leads to disloyal customer base

Question 5

Marketing advantage

Answer 5

A market position and marketing effort that dominates the competition in brand recognition, product line, and channels of distribution

Question 6

2 factors a relative advantage must have to be a competitive advantage

Answer 6

1 - advantage is meaningful to targeted customers (value, price, etc)
2 - advantage is sustainable and hard to imitate

Question 7

3 types of advantages under cost advantage

Answer 7

Variable cost advantage
Marketing cost advantage
Operating cost advantage

Question 8

3 types of advantages under differentiation advantage

Answer 8

Product differentiation advantage
Service quality advantage
Brand reputation advantage

Question 9

3 types of advantages under marketing advantage

Answer 9

Market share advantage
Product line advantage
Channel advantage

Question 10

Variable cost advantage

Answer 10

Businesses with a lower unit cost are able to achieve the same (or better) margins at lower prices than competing businesses

Question 11

Scale effect

Answer 11

A larger unit volume allows for production and purchasing economies that lower the per-unit manufacturing cost of a product

Question 12

Scope effect

Answer 12

When a business adds products to its product line that have similar manufacturing processes and that are made of the same purchased materials as its other products, the business can lower the average unit cost of all products

eg: car platforms

Question 13

Learning effect

Answer 13

As a business builds more of the same product, there is increased efficiency in repeating the same task

Question 14

Marketing cost scope effect

Answer 14

Created when a sales force is given more products to sell to the same customers

Question 15

Product line advantage

Answer 15

The more variety a brand has for products to sell, the more opportunities the brand has to attract customers. More products also means more selling opportunities for salesforce and channel partners

Question 16

Channel advantage

Answer 16

Businesses that require product distribution can secure channel advantages - best option is to have exclusive access to certain channels in a market which in some degree controls market access

Question 17

General Sun Tzu’s “Art of War”

Answer 17

Gaining a knowledge advantage and then attacking obliquely in a way that eventually causes your competitor to follow you instead of eradicating your competitor saves resources

Question 18

Knowledge advantage

Answer 18

Competitive strategies based on superior knowledge of both the terrain (customers) and the enemy (competitors)

Question 19

Customer reactive strategy

Answer 19

High customer knowledge, low competitor knowledge
Leads to overreaction to customer demand

Question 20

Competitor reactive strategy

Answer 20

High competitor knowledge, low customer knowledge
Leads to overreaction to competitor moves

Question 21

Inside-the-box strategy

Answer 21

Low competitor and customer knowledge
Leads to blind guesses

Question 22

Oblique strategy

Answer 22

High competitor and customer knowledge
Leads to market-based strategies to achieve desired gains without sustaining much loss

Question 23

Perceptual mapping

Answer 23

A technique that is used to capture customer perceptions of competing products or services

Question 24

Sources of competitor intelligence

Answer 24

Trade press, trade shows, financial reports, industry reports, customers, suppliers

Question 25

Benefits of competitor intelligence

Answer 25

Creates the opportunity for well-timed and effective strategies against competitors

Question 26

Competitive benchmarking

Answer 26

Way for a business to identify a key area of competitive weakness and then benchmark a business or other entity outside its industry that is recognized as a world-class performer in this area to gain insights into underlying processes that can make processes better than competitors

Question 27

Prisoner’s dillemma

Answer 27

Downward price moves by one competitor force “follower moves” by other competitors in order to minimize lost profits, but if no one price cut in the first place, everyone would be better off