Kotler18 exs

Creating Competitive Creating Competitive AdvantageAdvantage

Chapter 18Chapter 18

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Objectives• Learn how to understand competitors Learn how to understand competitors

as well as customers via competitor as well as customers via competitor analysis.analysis.

• Learn the fundamentals of competitive Learn the fundamentals of competitive marketing strategies based on creating marketing strategies based on creating value for customers.value for customers.

• Realize the need for balancing customer Realize the need for balancing customer and competitor organizations in order to and competitor organizations in order to become a truly market-centered become a truly market-centered organization.organization.

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• Has dominated Has dominated the chip industrythe chip industry

• Success is directly Success is directly related to Intel’s related to Intel’s competitive competitive strategystrategy

• Strategy focuses Strategy focuses on superior value on superior value and product and product leadershipleadership

• Heavy focus on Heavy focus on product and product and advertising advertising innovation and R&D innovation and R&D investmentsinvestments

• Changing market Changing market needs have needs have challenged Intel to challenged Intel to adaptadapt

• Intel is now Intel is now capitalizing on the capitalizing on the InternetInternet

IntelIntel

Case Study

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Definition

•Competitive AdvantageCompetitive Advantage An advantage over An advantage over

competitors gained by competitors gained by offering consumers greater offering consumers greater value than competitors value than competitors offer.offer.

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Definition

•Competitive AnalysisCompetitive Analysis The process of identifying key The process of identifying key

competitors; assessing their competitors; assessing their objectives, strategies, objectives, strategies, strengths and weaknesses, strengths and weaknesses, and reaction patterns; and and reaction patterns; and selecting which competitors selecting which competitors to attack or avoid.to attack or avoid.

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Competitor Analysis

• Identifying Identifying CompetitorsCompetitors

• Assessing Assessing CompetitorsCompetitors

• Selecting Selecting Competitors to Competitors to Attack or AvoidAttack or Avoid

• Firms face a wide Firms face a wide range of competitionrange of competition

• Be careful to avoid Be careful to avoid “competitor myopia”“competitor myopia”

• Methods of identifying Methods of identifying competitors:competitors: Industry point-of-viewIndustry point-of-view Market point-of-viewMarket point-of-view

Competitor maps can Competitor maps can helphelp

Steps in the Steps in the Process: Process:

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Competitor Analysis




• Determining Determining competitors’ objectivescompetitors’ objectives

• Identifying Identifying competitors’ strategiescompetitors’ strategies Strategic groupsStrategic groups

• Assessing competitors’ Assessing competitors’ strengths and strengths and weaknessesweaknesses BenchmarkingBenchmarking

• Estimating Estimating competitors’ reactionscompetitors’ reactions


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Competitor Analysis




• Strong or weak Strong or weak competitorscompetitors Customer value analysisCustomer value analysis

• Close or distant Close or distant competitorscompetitors Most companies compete Most companies compete

against close against close competitorscompetitors

• ““Good” or “Bad” Good” or “Bad” competitorscompetitors The existence of The existence of

competitors offers competitors offers several strategic benefitsseveral strategic benefits


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• Designing Competitive Intelligence Designing Competitive Intelligence SystemsSystems A Well-Designed CI System: A Well-Designed CI System:

Identifies types and sources of competitive Identifies types and sources of competitive information information

Continuously collects informationContinuously collects information Checks reliability and validity of informationChecks reliability and validity of information Interprets and organizes informationInterprets and organizes information Distributes information to decision makers Distributes information to decision makers

and responds to queriesand responds to queries

Competitor Analysis

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• Approaches to Marketing Approaches to Marketing StrategyStrategy No single strategy is best for all No single strategy is best for all

companiescompanies Marketing strategy and practice Marketing strategy and practice

often passes through three stages:often passes through three stages: Entrepreneurial marketingEntrepreneurial marketing Formulated marketingFormulated marketing Intrepreneurial marketingIntrepreneurial marketing

Competitive Strategies

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• Basic Competitive Strategies: PorterBasic Competitive Strategies: Porter Overall cost leadershipOverall cost leadership

Lowest production and distribution costsLowest production and distribution costs DifferentiationDifferentiation

Creating a highly differentiated product line Creating a highly differentiated product line and marketing programand marketing program

FocusFocus Effort is focused on serving a few market Effort is focused on serving a few market

segments segments


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• Basic Competitive Strategies: Value Basic Competitive Strategies: Value DisciplinesDisciplines Operational excellenceOperational excellence

Superior value via price and convenienceSuperior value via price and convenience Customer intimacyCustomer intimacy

Superior value by means of building strong Superior value by means of building strong relationships with buyers and satisfying relationships with buyers and satisfying needsneeds

Product leadershipProduct leadership Superior value via product innovationSuperior value via product innovation


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Competitive Strategy

• Market LeaderMarket Leader

• Market Market ChallengerChallenger

• Market FollowerMarket Follower

• Market NicherMarket Nicher

• Expanding the total Expanding the total demanddemand Finding new usersFinding new users Discovering and promoting Discovering and promoting

new product usesnew product uses Encouraging greater Encouraging greater

product usageproduct usage

• Protecting market shareProtecting market share Many considerationsMany considerations Continuous innovationContinuous innovation

• Expanding market shareExpanding market share Profitability rises with Profitability rises with

market sharemarket share

Competitive Competitive Positions Positions

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• Option 1: challenge the Option 1: challenge the market leadermarket leader High-risk but high-gainHigh-risk but high-gain Sustainable competitive Sustainable competitive

advantage over the advantage over the leader is key to successleader is key to success

• Option 2: challenge Option 2: challenge firms of the same size, firms of the same size, smaller size or smaller size or challenge regional or challenge regional or local firmslocal firms

• Full frontal vs. indirect Full frontal vs. indirect attacksattacks


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• Follow the market Follow the market leaderleader Focus is on Focus is on

improving profit improving profit instead of market instead of market shareshare

Many advantages:Many advantages: Learn from the market Learn from the market

leader’s experienceleader’s experience Copy or improve on Copy or improve on

the leader’s offeringsthe leader’s offerings Strong profitabilityStrong profitability


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• Serving market niches Serving market niches means targeting means targeting subsegmentssubsegments

• Good strategy for Good strategy for small firms with small firms with limited resourceslimited resources

• Offers high marginsOffers high margins• Specialization is keySpecialization is key

By market, customer, By market, customer, product, or marketing product, or marketing mix linesmix lines


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• Companies can become so Companies can become so competitor centered that they competitor centered that they lose their customer focus.lose their customer focus.

• Types of companies:Types of companies: Competitor-centered companiesCompetitor-centered companies Customer-centered companiesCustomer-centered companies Market-centered companiesMarket-centered companies

Balancing Customer and Competitor

Orientations

Kotler18 exs

Education

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