Chapter #6: Competitive Position & Sources of Advantage Flashcards
What should be used to analyse competitive position?
Overall value (rather than simply cost)
Competitive advantage can result in some level of superior customer value due to a customer’s preference for what three things?
Performance benefits
The cost the purchase
The ease of the purchase
Two sources of customer value (cost and performance/differentiation of advantage) attract two different kinds of customers. Which two kinds of customers?
Different perceptions of what’s valuable
- Price focused customers
- Benefit focused customers
Superior customer value results in superior __________
Company profit
To achieve above average profits a business has to develop what?
A competitive advantage that provides positive customer value.
How can a business create superior customer value?
More brand awareness Broader product lines Effective distribution Higher brand preference Higher market share
What are the 3 main sources of competitive advantage?
Cost advantage
Differentiation advantage
Marketing advantage
To be a competitive advantage a source of advantage should be ___________.
Meaningful to the customer
Sustainable - not easily copied by competitors
What is the scale effect?
A larger unit volume allows for production and purchasing economies of scale
What is the scope effect?
A business can lower the average unit cost of all products by adding products that have a similar manufacturing process (made from the same/similar materials)
What is the learning effects?
Each unit produced provides additional learning and the opportunity to build the next unit more efficiently
What is a product differentiation advantage?
Product differentiation (design, style, usability/easy to use)
Having a product that is a little different and unique
What is a service differentiation advantage?
Fewer errors, availability, better customer service (solving customer problems)
What is a marketing competitive advantage?
Greater share of the market - most dominant/market leader
What is a product line advantage?
More options that encourage a user to make a purchase (grog, toothpaste etc.)
What is a channel advantage?
A business that is able to control channels in a market and to some degree control market access (sometimes via relationships with manufacturers)
What is a competitive knowledge advantage?
Specialist in the market
A business with excellent customer knowledge but limited competitor knowledge will likely __________ to customer demands.
Overreact
What is competitor intelligence?
A source of competitive advantage
A way to understand the options available to customers/view the available substitutes
What is a perceptual map?
A competitor grid. Gives a better understanding of competitive position and identify key competitors to benchmark against.
What are the 3 steps in benchmarking your brand against competitors?
- Identify a key area of competitive weakness.
- Identify a benchmark company.
- Track the benchmark company’s process advantage.
What are some examples of industry forces?
Barriers to entry/exit Customer buyer power Supplier selling power Product substitutes Competitive rivalry
