M2 - 12 Competitive Strategy Flashcards
What is a competitor?
a company trying to be better than another in a related field:
a) a company producing and marketing the same product/category
b) a company delivering the same core benefit to customers in order to satisfy the same need.
c) a company capturing the same consumers money from the market point of view.
what is competitive advantages?
a competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices.
What are the three steps in analysing competitors?
1) Identifying the company’s competitors
2) assessing competitors’ objectives,, strategies, strengths, weaknesses
3) select which competitors to attack or avoid
Describe step 2 in analysing competitors.
Assessing competitors by measuring:
- what are the competitors objective
- what are their strategies?
- what are their strengths and weaknesses?
- How will each react to actions your company might take?
benchmarking
define benchmarking
the process of comparing the company’s products and processes to those competitors or leading firms in other industries to find ways to improve quality and performance.
What factors should be looked at when selecting which competitors to attack or avoid?
1 - are they strong or weak in their customer evaluation (value analysis)
2 - Are they close or distant in market offering similarity?
3 - are they good or bad in their values, practices, and risk taking?
what is step 1 in analyzing competitors?
identifying the companies competitors (positioning map) - those who sell a similar product or service
describe the three approaches to competitive marketing strategies.
approaches towards marketing strategy usually pass through 3 stages:
1- the entrepreneurial approach -most companies are started by people who live by their wits.
2- formulated approach - as small companies start to achieve success, they inevitable moved to more formulated marketing and develop formal marketing strategies.
3- intrepreneruial marketing - large and mature companies get stuck in formulated marketing and lose creativity, so they try and refresh their strategies.
What did Michael Porter suggest about competitive positioning strategies?
Michael Porter suggested that businesses can secure a sustainable competitive advantage by adopting one of 3 generic strategies. He also identified a fourth strategy “middle of the road” strategy, which although adopted by some businesses, is unlikely to create a competitive advantage.
1) The overall Cost Leadership Strategy - here the company works hard to achieve the lowest production and distribution costs. lower price = lower cost =large market share. carrefour and walmart are leaders at this approach.
2) differentiation - To be different, is what organisations strive for; companies and product ranges that appeal to customers and “stand out from the crowd” have a competitive advantage.With a differentiation strategy the business develops product or service features which are different from competitors and appeal to customers including functionality, customer support and product quality. comes across as leader in industry. merecedes uses this.
3) focus - Under a focus strategy a business focuses its effort on one particular segment of the market and aims to become well known for providing products/services for that segment. They form a competitive advantage by catering for the specific needs and wants of their niche market.
what did marketing consultants Michael Tracy and Fred Wiersema say about customer centered classification of competitive marketing (value discipline)?
they describe three generic competitive strategies, or value disciplines: operational excellence, customer intimacy and product leadership.
1) OPERATIONAL EXCELLENCE - An organization that focuses on cost leadership will always aim at providing its customers with high quality products or services at competitive prices and ease of purchase. The organization focuses internally on the streamlining of processes. Making as few errors as possible, minimizing superfluous service, standardizing and increasing (economies of scale) are part of this procedure. Examples of such organizations are: Dell, Wal-Mart, American Airlines, Federal Express, EasyJet and RyanAir.
2) CUSTOMER INTIMACY - The organization feels that its customers are the most important aspect of its organization. The organization is continuously working to meet the customer’s requirements and delivers mainly tailor-made work and one-on- one solutions in which the organization focuses on a long-term customer relationship. Obtaining a once-only (large) transaction is subordinate to creating a long-lasting intimacy bond.
3) PRODUCT LEADERSHIP - An organization that focuses on product leadership will always strive for product development and product innovation and want to be market leader of the specific product and/ or service (state-of-the-art products). They strive to create a continuous stream of innovation that is in demand with both loyal and new buyers. The organization invests much in Research & Development. This organization has a flexible structure and stimulates the performance and creativity of its employees. ex. apple
name the 4 competitive positions a firm may occupy in a target market.
1 - market leader 40%, the firm in an industry with the largest market share.
2 - market challenger 30%- a runner up firm that is fighting hard to increase its market share.
3- market follower 20%- runner up that wants to hold its share in an industry without rocking the boat.
4 - market nicher 10%- a firm that serves small segments the other firms in an industry overlook.
define a market challenger.
in competitive positions a market challenger is a runner up firm that is fighting hard to increase its market share.
name the strategies a firm in the position of market leader would take.
the leaders usually lead other firms in price changes, new product introductions, distribution coverage, and promotion spending. to remain number 1 firms may take any of the three actions below:
1 - expand total market - develope new users/more uses
2- protect market share
3- expand market share
name the strategies a firm in the position of market challenger would take.
1 - full frontal attack on market leader with 4 Ps
2 - indirect attack - on weaknesses of leaders or gaps in their coverage.
name the strategies a firm in the position of market follower would take.
1- follow closely - quality of product high so firm can compete with leaders and challangers.
2- follow at a distance - keep costs low
