Competitive Strategy

Unit 5

Dr. Joanna Pritchard

Chapter 9 Marketing Management Kotler et al.

Learning objectives
1. Relate digital marketing strategy to marketing and
business strategy.
2. Identify opportunities and threats arising from digital
media and technology platforms.
3. Apply the elements of the marketing mix in an online
context.
4. Evaluate the opportunities that digital makes available
for varying the marketing mix.
5. Assess the opportunities for digital brand-building.
What is a strategy?

• What is strategy?
– ‘Defines how we will meet our objectives.’
– ‘Sets allocation of resources to meet goals.’
– ‘Selects preferred strategic options to
compete within a market.’
– ‘Provides a long-term plan for the development of the
organisation.’
Porter’s Generic Strategies
 Competitive Advantage
Lower cost
Cost Leadership
• Appeal to price sensitive customers
• Lowest cost producer relative to local or foreign rivals in
the market
• Cost leader will make higher profits because costs are
Broad
lower
• Fully committed to cutting costs throughout value chain
• Control overheads and minimize spending in R&D,
marketing and advertising, service, sales force and
Competitive Scope
process innovation
• Achieve cost advantages that are hard for competitors
to copy or match
• E.g. K-mart, Walmart, Tesco, McDonald’s, KFC, Burger
King (not in every market!)
Focused Low-cost
• Emphasis on a niche market segmented by geographical
Narrow
region, income level and/or product specialization
• Market niche strategy concentrating on narrow, specific,
and recognizable customer segment and competing
with low prices – cost leader in its niche
• E.g hostels offering cheap accommodation for back
packers and students
Differentiation
Differentiation
• Seeks to be unique in its industry along dimensions valued
by customer
• Higher costs compensated by appealing to broad section pf
market willing to pay premium prices
• E.g. Apple – focus on design and style which customers are
happy to pay a premium for
• Must focus in investing in and developing features that
differentiate their products
• E.g. prestige, brand image, innovation, quality or reliability,
customer service, or distribution network
• More challenging for subsidiaries of MNEs in developing
countries – some manufacturers in China or Poland for
example have a reputation for low quality
Focused Differentiation
• Narrow customer segment and competes through
differentiating features
• E.g. Burj Al Arab hotel in Dubai – 7 star hotel with the
ultimate personal service
• Offer target market something that they value highly
• Must have a strong brand and understanding of target
market’s unique tastes and preferences and the ability to
offer products with world class attributes
Example 1
Example 2
Porter’s video
Thinking about strategy with purpose -
Porter
The relationship between vision, goals, objectives and KPIs
Stages in target marketing strategy development

Chapter 10 Marketing Management Kotler et al.

The SOSTAC® planning framework applied to digital marketing strategy
development

https://www.davechaffey.com/digital-marketing-glossary/sostac-marketing-plan-model/
A generic digital channel-specific SWOT analysis showing typical
opportunities and threats presented by digital media

See pages 88-91 Marketing Management Kotler et al.

Ansoff
Matrix
Using the Internet
to support different
organisational growth
strategies

See pages 80-85 Marketing Management Kotler et al.

Strategic direction & the Ansoff growth vector

“Limited growth
strategies”

Markets

“Substantive
growth
strategies”

Ansoff, I.: Strategies for Diversification, Harvard Business Review, Vol. 35 Issue 5,Sep-Oct 1957, pp. 113-124
Common online targeting options

• Brand loyalists – convert online

• Not brand loyal – encourage trial
• Most profitable – deepen relationships
• Larger companies (B2B)
• Smaller companies(B2B)
• Key members of the buying unit (B2B)
• Difficult to reach using other media.
Dell Singapore site segmentation
Source: www.ap.dell.com/content/default.aspx?c=sg&1=en&s=gen. © 2012Dell Inc. All Rights Reserved.
Influences on customers of multichannel decision
making

Pages 628-630 Marketing Management Kotler et al.

The elements of the marketing mix

Pages 23-24 Marketing Management Kotler et al.

Conducting marketing research online

• Online focus group

• Online survey
• Customer feedback or forums, possibly on
independent sites
• Web logs.

https://www.digitalinformationworld.com/2021/08/t
op-5-market-research-companies-online.html

Pages 166-190 Marketing Management Kotler et al.

Differential pricing

• Precision
– Setting prices more accurately through testing (price
indifference band)

• Adaptability
– Rapid changes (dynamic pricing)

• Segmentation
– Different charges according to profiling
Pricing options
• Cost-plus
– Add profit margin to operational costs
• Target profit pricing
– Based on breakeven
• Competition-based pricing
• Market-oriented
– Premium-pricing
– Penetration pricing
– "special introductory offer" – the classic sign of penetration pricing. The
aim of penetration pricing is usually to increase market share of a
product, providing the opportunity to increase price once this objective
has been achieved.
The main elements of the promotional mix