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Sessions 3 & 4

Sustainable Competitive Advantage

MM-II
IMT Dubai 2022
Dr Simos Chari

Learning Objectives

Ø To identify alternative approaches for competing

Ø Apply the resource-based view (RBV) to achieve

sustainable competitive advantage

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Types of Marketing Organizations

Slater & Olson (2001) / Chari et al., (2017)

1. Aggressive Marketers • Characteristics

2. Mass Marketers
3. Marketing Minimizers
4. Value Marketers
• Strategic objectives
• Management style
• Culture
• Actions / Reactions

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Aggressive Marketers

• Product innovators

• High-quality innovative products

• Premium prices

• Selective distribution channels

• Intensive advertising

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Mass Marketers
• Innovation followers

• Monitor competitors' actions and tactics

• Broad product line of undifferentiated

products

• Lower prices

• Broad distribution channels

• Moderate focus on promotion activities

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Marketing Minimizers

• Established products

• Focused line of products

• Low prices

• Intensive distribution

• Little to no effort into any marketing activities

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Value Marketers

• Premium value

• High-quality products

• Superior customer service

• Comparatively higher prices than

competitors

• Selective distribution channels

• Sales team

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The rise and fall of

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The Rise…
Task I:
“How did Cadillac manage to become
a status symbol in the US market?”

Industry Customers Competition

The fall…
Task II:
“Identify the factors that led to the
demise of Cadillac in the US market”

Industry Customers Competition

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Market Leader Strategies

Ø Expand total demand / market share
§ New users / new uses / more usage

Ø Protect / defend current market share

Examples:
§ Constant innovation / quality products
§ Strong customer relationships
§ Maintaining consistent prices that provide value
§ Creating good service experience

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RBV & Competitive Advantage

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RBV: Resource Based View (1)

“RBV starts from the concept that a firm’s

performance is determined by the resources
it has at its disposal and its capacity to
exploit such resources”

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RBV: Resource Based View (2)

“Deployment of available resources and

capabilities in organizational strategy to achieve
competitive advantage and superior
performance”.

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Model of Competitive Advantage

Resources

Value
Creation
Distinctive / Core Competitive
Competencies Advantage

Superior
Performance
Capabilities

© Dr Simos Chari

Model of Competitive Advantage

Resources

Value
Creation
Distinctive / Core Competitive
Competencies Advantage

Superior
Performance
Capabilities

© Dr Simos Chari

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Resources (general)
RESOURCES
“Human, financial, physical and knowledge factors that
provide the means for achieving business purposes”

“Stock of available factors that are owned or controlled by

a firm”

v Examples:
Infrastructure, technology, equipment, brand equity, distribution
networks, patents and trademarks, reputation, skilled-motivated
employees etc.

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Capabilities (general)

CAPABILITIES
“The firm’s capacity to deploy resources for achieving
organizational objectives”
“Complex bundles of skills, collective learning which
ensure the superior coordination of functional
activities”
v Examples:
Expertise, design and production skills, brand – product
management, effective customer service, speed in production,
just-in-time distribution etc.

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Morgan (2012)

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Core Competencies
“A harmonised combination of multiples resources and
skills that distinguish a firm in the marketplace” (C.K.
Prahalad and Gary Hamel 1990)

Main Characteristics:
1. Defines the perceived benefits (value)
2. Source for a competitive advantage
3. It can be implemented in a variety of markets
4. Rare and difficult to be imitated

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Core Competencies

Vehicle Engineering – Manufacturing – Innovation

Online Penetration - Prime Quick Delivery

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Core Competencies

Buying Power – Everyday Low Prices

Content – Personalization

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Model of Competitive Advantage

Resources

Value
Creation
Distinctive / Core Competitive
Competencies Advantage

Superior
Performance
Capabilities

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WHAT IS A COMPETITIVE
ADVANTAGE (CA)?

“An advantage that a firm has over its competitors,

allowing it to generate greater sales or margins
and/or retain more customers than its competition”

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CA: Porter’s Generic Strategies

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Marketing Strategic Behaviors:

“The work-related activities of an organization and

its members for achieving superior performance and
advantage in a selected market”
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Marketing Strategic Behaviors:

Olson et al., (2005):

1. Innovation oriented
2. Competitor oriented
3. Customer oriented
4. Internal / cost oriented

“The work-related activities of an organization and

its members for achieving superior performance and
advantage in a selected market”
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Marketing Strategic Behaviors:

Olson et al., (2005):

1. Innovation oriented
2. Competitor oriented
3. Customer oriented
4. Internal / cost oriented

“Focus on radical or discontinuous innovations. Firms not only

is open to new ideas but also proactively pursues these. Firms
encourage risk taking and invest in R&D to enhance the
likelihood of developing radically new products”
© Dr Simos Chari

Marketing Strategic Behaviors:

Olson et al., (2005):

1. Innovation oriented
2. Competitor oriented
3. Customer oriented
4. Internal / cost oriented

“Priority on the in-depth assessment of a set of targeted

competitors. Focuses on analysing direct competitors and on the
organization wide dissemination of the information generated from
this assessment. Develop competitor-oriented objectives rather than
economic or customer-oriented objectives”
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Marketing Strategic Behaviors:

Olson et al., (2005):

1. Innovation oriented
2. Competitor oriented
3. Customer oriented
4. Internal / cost oriented

“Highest priority on the creation and maintenance of customer

value. Engage in the organization wide development of and
responsiveness to information about the expressed and
unexpressed needs of both current and potential customers”
© Dr Simos Chari

Marketing Strategic Behaviors:

Olson et al., (2005):

1. Innovation oriented
2. Competitor oriented
3. Customer oriented
4. Internal / cost oriented

“Firms pursue efficiency in all parts of their value chain. Focus is

to reduce costs in primary and support activities. These firms
pursue operational excellence that they can translate into higher
sales through lower prices or higher margins”
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CA: Value Disciplines

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CA: Value Disciplines

“Best Product”

“Best Total Costs” “Best Total Solution”

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Model of Competitive Advantage

Resources

Value
Creation
Distinctive / Core Competitive
Competencies Advantage

Superior
Performance
Capabilities

© Dr Simos Chari

Economic Value Creation (EVC)

EVC = WTP - C

ü WTP = willingness to pay

ü C = costs incurred by producer

If EVC of A > EVC of B, then A has a

competitive advantage over B

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Sustainable Competitive Advantage

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Is the Competitive Advantage of

UMPQUA Bank Sustainable?

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Customer Service
Secrets Of Umpqua
Bank, aka Retail
Banking's 'World's
Greatest Bank’
Solomon (2016)

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Discussion Points:

A. How does the company generates profits?

B. Amazon’s R&C
C. Amazon’s core competencies.
D. Sustainability of success

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Reading

Kotler and Keller (2015). Chapters 12.

Further Reading:

1. Treacy and Wiersema (1993), ‘Customer Intimacy and Other Value

Disciplines’, Harvard Business Review, January-February, 84-93.

2. Olson, Eric M., Stanley F. Slater, and G. Tomas M. Hult. "The

performance implications of fit among business strategy, marketing
organization structure, and strategic behavior." Journal of marketing 69.3
(2005): 49-65

3. Morgan, N. A. (2012). Marketing and business performance. Journal of

the Academy of Marketing Science, 40(1), 102-119.

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