Chapter 18

: Creating Competitive
Advantage
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Objectives outline
1. Discuss the need to understand competitors as well as cus-
tomers through competitor analysis

2. Explain the fundamentals of competitive marketing strate-

gies based on creating value for customers

3. Illustrate the need for balancing customer and competitor

orientations in becoming a truly market-centered organiza-
tion
Competitor analysis
Identifying competitors

Assessing competitor’s
Selecting which com-
Identifying the com- objectives, strategies,
strength and weakness petitors to attack or
pany’s competitors
and reaction patterns avoid

• To plan effective marketing strategies, a company needs to find out all

it can about its competitors. Then the company can find areas of po-
tential competitive advantage and disadvantage .
Competitor analysis
Assessing competitors

• Determining competitors objectives

• Identifying competitors’ strategies
- Strategic group : A group of firms in an industry following the same or a similar strat-
egy

• Assessing competitors’ strength and weakness

- Benchmarking : comparing the company‘s products and processes to those of competi-
tors or leading firms in other industries to identify best practices and find ways to improve
quality

• Estimating competitors’ reactions

Competitor analysis
Selecting competitors to attack or avoid

Strong or Weak
Finding uncontested
competitors market spaces
Good or bad com-
• Customer value: an analysis con- petitors • Blue ocean strategy
ducted to determine what benefits
target customers value and how
they rate the relative value of vari-
ous competitors’ offers
Competitive strategies
Approaches to marketing strategy

Entrepreneurial mar-
keting

Intrapreneurial mar- Formulated market-

keting ing
 Competitive strategies
Basic competitive strategies

• More than three decades ago, Michael Porter suggested four basic competitive positioning strate-
gies that companies can follow - three winning strategies and one losing one. The three winning
strategies are as follows.

Overall cost
Differentiation Focus
leadership
 Competitive strategies
Basic competitive strategies

• Two marketing consultants, Michael Treacy and Fred Wiersema, offer a more customer centered
classification of competitive marketing strategies. They suggest that companies gain leadership po-
sitions by delivering superior value to their customers. Companies can pursue any of three strate-
gies called value disciplines for delivering superior customer value.

Operational Customer Product

excellence intimacy leadership
Competitive strategies
Competitive position

판매
market nichers
10%

market followers market leader

20% 40%

market challengers
30%

market leader market challengers market followers market nichers

Competitive strategies
Market leader strategies

• Expanding Total Demand

• Protecting Market Share

• Expanding Market Share

Competitive strategies
Market challenger/follower/nicher strategies

• Challenger
: they challenge the market leader and other competitors in an aggres-
sive bid for more market share or they can play with competitors.
• Follower
: they can learn from the market leader’s experience. although the fol-
lower will probably not overtake the leader, it often can be as profitable.
• Nicher
: the market nicher ends up knowing the target customer group so well
that it meets their needs better than other firms that casually sell to that
niche.
 Balancing customer and competitor orientations
Customer-centered

• Product orientation: pay little attention to either

Product Customer customer or competitor.
orientation orientation • Customer orientation: pay attention to cus-
Competitor-centered

tomers.
• Competitor orientation: pay attention to com-
petitors
Competitor Market ori- • Market orientation: pay attention to both cus-
orientation entation
tomer and competitor.