Objectives Learn how to understand competitors as well as customers via competitor analysis. Learn the fundamentals of competitive marketing strategies.
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1 ObjectivesLearn how to understand competitors as well as customers via competitor analysis.Learn the fundamentals of competitive marketing strategies based on creating value for customers.Realize the need for balancing customer and competitor organizations in order to become a truly market-centered organization.
2 Intel Has dominated the chip industry Success is directly related to Intel’s competitive strategyStrategy focuses on superior value and product leadershipHeavy focus on product and advertising innovation and R&D investmentsChanging market needs have challenged Intel to adaptIntel is capitalizing on the Internet now
3 Definition Competitive Advantage An advantage over competitors gained by offering consumers greater value than competitors offer.
4 Definition Competitive Analysis The process of identifying key competitors; assessing their objectives, strategies, strengths and weaknesses, and reaction patterns; and selecting which competitors to attack or avoid.
5 Steps in Analyzing Competitors Figure 18-1:Steps in Analyzing Competitors
6 Competitor Analysis Steps in the Process: Firms face a wide range of competitionBe careful to avoid “competitor myopia”Methods of identifying competitors:Industry point-of-viewMarket point-of-viewCompetitor maps can helpSteps in the Process:Identifying CompetitorsAssessing CompetitorsSelecting Competitors to Attack or Avoid
7 230-year-old Encyclopedia Britannica viewed itself as competing with your publishers of printed encyclopedias. Big mistake! Its real competitors were software encyclopedias and the Internet.
9 Discussion Question Create a competitor map for one of the following: WalMartMcDonald’sNikeStarbucksGoogle
10 Competitor Analysis Steps in the Process: Identifying Competitors Determining competitors’ objectivesIdentifying competitors’ strategiesStrategic groupsAssessing competitors’ strengths and weaknessesBenchmarkingEstimating competitors’ reactionsSteps in the Process:Identifying CompetitorsAssessing CompetitorsSelecting Competitors to Attack or Avoid
11 Competitor Analysis Steps in the Process: Identifying Competitors Strong or weak competitorsCustomer value analysisClose or distant competitorsMost companies compete against close competitors“Good” or “Bad” competitorsThe existence of competitors offers several strategic benefitsSteps in the Process:Identifying CompetitorsAssessing CompetitorsSelecting Competitors to Attack or Avoid
12 Competitive Strategies Basic Winning Competitive Strategies: PorterOverall cost leadershipLowest production and distribution costsDifferentiationCreating a highly differentiated product line and marketing programFocusEffort is focused on serving a few market segments
13 Hohner has successfully implemented a focus strategy to capture an 85% share of the harmonica market.
14 Competitive Strategies Basic Competitive Strategies: Value DisciplinesOperational excellenceSuperior value via price and convenienceCustomer intimacySuperior value by means of building strong relationships with buyers and satisfying needsProduct leadershipSuperior value via product innovation
16 Competitive Positions Competitive StrategyExpanding the total demandFinding new usersDiscovering and promoting new product usesEncouraging greater product usageProtecting market shareMany considerationsContinuous innovationExpanding market shareProfitability rises with market shareCompetitive PositionsMarket LeaderMarket ChallengerMarket FollowerMarket Nicher
17 Competitive StrategyWD-40 has a knack for developing new uses for its product.What other brands have adopted a similar strategy?Clicking the WWW icon will open your web browser and link to the web site pictured in the screen shot.WD40
18 Competitive Positions Competitive StrategyOption 1: challenge the market leaderHigh-risk but high-gainSustainable competitive advantage over the leader is key to successOption 2: challenge firms of the same size, smaller size or challenge regional or local firmsFull frontal vs. indirect attacksCompetitive PositionsMarket LeaderMarket ChallengerMarket FollowerMarket Nicher
19 Pepsi is an example of market challenger that has chosen to use a full frontal attack
20 Competitive Positions Competitive StrategyFollow the market leaderFocus is on improving profit instead of market shareMany advantages:Learn from the market leader’s experienceCopy or improve on the leader’s offeringsStrong profitabilityCompetitive PositionsMarket LeaderMarket ChallengerMarket FollowerMarket Nicher
21 Dial Corporation successfully uses a market follower strategy
22 Competitive Positions Competitive StrategyServing market niches means targeting subsegmentsGood strategy for small firms with limited resourcesOffers high marginsSpecialization is keyBy market, customer, product, or marketing mix linesCompetitive PositionsMarket LeaderMarket ChallengerMarket FollowerMarket Nicher
23 Balancing Customer and Competitor Orientations Companies can become so competitor centered that they lose their customer focus.Types of companies:Competitor-centered companiesCustomer-centered companiesMarket-centered companies
24 Game playing industry Nintendo Microsoft Sony Wii hyperlink Xbox 360 Play Station
26 Threat of New Entry the existence of barriers to entry economies of product differencesbrand equityswitching costscapital requirementsaccess to distributionabsolute cost advantageslearning curve advantagesexpected retaliationgovernment policies
27 Competitive Rivalry number of competitors rate of industry growth intermittent industry overcapacityexit barriersdiversity of competitorsinformational complexity and asymmetrybrand equityfixed cost allocation per value addedlevel of advertising expense
28 Supplier Powersupplier switching costs relative to firm switching costsdegree of differentiation of inputspresence of substitute inputssupplier concentration to firm concentration ratiothreat of forward integration by suppliers relative to the threat of backward integration by firmscost of inputs relative to selling price of the product
29 Buyer Power buyer concentration to firm concentration ratio bargaining leveragebuyer volumebuyer switching costs relative to firm switching costsbuyer information availabilityability to backward integrateavailability of existing substitute productsbuyer price sensitivityprice of total purchase
30 Threat of Substitution buyer propensity to substituterelative price performance of substitutesbuyer switching costsperceived level of product differentiation