Competitive Advantages March 2, 2010

Guitar Hero Example

Next: Rock Band

Next: Guitar Hero World Tour

Competitive Advantages Business look for advantages over competition Some may be temporary Eg. Rock Band/Guitar Hero, Coke Zero/Pepsi Max, Quiznos/Subway True competitive advantage is sustainable

Sustainable Competitive Advantages Methods by which a business holds on to its customers in spite of competition How? Unique selling proposition Lower production costs Servicing a niche market Creating customer loyalty

Unique Selling Proposition Remember:

What happened? - In 2005, EA signed an exclusivity deal with the NFL - Exclusive rights to use teams, players, stadiums in a video game - This is a unique selling proposition

Unique Selling Proposition Why would a customer buy from me instead of others? Must be something a competitor could not duplicate easily Eg. Patent, licensing.

Lowering Production Costs Use cost-efficient, high-tech systems and processes to reduce costs. Eg. Building a plant outside of the country – lower resource costs, few taxes, lower cost of living that reduces labour expenses. What if other companies do not want to relocate?

Serving a Niche Market If a marketer recognizes an opportunity to create a niche market, and takes advantage of the opportunity.

Burrito Boyz Burrito Boyz served niche market in Toronto/Mississauga If a new competitor opened, I would have to be convinced the product is superior to Burrito Boyz before switching

Creating Customer Loyalty Are there any brands or stores that you are particularly loyal to? Eg. Mr. Fortuna -> Nike shoes, Rawlings baseball gloves Bank customers Customer develops strong relationship with product retailer, and won’t consider another unless a mistake is made.

Non Sustainable Competitive Advantages Promotion Placement Quality Benefits of Use Price Design Features

Promotion Place brands in minds of consumers Eg. Roll Up the Rim to Win Top of the Mind Awareness: Consumer is most likely to think about one brand of product or service before another. Can you think of any examples?

Placement A product must be there to purchase in order to compete. Eg. Placement in grocery stores, Wal-Mart Exclusive distribution Look at Bishop Tonnos – see any Pepsi machines? Box Stores (Category Killers)

Quality Businesses are trying to make their products better. Research & Development – continual improvement Some businesses compete by providing low quality merchandise Children’s clothes

Benefits Of Use Value is not the product itself, but what it will do. iPhone – benefit is the apps and all the things they do for people A product that can do more or perform better than another has a competitive advantage

Price Features being equal, price is only a competitive advantage if it is lower Not sustainable. Competitors can always lower their prices as well. Image pricing Eg. Cadillac, Mercedes

Design Features Influences how a product looks and what it does Eg. Fashion Packaging Mayonnaise?