Competitive advantage – an advantage over competitor gained by offering consumers greater value than competitors do. * Customers will see competitive advantages as customer advantages
Competitive Marketing Strategies – Strategies that strongly position the company against competitors and give the company the strongest possible strategic advantage.
Competitor 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.
* Competitors can include: All firms making the same product or class of products, all firms making products that supply the same service, or all firms competing for the same consumer dollars * Companies can identify competitors from an industry point of view (e.g. oil or pharmaceutical industry; Pepsi’s competitor would be Coca-Cola). * Companies can identify competitors from a market point of view – they define competitors as companies that are trying to satisfy the same customer need or build relationships with the same customer group (the customer wants “thirst quenching” – a need that can be satisfied by bottled water, energy drinks, fruit juice, etc). * Companies must avoid competitor myopia – a company is more likely to be “buried” by its latent competitors than its current ones (Tower Records didn’t go bankrupt by traditional music stores, but by BestBuy/Apple store).
Assessing competitors –
* Determining competitors objectives – the company wants to know the relative importance that a competitor places on current profitability, market share growth, cash flow, technological leadership, service leadership, etc. They also must monitor its competitors objectives for various segments * Identifying competitors’ strategies -
Strategic group – a group of firms in an industry following the same or similar strategy (Whirlpool and GE each produce a full line of medium-price appliances supported by good service).
* The more that one firm’s strategy resembles another firm’s strategy, the more the two firms compete. If a company enters a strategic group, the members of that group become its key competitors. A group must develop strategic advantages over the others. * Assessing Competitor’s Strengths and Weaknesses – Marketers need to carefully assess each competitor’s strengths and weaknesses to answer a this: What can our competitors do? * Companies must first gather data on each competitor’s goal, strategies, and performance over the last few years. * Companies normally learn about their competitor’s strengths and weaknesses through secondary data, personal experience, and word of mouth. Or they can benchmark themselves against other firms. Benchmark – the process of comparing the company’s products and processes to those of competitors or leading firms in other industries to identify best practices and find ways to improve quality and performance.
* Estimating Competitor’s Reactions – What will our competitors do? A competitor’s objective, strategies, and strengths and weaknesses go a long way toward explaining its likely actions. Marketing managers also need a deep understanding of a given competitor’s mentality. * Some competitors live in harmony, while others fight constantly. Knowing how major competitors react gives the company clue on how best to attack competitors or how best to defend its current positions.
Selecting Competitors to attack or avoid –
* Strong or weak competitors – The company can focus on one of several classes of competitors. Most companies prefer to compete against weak competitors, but competing against strong competitors may provide greater returns. A useful tool for assessing competitors strengths and weaknesses is customer value analysis.
Customer Value analysis – An analysis conducted to determine what benefits target...