STRATEGIES FOR CREATING AND SUSTAINING COMPETITIVE ADVANTAGE

Topics: Marketing, Target market, Marketing plan Pages: 40 (3152 words) Published: November 6, 2013
STRATEGIES FOR CREATING AND
SUSTAINING COMPETITIVE ADVANTAGE

Thomas Friedman (2005)
Globalization 1.0 (1492

Globalization 2.0 (1800

Globalization of the Company
The Golden Arches Theory..Multinational company

Globalization 3.0 (2000

now)

Globalization of the Individual
The world is on the flat screen

The Message Revolution
The price of global communication

1800)

Globalization of the Country

THE ADVANTAGES OF PIONEER

HOW NEW IS NEW ?
New-to-the-world products : true innovations that are new to the firm and create an entirely new market (10 percent)
New product lines : a product category that is new for the company introducing it, but not new to customers in the target market because of the existence of one or more competitive brands (20 percent)

Additions to existing product lines :
established product line. (26 percent)
Improvements in or revisions of existing products : items providing improved performance or greater perceived value brought out to replace existing products. (26 percent)
Repositionings : existing products that are targeted at new application and new market segments (7 percent)
Cost reductions : product modifications providing similar performance at lower cost (11 percent)

1. First choice of market segments and positions : the pioneer has the opportunity to develop a product offering with attributes most important to the largest segment of customers or to promote the importance of attributes that favor its brand. 2. The pioneer defines the rules of the game :

product quality, price, distribution, warranties, postsale service, and promotional appeals and budgets set standards that subsequent competitors must meet or beat. 3. Distribution advantages : The pioneer has the most options in designing a distribution channel to bring the new product to market.

4. Economies of scale and experience : Being first means that pioneer can gain accumulated volume and experience and thereby lower per unit costs as a faster rate than followers. 5. High switching cost for early adopter :

product may be reluctant to change suppliers when competitive product appear. This is particularly true for industrial goods where the cost of switching suppliers can be high. 6. Possibility of positive network effects : The value of some kinds of goods and services to an individual customer increases as greater numbers of other people adopt the product and the network of users grows larger.

7. Possibility of preempting scarce resources and suppliers : The pioneer may be able to negotiate favorable deals with suppliers who are eager for new business or who do not appreciate the size of the opportunity for their raw materials or component parts.

THE ADVANTAGES OF FOLLOWER

HIGHLIGHTS
A pioneering firm stands the best chance for long-term success in marketshare leadership and profitability when :

1.
2.

The new product-market is insulated from the entry of competitors, at least for a while, by strong patent protection, proprietary technology (such as unique production process), substantial investment requirements, or positive network effects, or

The firm has sufficient size, resources, and competences to take full advantage of its pioneering position and preserve it in the face of later competitive entries.

3.
4. Ability to take advantages of the latest technology
5.

MARKETING STRATEGY ELEMENTS PURSUED BY SUCCESSFUL
PIONEERS, FAST FOLLOWERS AND LATE ENTRANTS

THE STORY OF THE GIANT

through

100%
Market Share
by Xerox

1979
Starting the
competition:
IBM
Canon
Kodak

Xerox is the king for copier machine..but after
20 yrs patent expired, they are facing

Successful Fast
Followers
IBM
Kodak
Canon
Minolta
Others

1984
Xerox Market Share = 8%

MARKETING OBJECTIVES AND STRATEGIES FOR NEW PRODUCT
PIONEERS
Situational
variables
Primary Objective

Large entry scale
Broad product line
High product quality
Heavy promotional expenditures...
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