MANAGEMENT

Topics: Marketing, Competitor analysis, Strategic management Pages: 17 (2807 words) Published: September 22, 2014
MKTG7501– Marketing

Seminar 2

Creating Value and
Competitive Advantage

1

COMPETITION AND COMPETITIVE
ADVANTAGE
Today understanding your competitor is not
enough – Marketers must consider not only the
needs of the target market but also the strategies
of competitors
 Competitive advantage - An advantage over
competitors gained by offering consumers greater
value
 The first step is the competitor analysis –
Followed by the process of identifying major
competitors, assessing their objectives,
strategies, strengths and weaknesses, and
selecting which competitors to attack or avoid


2

STEPS IN ANALYZING COMPETITORS
Identifying the
company’s
competitors

Assessing
competitors’
strengths and
weaknesses

Determining
competitors’
objectives

Estimating
competitors’
reactions

Identifying
competitors’
strategies

Selecting
competitors to
attack and
avoid
3

1

WHAT DRIVES INDUSTRY COMPETITIVENESS?
PORTER’S FIVE FORCES MODEL
New entrants
Threat of new entrants
(Barriers to entry)
Bargaining power
of suppliers

Suppliers

Industry
Competitors

Buyers

Intensity of
rivalry

Bargaining power
of buyers

Threat of substitutes

Substitutes

25

Costco
Coles

How could competitors react to your marketing
strategies? – Examples?

IMPACT OF THE INTERNET
ON PORTER’S FIVE FORCES
 New

entrants Reduced barriers to entry
because of less need for sales force.
Access to distribution channels and
physical assets.
 Substitutes Additional new substitution
threats and potential market expansion
from
e-tailers offering a wide range of products
and services.
5

IMPACT OF THE INTERNET
ON PORTER’S FIVE FORCES
 Suppliers

The internet provides a channel
for suppliers to end users as well as enabling
procurement processes that can standardize
products and reduce differentiation
 Buyers Improves bargaining power through
wider choice and reduces switching costs
 Rivalry of competitors Migrates
competition to price by reducing differences
between competitors as well as widening the
geographic market, increasing the number of
competitors

6

2

STEPS IN ANALYZING COMPETITORS
Determining competitors’ objectives – shortterm versus long term – How it might react to different competitive actions?
 Identifying competitor strategies – Concept
of ‘strategic group’ – once a company enters a
strategic group the members of that group
becomes its key competitors


7

STEPS IN ANALYZING COMPETITORS
 Assessing

competitor’s strengths and
weaknesses – what are the competitor
capabilities – role of competitor
intelligence and ‘benchmarking’
 Estimating competitor reactions –
some flanks are fiercely guarded –
competitor’s business philosophy
 Selecting competitors to attack or
avoid – strong and weak competitors –
’customer value analysis’ – close and
distant competitors

8

SELECTING COMPETITORS TO ATTACK AND TO AVOID


Strength of competitors


Customer Value Analysis

Competitive Analysis (taken from sample marketing plan on Blackboard) Competitor

26

Product and/or Service
Quality
Selection
Price
Location and Physical Appearance
Visibility
Convenience Factors
Added Value Factors
Pre and Post Sales Service
Experience
Expertise
Reputation
Image
Other Marketing Activities
Established Sales Channels
Advertising
Total

House of
Fabrics

Warehouse
Fabrics

JoAnn's

Interior
Designers

Design
Specific Ltd

7
6
5

8
7
8

6
3
2

2
1
2

6
8
8

8
6

7
6

8
6

3
3

6
8

5
4
6
2
3

4
4
5
8
3

5
4
6
6
3

8
7
9
8
6

9
7
8
8
8

6
6
78

6
7
87

4
4
69

3
5
68

6
7
112

3

GENERIC COMPETITIVE STRATEGIES
 (a)

Overall cost leadership
Differentiation
 (c) Focus strategy (cost or differentiation)
 Overall cost leadership – Works hard
to achieve the lowest costs of production
and...
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