Creating Competitive
Advantage
Chapter 17
17 - 1
Learning Goals
1. Learn how to understand competitors
as well as customers via competitor
analysis.
2. Understand the fundamentals of
competitive marketing strategies
based on creating value for
customers.
3. Realize the need for balancing
customer and competitor
organizations in order to become a
truly market-centered organization.
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Case Study
Washington Mutual
• Rated highly in Fortune • Branches or retail stores
Magazine’s most provide high-tech
admired companies customer convenience
• Nation’s 7th largest • Looks to cross sell
products and build full
financial institution customer relationships
• Focus is on operational • Exuberant corporate
excellence and offering culture for employees
convenience and low • Could be considered the
prices Wal-Mart of banking
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Definition
Competitive Advantage
An advantage over competitors
gained by offering consumers
greater value and satisfaction than
competitors offer.
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Goal 1: Learn competitor analysis to understand customers/competitors
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.
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Goal 1: Learn competitor analysis to understand customers/competitors
Competitor Analysis
Steps in the • Firms face a wide range of
Process: competition
• Be careful to avoid
Identifying “competitor myopia”
Competitors • Methods of identifying
competitors:
Assessing Competitors Industry point-of-view
Selecting Competitors Market point-of-view
to Attack or Avoid • Competitor maps
can help
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Goal 1: Learn competitor analysis to understand customers/competitors
Competitor Analysis
Steps in the • Determining competitors’
objectives
Process: • Identifying competitors’
strategies
Identifying Strategic groups
Competitors • Assessing competitors’
Assessing Competitors strengths and
weaknesses
Selecting Competitors Benchmarking
to Attack or Avoid • Estimating competitors’
reactions
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Goal 1: Learn competitor analysis to understand customers/competitors
Competitor Analysis
Steps in the • Strong or weak
competitors
Process: Customer value
analysis
• Close or distant
Identifying competitors
Competitors Most companies
compete against close
Assessing Competitors competitors
Selecting Competitors • “Good” or “Bad”
competitors
to Attack or Avoid The existence of
competitors offers
several strategic
benefits
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Goal 1: Learn competitor analysis to understand customers/competitors
Competitor Analysis
Designing Competitive Intelligence
Systems
A Well-Designed CI System:
• Identifies types and sources of competitive
information
• Continuously collects information
• Checks reliability and validity of information
• Interprets and organizes information
• Distributes information to decision makers
and responds to queries
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Goal 1: Learn competitor analysis to understand customers/competitors
Competitive Strategies
Approaches to Marketing Strategy
No single strategy is best for all
companies
Marketing strategy and practice
often passes through three stages:
• Entrepreneurial marketing
• Formulated marketing
• Intrepreneurial marketing
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Goal 2: Understand the fundamentals of competitive marketing strategy
Competitive Strategies
Porter’s Basic Competitive Strategies
Overall cost leadership
• Lowest production and distribution costs
Differentiation
• Creating a highly differentiated product line and
marketing program
Focus
• Effort is focused on serving a few market
segments
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Goal 2: Understand the fundamentals of competitive marketing strategy
Competitive Strategies
Treachy and Wiersema’s Basic
Competitive Strategies: Value Disciplines
Operational excellence
• Superior value via price and convenience
Customer intimacy
• Superior value by means of building strong
relationships with buyers and satisfying needs
Product leadership
• Superior value via product innovation
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Goal 2: Understand the fundamentals of competitive marketing strategy
Competitive Strategy
Expanding the total demand
Finding new users
Competitive Discovering and promoting new
product uses
Positions Encouraging greater product
usage
Protecting market share
Market Leader Prevent or fix weaknesses
Fulfill value promise
Market Challenger Keep prices consistent with value
Build relationships
Market Follower Continuous innovation
Expanding market share
Market Nicher Profitability rises with market
share
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Goal 2: Understand the fundamentals of competitive marketing strategy
Competitive Strategy
Competitive • Challenge the market
leader
Positions High-risk but high-
gain
Market Leader Sustainable
competitive advantage
Market Challenger over the leader is key
Market Follower to success
• Challenge firms of the
Market Nicher same size or smaller
regional and local firms
• Full frontal vs. indirect
attacks
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Goal 2: Understand the fundamentals of competitive marketing strategy
Competitive Strategy
Competitive Follow the market
Positions leader
Many advantages:
• Learn from the
Market Leader market leader’s
experience
Market Challenger • Copy or improve on
the leader’s offerings
Market Follower • Strong profitability
Does not mean being a
Market Nicher carbon copy of the
leader
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Goal 2: Understand the fundamentals of competitive marketing strategy
Competitive Strategy
Competitive • Serving market niches
means targeting
Positions subsegments
• Good strategy for small
firms with limited
Market Leader resources
Market Challenger • Earns high margins rather
than high volume
Market Follower • Specialization is key
Market Nicher Customer size,
geographic, quality-price,
service
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Goal 2: Understand the fundamentals of competitive marketing strategy
Balancing Customer and
Competitor Orientations
Companies can become so
competitor centered that they lose
their customer focus.
Types of companies:
Competitor-centered companies
Customer-centered companies
Market-centered companies
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Goal 3: Realize the need for balancing customer & competitor organizations
