Principles of Marketing

Session 6

Dr Farrah Arif

Managing Products vs

Managing Customer Relationships

CustomerAdvantage leads to Competitive

Advantage

Two Steps for CompetitiveAdvantage

• Competitor Analysis• Competitive Marketing Strategies

Competitor Analysis

1. Identifying Competitors2. Assessing Competitors3. Assessing Competitors to Attack and Avoid

Identifying Competitors• Similar products/services to the same customers

at similar price• All companies making products that supply the

same service• All companies that compete for the same

consumer dollars (share of wallet)

Competitor Myopia A company is more likely to be “buried” by its latent

competitors than its current ones

(industry point of view)

(industry point of view)

(market point of view)

Assessing Competitors 1. Determining Competitors’ Objective

Current Profitability; Market Share Growth; Cash Flow; Technological Leadership; Service Leadership

2. Identifying Competitor’s Strategies

Assessing Competitors 1. Determining Competitors’ Objective

Current Profitability; Market Share Growth; Cash Flow; Technological Leadership; Service Leadership

2. Identifying Competitor’s StrategiesSTRATEGIC GROUP: a group of firms in an industry following the same or similar strategy in a given target market – KEY Competitors

3. Assessing Competitor’s Strengths and WeaknessesWhat can our competitors do? Benchmarking

4. Estimating Competitor’s Reactions What will our competitors do?Likely reactions – price cuts; promotion increases; new-

product introductionsInternal Culture and Guiding Beliefs

Selecting Competitors to Attack and Avoid

Strong vs Weak Competitor

Close vs Distant Competitor

Good vs Bad Competitors

Finding Uncontested Market Spaces

Designing a Competitive Intelligence System

Identifies the vital types of competitive information and the best sources of this information

Continuously collects information from the field and from published data

Checks the information for validity and reliability, interprets it, and organizes it an appropriate way

Sends key information to relevant decision makers and responds to inquires from managers about competition

Two Steps for CompetitiveAdvantage

• Competitor Analysis• Competitive Marketing Strategies

Approaches

Entrepreneurial Marketing

Formulated Marketing

Intrepreneurial Marketing

Formulated vs Creative

Michael Porter’s Basic Competitive Positioning Strategies

Customer-centered Competitive Marketing Strategies : Value Disciplines for

Superior Customer Value

Competitive Positions

40 %

30 %

20 %10 %

Market Leader Strategies

Expanding the Total Demand

Protecting Marketing Share

Expanding Market Share

Market Challenger Strategy

“Second-mover Advantage”Full Frontal Attack vs Indirect Attack

Market Follower Strategy

Market Nicher Strategies

Competitive Environment – The Challenge

Competitor-centered Company+ the company develops a fighter orientation- the company becomes too reactive

Customer-centered Company+ identify new opportunities & set long-run Strategies that make sense

Market-centered Company – The balanced approach

Take home

Understanding of Customers is not enough

To gain competitive advantage, companies should do Competitive Analysis and look at the Competitive Strategies

Market-centered orientation is a way forward