Marketing Competitiveness

What this topic is about

• The possible impacts of market conditions and degree of competition

• Determinants of competitiveness

• Methods of improving competitiveness

Competitiveness

The ability of a business to deliver better value to

customers than competitors

Competitive Advantage

• The ability of a business to add more value for its customers than its rivals and attain a position of relative advantage

• A situation where a business has an advantage over its competitors by being able to offer better value, quality and/or service

What is “Value”?

Value for money =

Price x QualitySir Stuart Rose (CE0 M&S)

Economist’s View

Increasing Marketing Concentration

Market Structures in Context

Non-price competition – brand | service | USP

Efficiency | lowest unit cost | compete on price

Market Structures – Three Key Issues

• The extent of current competition• The potential for new firms to enter the

market• The extent to which the firm produces an

homogenous product (indistinct from rivals) or a differentiated product (distinct from rivals)

The Threat of New Market Entrants

• The possibility of newcomers entering the market is an important aspect of competition within the market

• High profits will tempt newcomers to enter a market and this will drive down prices and profits

• Therefore the maintenance of monopoly power depends upon erecting and maintaining barriers to market entry

Economics – Four Market Structures

• Perfect competition– Many firms all producing or selling homogeneous goods– E.g. CDRs

• Monopolistic competition– Competition between many firms producing differentiated goods– E.g. restaurants, fast-food outlets

• Oligopoly– Competition between a small number of suppliers– E.g. banking, chocolate bars, tour operators

• Monopoly– Single suppler– E.g. water & gas

Strategist’s View (Porter)

Example Porter Model – Grocery Retailing

The force Comment

Entry barriers High- high cost of entry will deter newcomers

Suppliers power Large suppliers may enjoy some degree of power but the small suppliers are in a weak position

Buyer power Collectively, buyers are strong but individual buyers are in a weak position

Threat of substitution

Medium threat in some parts of the market in but in general there is little threat

Existing rivalries Intense competition as supermarkets fight over market shares

Market Forces – What Can Be Done

• Customer reliance– Reduce over-reliance on customers– Focus marketing efforts on most profitable

customers• Supplier reliance

– Build relationships– Have an alternative source of supply

• Barriers to entry– Build a brand– Capture a fair share of distribution– Operate efficiently to compete at low cost

More on Barriers to Entry

• Product differentiation (including brands)– Will act to increase customer loyalty making it difficult

for newcomers to gain market share

• Access to raw materials and distribution channels– A lack of access will make it difficult for newcomers to

enter the market

• Retaliation by established products– E.g. the threat of price war– Will act to discourage newcomers

Marketing Mix – Which is Most Important?

The Importance of a USP

Something that sets a product apart from its competitors in the eyes of customers, both new and existing

What Really Counts to be Competitive

Questions to Test Marketing Competitiveness

What is different or better about this business compared with the competition?

Is this business operating and organised efficiently?

Does this business do all it can to delight its customers?

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Marketing Competitiveness