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Aqa bus2-marketingcompetitiveness


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Aqa bus2-marketingcompetitiveness

  1. 1. Marketing Competitiveness
  2. 2. What this topic is about <ul><li>The possible impacts of market conditions and degree of competition </li></ul><ul><li>Determinants of competitiveness </li></ul><ul><li>Methods of improving competitiveness </li></ul>
  3. 3. Competitiveness The ability of a business to deliver better value to customers than competitors
  4. 4. Competitive Advantage <ul><li>The ability of a business to add more value for its customers than its rivals and attain a position of relative advantage </li></ul><ul><li>A situation where a business has an advantage over its competitors by being able to offer better value, quality and/or service </li></ul>
  5. 5. What is “Value”? Value for money = Price x Quality Sir Stuart Rose (CE0 M&S)
  6. 6. Economist’s View Increasing Marketing Concentration
  7. 7. Market Structures in Context Non-price competition – brand | service | USP Efficiency | lowest unit cost | compete on price
  8. 8. Market Structures – Three Key Issues <ul><li>The extent of current competition </li></ul><ul><li>The potential for new firms to enter the market </li></ul><ul><li>The extent to which the firm produces an homogenous product (indistinct from rivals) or a differentiated product (distinct from rivals) </li></ul>
  9. 9. The Threat of New Market Entrants <ul><li>The possibility of newcomers entering the market is an important aspect of competition within the market </li></ul><ul><li>High profits will tempt newcomers to enter a market and this will drive down prices and profits </li></ul><ul><li>Therefore the maintenance of monopoly power depends upon erecting and maintaining barriers to market entry </li></ul>
  10. 10. Economics – Four Market Structures <ul><li>Perfect competition </li></ul><ul><ul><li>Many firms all producing or selling homogeneous goods </li></ul></ul><ul><ul><li>E.g. CDRs </li></ul></ul><ul><li>Monopolistic competition </li></ul><ul><ul><li>Competition between many firms producing differentiated goods </li></ul></ul><ul><ul><li>E.g. restaurants, fast-food outlets </li></ul></ul><ul><li>Oligopoly </li></ul><ul><ul><li>Competition between a small number of suppliers </li></ul></ul><ul><ul><li>E.g. banking, chocolate bars, tour operators </li></ul></ul><ul><li>Monopoly </li></ul><ul><ul><li>Single suppler </li></ul></ul><ul><ul><li>E.g. water & gas </li></ul></ul>
  11. 11. Strategist’s View (Porter)
  12. 12. 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
  13. 13. Market Forces – What Can Be Done <ul><li>Customer reliance </li></ul><ul><ul><li>Reduce over-reliance on customers </li></ul></ul><ul><ul><li>Focus marketing efforts on most profitable customers </li></ul></ul><ul><li>Supplier reliance </li></ul><ul><ul><li>Build relationships </li></ul></ul><ul><ul><li>Have an alternative source of supply </li></ul></ul><ul><li>Barriers to entry </li></ul><ul><ul><li>Build a brand </li></ul></ul><ul><ul><li>Capture a fair share of distribution </li></ul></ul><ul><ul><li>Operate efficiently to compete at low cost </li></ul></ul>
  14. 14. More on Barriers to Entry <ul><li>Product differentiation (including brands) </li></ul><ul><ul><li>Will act to increase customer loyalty making it difficult for newcomers to gain market share </li></ul></ul><ul><li>Access to raw materials and distribution channels </li></ul><ul><ul><li>A lack of access will make it difficult for newcomers to enter the market </li></ul></ul><ul><li>Retaliation by established products </li></ul><ul><ul><li>E.g. the threat of price war </li></ul></ul><ul><ul><li>Will act to discourage newcomers </li></ul></ul>
  15. 15. Marketing Mix – Which is Most Important?
  16. 16. The Importance of a USP Something that sets a product apart from its competitors in the eyes of customers, both new and existing
  17. 17. What Really Counts to be Competitive
  18. 18. 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? 1 2 3
  19. 19. Marketing Competitiveness