This document outlines key concepts from Chapter 18 on creating competitive advantage. It discusses competitor analysis, competitive strategies, and balancing customer and competitor orientations. Specifically, it covers identifying and assessing competitors, analyzing customer value, Porter's competitive strategies of cost leadership, differentiation and focus. It also discusses Treacy and Wiersema's value disciplines of operational excellence, customer intimacy and product leadership. Finally, it examines strategies for market leaders, challengers, followers and nichers.

1. Chapter 18- slide 1
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Chapter Eighteen
Creating Competitive
Advantage

2. Chapter 18- slide 2
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Creating Competitive Advantage
• Competitor Analysis
• Competitive Strategies
• Balancing Customer and Competitor
Orientations
Topic Outline

3. Chapter 18- slide 3
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• Competitive advantages require
delivering more value and satisfaction
to target consumers than competitors
do
• Competitive marketing strategies are
how companies analyze their
competitors and develop value-based
strategies for profitable customer
relationships
Creating Competitive Advantage

4. Chapter 18- slide 4
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• Competitor analysis is the process of
identifying, assessing, and selecting
key competitors
Competitor Analysis

5. Chapter 18- slide 5
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Competitor Analysis
Competitors can include:
• All firms making the same product or class
of products
• All firms making products that supply the
same service
• All firms competing for the same consumer
dollars
Identifying Competitors

6. Chapter 18- slide 6
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Competitor Analysis
Assessing Competitors

7. Chapter 18- slide 7
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Competitor Analysis
Assessing Competitors

8. Chapter 18- slide 8
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Competitor Analysis
Customer value analysis determines the
benefits that target customers’ value and
how customers rate the relative value of
various competitors’ offers.
• Identification of major attributes that customers
value and the importance of these values
• Assessment of the company’s and competitors’
performance on the valued attributes
Selecting Competitors to Attack and Avoid

9. Chapter 18- slide 9
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Competitor Analysis
• Strong or weak competitors
• Close or distant competitors
• Good or bad competitors
Selecting Competitors to Attack and Avoid

10. Chapter 18- slide 10
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Competitor Analysis
• Finding uncontested market spaces
called blue ocean strategy
• No direct competitors
Selecting Competitors to Attack and Avoid

11. Chapter 18- slide 11
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Competitor Analysis
• Identifies competitive information and the best
sources of this information
• Continually collects information
• Checks information for validity and reliability
• Interprets information
• Organizes information
• Sends key information to relevant decision makers
• Responds to inquiries about competitors
Designing a Competitive Intelligence
System

12. Chapter 18- slide 12
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Competitive Strategies
Stages of approaches to marketing strategy
include:
• Entrepreneurial marketing
• Formulated marketing
• Intrepreneurial marketing
Approaches to Marketing Strategy

13. Chapter 18- slide 13
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Competitive Strategies
Entrepreneurial marketing involves visualizing an
opportunity and constructing and implementing
flexible strategies
Formulated marketing involves developing formal
marketing strategies and following them closely
Intrepreneurial marketing involves the attempt to
reestablish an internal entrepreneurial spirit and
refresh marketing strategies and approaches
Approaches to Marketing Strategy

14. Chapter 18- slide 14
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Competitive Strategies
Michael Porter’s four basic
competitive positioning strategies
Basic Competitive Strategies

15. Chapter 18- slide 15
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Competitive Strategies
Overall cost leadership strategy is when a
company achieves the lowest production
and distribution costs and allows it to lower
its prices and gain market share
Basic Competitive Strategies

16. Chapter 18- slide 16
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Competitive Strategies
Differentiation strategy is when a company
concentrates on creating a highly
differentiated product line and marketing
program so it comes across as an industry
class leader
Focus strategy is when a company focuses its
effort on serving few market segments well
rather than going after the whole market
Basic Competitive Strategies

17. Chapter 18- slide 17
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Competitive Strategies
Porter believed that a company that pursued a
clear strategy would achieve superior
performance and that companies without a
clear strategy would not succeed
Porter considered no clear strategy to be
“middle of the road”
Basic Competitive Strategies

18. Chapter 18- slide 18
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Competitive Strategies
Michael Treacy and Fred Wiersema suggest
companies can gain leadership positions by
delivering superior value to their customers
in three strategies or “value disciplines:”
• Operational excellence
• Customer intimacy
• Product leadership
Basic Competitive Strategies

19. Chapter 18- slide 19
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Competitive Strategies
Operational excellence refers to a company
providing value by leading its industry in
price and convenience by reducing costs
and creating a lean and efficient value
delivery system
Basic Competitive Strategies

20. Chapter 18- slide 20
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Competitive Strategies
Customer intimacy refers to a company
providing superior value by segmenting
markets and tailoring products or services to
match the needs of the targeted customers
Basic Competitive Strategies

21. Chapter 18- slide 21
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Competitive Strategies
Product leadership refers to a company
providing superior value by offering a
continuous stream of leading-edge products
or services. Product leaders are open to
new ideas and solutions and bring them
quickly to the market.
Basic Competitive Strategies

22. Chapter 18- slide 22
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Competitive Strategies
Competitive Positions

23. Chapter 18- slide 23
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Competitive Strategies
Market leader is the firm with the largest market share
and leads the market price changes, product
innovations, distribution coverage, and promotion
spending
Market challengers are firms fighting to increase
market share
Market followers are firms that want to hold onto their
market share
Market nichers are firms that serve small market
segments not being pursued by other firms
Competitive Positions

24. Chapter 18- slide 24
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Competitive Strategies
• Expand total demand
• Protect their current market
• Expand market share
Market Leader Strategies

25. Chapter 18- slide 25
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Competitive Strategies
Expand total demand by developing:
• New users
• New uses
• More usage of its products
Market Leader Strategies
Expanding Total Demand

26. Chapter 18- slide 26
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Competitive Strategies
Protect current market by:
• Fixing or preventing weaknesses that
provide opportunities to competitors
• Maintain consistent prices that provide
value
• Keep strong customer relationships
• Continuous innovation
Market Leader Strategies
Protecting Market Share

27. Chapter 18- slide 27
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Competitive Strategies
Expand market share by:
• Increasing profitability with increasing
market share in served markets
• Producing high-quality products
• Creating good service experiences
• Building close relationships
Market Leader Strategies
Expanding Market Share

28. Chapter 18- slide 28
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Competitive Strategies
Challenge the leader with an aggressive bid for
more market share
Play along with competitors and not rock the
boat
Market Challenger Strategies

29. Chapter 18- slide 29
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Competitive Strategies
Second mover advantage occurs when
a market follower observes what has
made the leader successful and
improves on it
Challenges firms its own size or smaller
Market Follower Strategies

30. Chapter 18- slide 30
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Competitive Strategies
Ideal market niche is big enough to be profitable
with high growth potential and has little
interest from competitors
Key to market niching is specialization
• Market
• Customer
• Product
• Marketing mix
Market Nicher Strategies

31. Chapter 18- slide 31
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Balancing Customer and
Competitor Orientations
Companies need to continuously adapt
strategies to changes in the competitive
environment
• Competitor-centered company
• Customer-centered company
• Market-centered company

32. Chapter 18- slide 32
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Balancing Customer and
Competitor Orientations
Competitor-centered company spends most
of its time tracking competitor’s moves and
market shares and trying to find ways to
counter them
• Advantage is that the company is a fighter
• Disadvantage is that the company is
reactive

33. Chapter 18- slide 33
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Balancing Customer and
Competitor Orientations
Customer-centered company spends most of
its time focusing on customer developments
in designing strategies
Provides a better position than competitor-
centered company to identify opportunities
and build customer relationships

34. Chapter 18- slide 34
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Balancing Customer and
Competitor Orientations
Market-centered company spends most of its
time focusing on both competitor and
customer developments in designing
strategies