Creating Competitive Advantage

Dr. Amila Jayarathne

 Session Outline

Competitor Analysis

Competitive Strategies

Balancing Customer and Competitor

Orientations
 Competitor Analysis
Competitive Advantage
An advantage over competitors gained by offering consumers
greater value than competitors do.

Competitor 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.

Competitive Marketing Strategies

Strategies that strongly position the company against
competitors and that give the company the strongest possible
strategic advantage.
 Why?
To plan effective marketing strategies the company
needs to find out all it can about its competitors. It
must constantly compare its marketing strategies,
products, prices, channels, and promotions with those
of close competitors.

Steps in Analyzing Competitors

Assessing competitors
Identifying the objectives, strategies, Selecting which
companys strengths and competitors to
competitors weaknesses and attack or avoid.
reaction patterns
 Identifying Competitors

Normally, identifying competitors would seem

a simple task. But companies actually face a
much wider range of competitors.

Companies must avoid competitor myopia.

 Different Forms of Competition

Brand Competition

Industry Competition

Form Competition

Generic Competition
Porters Approach to Competitive Structure Analysis
 Assessing Competitors

Determining Competitors Objectives

Identifying Competitors Strategies

Assessing Competitors Strengths and

Weaknesses

Estimating Competitors Reactions

 Strategic Groups

A group of firms in an industry following the same or a

similar strategy.
Selecting Competitors to Attack and Avoid

Strong or weak competitors

Close or distant competitors

Good or bad competitors

 Strong or Weak Competitors

The company can focus on one of several classes of

competitors. A useful tool for assessing competitor
strengths and weaknesses is customer value analysis.

Customer Value Analysis

Analysis conducted to determine what benefits target
customers value and how they rate the relative value
of various competitors offers.
 Strategic Sweet Spot versus Competitors

Competitors Customers
offerings needs

When selecting Sweet

competitors, the spot
company wants to
find the sweet spot Companys
where it meets capabilities
customers needs in a
way that rivals cant.
 Good or Bad Competitors

A company really needs and benefits from

competitors. However, a company may not
view all of its competitors as beneficial. Good
competitors play by the rules of the industry.
Bad competitors, in contrast, break the rules.
 Finding Uncontested Market Spaces
Rather than competing head to head with
established competitors, many companies seek out
unoccupied positions in uncontested market spaces
(No direct competitors) Blue Ocean Strategy.
Designing a Competitive Intelligence System

Main types of information about competitors

must be collected, interpreted, distributed
and used.
 Competitive Strategies
What broad marketing strategies might the
company use?

Which ones are best for a particular company,

or for the companys different divisions and
products?
 Approaches to Marketing Strategy
No one strategy is best for all companies. Each
company must determine what makes the
most sense given its position in the industry
and its objectives, opportunities and
resources.
Basic Competitive Strategies

Overall Cost Leadership

Differentiation

Focus
 Competitive Positions

Competitive Market Positions and Roles

Market Market Market Market

Leader Challenger Follower Nicher

40% 30% 20% 10%

 Market Leader Strategies
Market Leader
The firm in an industry with the largest market
share.

Expand Total Market

Protect Market Share

Expand Market Share

 Market Challenger Strategies
Market Challenger
A runner-up firm that is fighting hard to
increase its market share in an industry.

Full Frontal Attack

Indirect Attack
 Market Follower Strategies

Market Follower
A runner-up firm that wants to hold its share
in an industry without rocking the boat.

Follow at a Distance
 Market Nicher Strategies
Market Nicher
A firm that serves small segments that the
other firms in an industry overlook or ignore.

By Customer, Market, Quality-Price, Service

Multiple Niching
Balancing Customer and Competitor
Orientations

Can the company spend too much

time and energy tracking
competitors, damaging its customer
orientation?
 Evolving Company Orientations

Customer-Centered
No Yes
Competitor-Centered

Product Customer
No Orientation Orientation

Competitor Market
Yes
Orientation Orientation
Summary and Conclusions