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Chapter 18

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Department
Management (MGM)
Course
MGMA01H3
Professor
Tarun Dewan
Semester
Summer

Description
It is crucial to build customer relationships and gain competitive advantage and this requires delivering more value and satisfaction to target customers that competitors. Competitive marketing strategies: how companies analyze their competitors and develop successful, value-based strategies for building and maintaining profitable customer relationships. The two steps are: 1) Competitor analysis: Identifying key competitors; assessing their objectives, strategies, strengths and weaknesses and selecting which competitors to attack or avoid Company must compare its marketing strategies, products, prices, promotions with its key competitors. This way companies can find out potential competitive advantage or disadvantage Steps in analyzing competitors:  Identifying competitors Companies may see their competitors as all the businesses producing that product They must avoid competitor myopia: company is more likely to be buried by its latent competitors than its current ones. For example Kodak probably thought that Fujifilm would take them over but instead it was the competitors they didn’t see coming: Sony, Samsung.  Assessing competitors Determining competitors’ objectives: need to find out the relative importance a competitor gives to market share, cash flow, technological leadership and other goals Identifying competitors’ strategies: if two firms are following the same strategy the more the two firms compete. Strategic group are those firms that follow the same strategy in a given target segment. Assessing competitors’ strengths and weaknesses: Find out using secondary data, personal experience, primary research with customers or employees. They can also benchmark: comparing the company’s products and processes to those of competitors in other industries to identify best practices and find ways to improve quality and performance Estimating competitor’s reaction: knowing how the competitors will react gives the company an idea of how to best attack them  Selecting which competitors to attack/avoid Strong or weak competitors: companies focus to attack weak competitors as this takes less time and resources. Useful tool for assessing strengths and weakness is customer value analysis (what benefits target customers value how they rate comparing to competitors’ offerings). Company needs to find sweet spot: place where it meets consumer needs in ways rivals can’t Close or distant competitors: companies compete with close competitors. Walmart competes with sellers instead of with American eagle Good or bad competitors: company needs and benefits from competitors as they can share costs, increase total demand, etc. Good competitors play by the rules of the industry but bad competitors does not. Implication is that good companies like to shape the industry they are in. Eg: yahoo music, napster might team to attack itunes 2) Competitor marketing strategies: Strategy that strongly positions the company against competitors and give the company the strongest possible strategic advantage Approaches to marketing strategy pass through 3 stages: Entrepreneurial marketing: most companies are started by individuals who live by their wits. Formulated marketing: as small companies achieve success, they move toward more formulated marketing. They develop formal marketing strategies Intrepreneurial marketing: many large and mature companies get stuck in formulated marketing. They then refresh their marketing strategies and try new approaches Basic competitive strategies: Overall cost leadership: company works hard to achieve the lowest produ
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