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CH 18.docx

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University of Toronto Scarborough
Management (MGM)
Tarun Dewan

CH 18: Creating Competitive Advantage  Competitive Advantage- An advantage over competitors gained by offering consumers greater value than competitors do.  Step 1: 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.  Step2: Competitive Marketing Strategies- Strategies that strongly position the company against competitors and give the company the strongest possible strategic advantage. o Requires delivering more value and satisfaction to target consumers than competitors do.  Identifying Competitors must avoid “competitor myopia” o From the industry point of view competitors in the same industry o Market point of view define competitors as companies that are trying to satisfy the same customer need or build relationships wit the same customer group.  Assessing Competitors: Must know a competitor’s mix of objectives reveals whether the competitor is satisfied with its current situation and how it might react to different competitive actions o I.e. if competitors discovered a new segment opportunity for other companies to come in.  Identifying Competitors’ Strategies product quality, features, mix, customer services, pricing policy, distribution coverage, sales force strategy, advertising and sales promotion programs.  Strategic Group- A group of firms in an industry following the same or a similar strategy in a given target market o Rivalry between groups: 1. Strategic groups may appeal to overlapping customer segments 2. Customers may not see much difference in the offers of different groups 3. Members of one strategic group might expand into new strategy segments  Assessing Competitors’ Strengths and Weaknesses gather data on each competitor’s goals, strategies, and performance over the past few year o Ways: 1. secondary data, personal experience and word of mouth. 2. Conduct primary marketing research with customers, suppliers and dealers 3. Benchmark- The process of comparing the company’s products and processes to those of competitors or leading firms in other industries to identify “best practises” and find ways to improve quality and performance  Estimating Competitors’ Reactions: o Some industries, companies live in relative harmony; other fight constantly o Knowing how major competitors react gives the company cues on how best to attack competitors or how best to defend the company’s current positions.  Weak competitors little return in defeating them  Strong competitors lots of return  Customer Value Analysis- Analysis conducted to determine what benefits target customers’ value and how they rate the relative value of various competitors’ offerings. o Identifies 1. Major attributes that customers value and the importance customer place 2. Assesses the company’s and competitors’ performance on the valued attributes.  Most compete with close competitors- those the resemble them most- rather than distant competitors o Con: small firms are bought out by bigger firms so less but tougher competitors  Competition results in strategic benefits: o Share the costs of market and product development and help to legitimize new technologies o Serve less-attractive segments or lead to more product differentiation o Increase total demand  “Good” competitor play by the rules  “Bad” competitor break the rules, buy share rather than earn it, take large risks and play by their own rules  Finding Uncontested Market Spaces “blue ocean strategy” create powerful leaps in value for both the firm and its buyers, creating all-new demand and rendering rivals obsolete.  Designing a competitive Intelligence System 1. Identifies the vital types of competitive information needed and the best sources of this information 2. Collects information from the field and from published data 3. Checks the information for validity and reliability, interprets it, and organizes it 4. Sends key information to relevant decision makers and responds to inquiries from managers about competitors. (phones, emails, bulletins..)  Approaches to Marketing Strategies o Everyone has their own strategies, some more formal other just sketch strategies on the fly o 3 Stages: 1. Entrepreneurial Marketing: most companies are started by individuals who live by their wits. They visualize an opportunity, construct flexible strategies on the backs of envelopes, and knock on every door to gain attention. 2. Formulating Marketing: As small companies achieve success, they inevitably move toward more-formulated marketing 3. Intrepreneurial Marketing: Many large and mature companies get stuck in formulated marketing. Lose the marketing creativity and passion. Need to re-establish within their companies the entrepreneurial spirit and actions that made them successful. Encourage more initiative and “intrepreneurship” at the local level.  Basic Competitive Strategies: 4 basic competitive positioning strategies (3 winning, 1 losing) o 3 winnings 1. Overall cost leadership: lowest production and distribution costs 2. Differentiation: creating a highly differentiated product line and marketing program 3. Focus: serving a few market segments o Losing: Middle-of-the-roaders who try to be good at everything but isn’t good at anything  Gain leadership positions by delivering superior value to their customers o 3 strategies  call
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