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Chapter 18

Chapter 18 Notes


Department
Management (MGM)
Course Code
MGMA01H3
Professor
Alison Jing Xu
Chapter
18

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Chapter 18 Creating Competitive Advantage Notes
competitive advantage an advantage over competitors gained by offering consumers greater value than competitors do
competitor analysis 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 give the company the
strongest possible strategic and competitive advantages
Competitor Analysis
identifying the company’s competitors assessing competitors’ objectives, strategies, strengths and weaknesses, and reaction
patterns selecting which competitors to attack or avoid
Identifying Competitors
at the narrowest level, a company can define its competitors as other companies offering similar products and services to the
same customers at similar prices; but companies actually face a much wider range of competitors
the company might define competitors as all firms making the same product or class of products
even more broadly, competitors might include all companies making products that supply the same service
finally, and still more broadly, competitors might include all companies that compete for the same consumer dollars
companies can identify their competitors from the industry point of view or from the market point of view
in general, the market concept of competition opens the company’s eyes to a broader set of actual and potential competitors
Assessing Competitors
Determining Competitors’ Objectives
the company wants to know the relative importance that a competitor places on current profitability, market share growth, cash
flow, technological leadership, service leadership, and other goals—knowing 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
a company also might monitor its competitors’ objectives for various segments
Identifying Competitors’ Strategies
strategic group a group of firms in an industry following the same or similar strategy in a given target market
although competition is most intense within a strategic group, there is also some rivalry among groups—(1) some of the strategic
groups may appeal to overlapping customer segments; (2) the customers may not see much difference in the offers of difference
groups; and (3) members of one strategic group might expand into new strategy segments
the company needs to look at all of the dimensions that identify a strategic groups within the industry
Assessing Competitors’ Strengths and Weaknesses
as a first step, companies can gather data on each competitor’s goals, strategies, and performance over the past few years
companies learn about competitors’ strengths and weaknesses through secondary data, personal experience, and word of mouth
they can also conduct primary marketing research with customers, suppliers, and dealers or they can benchmark
benchmarking the process of comparing the company’s products and processes to those of competitors or leading firms in
other industries to identify “best practices” and find ways to improve quality and performance
Estimating Competitors’ Reactions
some competitors do not react quickly or strongly to a competitor’s move as they may feel their customers are loyal, they may be
slow in noticing the move, or they may lack the funds to react
some competitors react only to certain types of moves and not to others
other competitors react swiftly and strongly to any action
in some industries, competitors live in perfect harmony; in others, they fight constantly
Selecting Competitors to Attack and Avoid
Strong or Weak Competitors
most companies prefer to compete against weak competitors because this requires fewer resources and less time, but in the
process, the firm may gain little, thus competitors should compete with strong competitors to sharpen its abilities
moreover, even strong competitors have some weaknesses, and succeeding against them often provides greater returns
customer value analysis useful tool for assessing competitor strengths and weaknesses; analysis conducted to determine what
benefits target customers value and how they rate the relative value of various competitors’ offerings
the key to gaining competitive advantage is to take each customer segment and examine how the company’s offer compares
the company wants to find the “strategic sweet spot”—the place where it meets customers’ needs in a way that rivals can’t
Close or Distant Competitors
most companies will compete with close competitors—those that resemble them most—rather than distant competitors
at the same time, the company may want to avoid trying to “destroy” a close competitor
“Good” or “Bad” Competitors
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