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Chapter 18

Chapter 18 Notes


Department
Management (MGM)
Course Code
MGMA01H3
Professor
Tarun Dewan
Chapter
18

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Chapter 18:
Competitive advantage an advantage over competitors gained by offering
consumers greater value than competitors do
How companies analyze their competitors and develop successful, value-based
strategies for building and maintaining profitable customer relationships
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
2) competitive marketing strategies strategies that strongly position the company
against competitors and give the company the strongest possible strategic advantage
Competitor Analysis
Constantly compare its marketing strategies, products, prices, channels, and
promotions with those of close competitors
oCan find areas of potential advantage and disadvantage
1. Identifying Competitors
a.Company might define competitors as all firms making the same
product or class of products
b.Avoid competitor myopia a company more likely to be buried by
its latent competitors that its current ones
c. Identify competitors from the industry point of view and market point
of view
2.Assessing Competitors
a.Determining Competitors’ Objectives
i.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
1.Reveals whether the competitors is satisfied with its
current situation and how it might react different
competitive actions
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b. Identifying Competitors’ Strategies
i.Strategic group a group of firms in an industry following the
same or a similar strategy in a given target marketing
ii.Needs to look at all of the dimensions that identify strategic
groups within the industry
c.Assessing Competitors’ Strengths and Weaknesses
i.Companies normally learn about their competitors’ strengths
and weaknesses through secondary data, personal experience,
and word of mouth
ii.They could also conduct primary marketing research with
customers, suppliers, and dealers
iii.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
d.Estimating Competitors’ Reactions
i.Knowing how major competitors react gives the company clues
on how best to attack competitors or how best to defend the
company’s current positions
3.Selecting Competitors to Attack and Avoid
a.Strong or Weak Competitors
i.Most companies prefer to compete against weak competitors
fewer resources and time, but gain little
ii.Tool for assessing competitor strengths and weaknesses is
customer value customer value analysis analysis conducted
to determine what benefits target customers value and how
they rate the relative value of various competitors’ offerings
1.First identifies the major attributes that customers
value and the importance customers place on these
attributes
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2.Assesses the company’s and competitors’ performance on
the valued attributes
iii. Strategic sweet spot the place where it meets customers
needs in a way that rivals cant
b.Close or Distant Competitors
i.Most companies will compete with close competitors those
resemble them most
ii.At the same time, company may want to avoid trying to
destroy a close competitor brought in tougher competitors
by acquiring
c.Good or Bad Competitors
i.Benefits:
1.Competitors may share the costs of market and product
development and help to legitimize new technologies
2.They may serve less-attractive segments or lead to more
product differentiation
3.May help increase total demand
ii.Disadvantages:
1.They try to buy share rather than earn it, take large
risks, and play by their own rules
d.Finding Uncontested Market Spaces
i.Rather than competing head to head with established
competition, many companies seek out unoccupied positions in
uncontested market spaces
ii.They try to create products for which there are no direct
competitors
iii.blue ocean strategy the goals is to make competition
irrelevant
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