Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG 201 Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University 2 CHAPTER Strategic Planning for Competitive Advantage

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 Identify sources of competitive advantage Competitive Advantage

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 Competitive Advantage The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 Competitive Advantage Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 Cost Competitive Advantage Being the low-cost competitor in an industry while maintaining satisfactory profit margins.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 Cost Competitive Advantage  Obtain inexpensive raw materials  Create efficient plant operations  Design products for ease of manufacture  Control overhead costs  Avoid marginal customers

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 Sources of Cost Reduction Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 Product/Service Differentiation Product/Service Differentiation Competitive Advantage The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 Examples of Product/Service Differentiation  Brand names  Strong dealer network  Product reliability  Image  Service

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 Niche Competitive Advantage The advantage achieved when a firm seeks to target and effectively serve a small segment of the market.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 Niche Competitive Advantage  Used by small companies with limited resources  May be used in a limited geographic market  Product line may be focused on a specific product category

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 Sources of Sustainable Competitive Advantage Patents Copyrights Locations Equipment Technology Customer Service Promotion Skills and Assets of an Organization Skills and Assets of an Organization