MKTG 4890 Week 3 Competition * Bases * Levels * Methods for determining * Causes

Strategic 5 - Cs Customer CompanyCompetitor Over competitor (Create greater value) Mktg. Strategy: Achieve max positive differentiation Context/Collaborators

Defining the Competitive Set

4 Bases of Competition I.Customer-oriented Attitude Who they are – competition for same budget When they use product Why they use product- benefits sought II.Marketing-oriented Attitude: MediaDistributionPrice

Bases of Competition cont. III.Resource-oriented Raw materials Employees Financial resources IV.Geographic

Competition As Defined by the Customer Product form competition - includes only products or services of the same product type.Product form competition - includes only products or services of the same product type. Product category competition - products that have similar features and provide the same basic function.Product category competition - products that have similar features and provide the same basic function. Generic competition - incorporates the customers notions of substitutability.Generic competition - incorporates the customers notions of substitutability. Budget competition - products and services that are purchased from the same general budget.Budget competition - products and services that are purchased from the same general budget.

4 Levels of Competition Diet lemon limes Baseball cards Fruit flavore d colas Coffee Diet Coke Diet Pepsi Diet-Rite cola Bottled water Lemon limes Regular colas Beer Juices Wine Fast food Tea Video rentals Ice cream Product form competition: Diet colas Product category competition: Soft drinks Generic competitio : Beverages Budget competition : Food and entertainment

Critical Differences Product form or product category competition are inward oriented.Product form or product category competition are inward oriented. Product form and product category competitors are defined by products that look like yours.Product form and product category competitors are defined by products that look like yours. Generic competitors are defined by looking outside the firm to the customers.Generic competitors are defined by looking outside the firm to the customers.

Methods for Determining Competitors Existing categories ©Existing categories ©

Competitor Analysis (Actual) Strategic Groups –Pursue similar competitive strategies –Have similar characteristics –Have similar assets and competencies

High LowHigh Low Quality Vertical Integration Strategic Groups in the Major Appliance Industry Group A Narrow line Lower mfg. cost Very high service High price Group D Broad line Medium mfg. cost Low service Low price Group C Moderate line Medium mfg. cost Medium service Medium price Group B Full line Low mfg. cost Good service Medium price

Methods for Determining Competitors SubstitutabilitySubstitutability Managerial judgmentManagerial judgment Customer-purchase-based measuresCustomer-purchase-based measures Customer-judgment-based measures ©Customer-judgment-based measures ©

Customer-Judgment-Based Measures Overall similarityOverall similarity Similarity of consideration setsSimilarity of consideration sets Product deletionProduct deletion Substitution in useSubstitution in use

Causes of Competition Opportunity Potential Opportunity Potential Ease of Entry Ease of Entry Nature of Product Nature of Product Exit barriers Exit barriers Homogeneity of Products Homogeneity of Products Industry Structure Industry Structure Commitment to the Industry Commitment to the Industry Innovations Innovations