Marketing Strategy MKT 460 Competitor Analysis & Creating Sustainable Competitive Advantage Taufique Hossain

“If you don’t have a competitive advantage, don’t compete” Jack Welch, GE

Key Questions in Marketing Strategy Where? In which markets are we competing? Technology, customer groups, geographic markets, etc. How? How are we competing in these markets (value proposition)? Competitive advantage, corporate posture, etc. With whom? Which relationships do we have to develop or do we need to nurture? Selection of channel members, logistic partners, sourcing decisions, etc.

Sources of Competitive Advantage Cost leadership Differentiation Focus

Advantages of Companies: A Different View Product Leadership best product Product Differentiation Operative Competence Customer Orientation Operational Excellence best total costs Customer Intimacy best total solution Treacy and Wiersema (1993)

Changing the Value Perspective: Advantages at the Product Level High Relative Offering vs. Key Competitors Us Low Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7 Factor 8 Factor 9 Factor 10 Key Factors of Product, Service, and Delivery

Changing the Value Perspective: An Example High Relative Offering vs. Key Competitors Competitor 2 Us Low Competitor 1 Eating Facilities Lounge 24-Hour Reception Room Amenities Silence Price Hygiene Architecture Room Size Bed Quality Key Factors of Product, Service, and Delivery

Four Steps to a New Value Proposition Reduce What factors should be reduced well below the industry standard? Eliminate What factors should be Eliminated that the industry has taken for granted? Raise What factors should be raised well beyond the industry standard? New Value Proposition Create What factors should be created that the industry has never offered ? Kim and Mauborgne (1997)

New Value Proposition Example High Competitor 2 Relative Offering vs. Key Competitors Us Competitor 1 Low Eating Facilities Lounge 24-Hour Reception Room Amenities Silence Price Hygiene Architecture Room Size Bed Quality Key Factors of Product, Service, and Delivery

Learning from Competitors

Components of Competitor Analysis

Competitor Objectives

Competitor Strategies

Competitor Resources

Competitor Capabilities Key success factors Self: total 5 Competitor A: total 6 Financial strength Staying power Strong R&D Technological breadth Quick response capability European marketing -2 -1 1 2 -2 -1 1 2 Key success factors Competitor B: total 4 Competitor C: total -2 Financial strength Staying power Strong R&D Technological breadth Quick response capability European marketing -2 -1 1 2 -2 -1 1 2

Future Competitor Strategies

Advantage Creating Resources Contribute to providing value for customers Are hard for competitors to acquire or imitate Are unique to firm Sustainable Competitive Advantage

Generic Routes to competitive advantage creation Market advantage Financial disadvantage Market advantage Market & Financial advantage Financial disadvantage Stuck in the middle Financial advantage Market & Financial disadvantage Market disadvantage Market disadvantage Financial advantage Customer valued uniqueness High Cost relative to competitors Average Low High Average Low

Cost Drivers Costs Economies of Scale Experience Capacity Utilization Linkages Inter-elationship Integration Timing Policy Choices Location Institutional

Uniqueness Drivers Uniqueness Product Differentiation Price Differentiation Distribution Differentiation Brand Differentiation Promotional Differentiation

Sustaining competitive Advantage Unique & valued products Clear, tight definition of market targets Enhanced customer linkages Established brand & company credibility.

Hypothetical Market Structure

Strategies for Market Leader Expanding Total Market New Customer More Usage Defending Market Share Position Defense Flank Defense Preemptive Defense Counteroffensive Defense Mobile Defense Contraction Defense Expanding Market Share

Strategies for Market Challenger Defining the strategic objective and opponents Attack the market leader Attack firms of its own size Attack small local & regional firms Choosing general attack strategy Frontal Attack Flank Attack Encirclement Attack Bypass Attack Guerilla Warfare Choosing specific attack strategy

Strategies for Market Followers Counterfeit Cloner Imitator Adapter

Strategies for Market Nichers Choosing the battleground Focusing Effort Ability to segment the market Efficient use of R&D resources Thinking Small Create, Expand & Protect.

Reading Hooley et al. Chapters 5 and 11. Kotler et al. Chapter 9. Newbert (2007), ‘Empirical Research on the Resource-Based View of the Firm: An Assessment and Suggestions for Future Research’, Strategic Management Journal, 28, 121-146. Treacy and Wiersema (1993), ‘Customer Intimacy and Other Value Disciplines’, Harvard Business Review, January-February, 84-93. Kim and Mauborgne (1997), ‘Value Innovation: The Strategic Logic of High Growth’, Harvard Business Review, January- February, 103-112.