M ARKETING F UNDAMENTALS COMPETITION

W HAT IS C OMPETITION ? Two or more businesses trying to sell the same type of product or service to the same customer Market share The percentage of the sales volume of a total market held by a specific company E.g. If the cereal market is valued at $10 billion and General Mills is worth $2.5 billion, what is its market share?

T HE B ENEFITS OF C OMPETITION Why do consumers want competition? Encourages new business creation More jobs and therefore salaries for people Wide selection of goods and services for consumers (choices) Product type, style, price and quality Forces businesses to produce better quality products and offer reasonable prices

C OMPETITIVE S TRATEGIES Allows the company to hold onto or increase its market share Achieved by gaining a ‘competitive advantage’ An advantage over competitors by offering consumers greater value How can they do this?

S USTAINABLE C OMPETITIVE A DVANTAGES Sustainable: Part of overall marketing strategy 1. Developing a Unique Selling Proposition (USP) The feature or benefit of a product or service that cannot be easily duplicated =74CEA34DD825C99A&playnext=1&index=13 =74CEA34DD825C99A&playnext=1&index=13 2. Lowering Production Costs Using cost-efficient, high technology processes to reduce costs and then charge a lower price

S USTAINABLE C OMPETITIVE A DVANTAGES 3. Servicing a niche market One company provides a product or service for a small market and, by doing so, keeps competitors out of the market 4. Creating Customer Loyalty The consumer develops a strong relationship with the product or the retailer Consumer does not consider another brand or store unless the favoured product/retailer makes a big mistake 4C15FDC1CC82DBB&playnext=1&index=23 4C15FDC1CC82DBB&playnext=1&index=23

N ON -S USTAINABLE C OMPETITIVE A DVANTAGES Non-sustainable: Used by competitors to shift sales in their direction 1. Promotion To create top-of-mind awareness Increase sales Gain consumer loyalty 2. Placement It must be where consumers want it, when consumers want it

N ON -S USTAINABLE C OMPETITIVE A DVANTAGES 3. Quality Being the best of its type Stronger, faster, easier, lighter, etc. Adding features to improve a product 4. Benefits of Use The more benefits of use the better Promote additional benefits to differentiate from competition E.g. What benefits can you choose to promote?

N ON -S USTAINABLE C OMPETITIVE A DVANTAGES 5. Technology Using a better technology or offering a more innovative product 6. Price All features equal, price must be lower than competitors to be a competitive advantage Hard to sustain because prices change all the time

N ON -S USTAINABLE C OMPETITIVE A DVANTAGES 7. Design Features The function and form of the product E.g. A car’s design makes it move from one place to another (function) and defines its color and shape (form) We often buy for the ‘look’ of the product when the function is the same Packaging becomes important too

D IRECT VS. I NDIRECT C OMPETITION Direct When companies with products that are very similar are competing for the same market E.g. Coke and Pepsi, Nike and Adidas Indirect When companies with products that are NOT similar are in competition for consumer’s income E.g. What can you buy for $20.00? ~Complete the Competitive Advantage Activity~ In Groups of 3 or 4