1. 3.2 Competitive Advantages
Chapter 3: The Competitive
Market

2. Sustainable Competitive Advantage
Methods by which a business holds onto its customers, in spite of the competition
Four types of sustainable competitive advantage
Developing a unique selling proposition
Lowering production costs
Servicing a niche market
Creating customer loyalty
Page 89

3. Developing a Unique Selling Proposition
A unique selling proposition (USP) is the one thing that a company’s product has that competing companies do not have and are not likely to develop
Does a company have a USP?
They need to ask: “Why would my target customer buy from me instead of from my competitor?”

4. Developing a Unique Selling Proposition
If the answer to the question is something that CAN be duplicated by the competitor, then the company does NOT have a USP
“I advertise more”
“I deliver”
“I produce the product in green”
Page 89

5. Developing a Unique Selling Proposition
If the answer to the question is something that CANNOT be duplicated by the competitor, then the company DOES have a USP
EXAMPLES:
“This is a patented design”
“I licensed the rights to the name and image of that character
“The supplier will only sell to me”
Page 89

6. Lowering Production Cost
Using cost-efficient and high-technology manufacturing systems to reduce the costs associated with its products can create a sustainable competitive advantage
E.g. Business can reduce production costs by building a plant in a country that has:
Lower resource costs
Fewer taxes
Lower cost of living
Page

7. Servicing a Niche Market
A competitive advantage can be achieved if a marketer recognizes an opportunity to create a niche market and takes advantage of that opportunity
E.g. creating software packages for specific markets like billing software for dentists
Page 90

8. Creating Customer Loyalty
Consumer loyalty can also be referred to as relationship marketing
The consumer develops a strong relationship with the product or retailer and will not consider another brand or store
E.g. buying Honda or Heinz ketchup
Loyalty will hold up unless if the favoured product or retailer makes a mistake
Page

9. Non-Sustainable Competitive Advantages
Competitive advantages that can be used by competitors to shift sales in their direction
Promotion
Placement
Quality
Benefits of use
Price
Design features
Page 91

10. Promotion
A company can obtain a competitive advantage through promotion if it can create top-of-mind awareness
top-of-mind awareness means that the consumer is most likely to think about one brand of a product before he/she thinks of another
This is a major goal of marketers and advertisers
E.G.- Tim Horton’s ROLL UP THE RIM
Page

11. Your Turn…
Take a moment and write down as many advertising slogans as you can think of…
NIKE – Just Do It
Nestlé: "Good Food. Good Life"
Pepsi: "It's the Cola"
The Home Depot: "You Can Do It. We Can Help."
Mazda: "Zoom Zoom"
McDonald's: "I'm Lovin' It"

12. Which ones do you know…? Think Different Apple Macintosh
                        
When you care to send the very best
Hallmark

13. Which ones do you know…? “Where’s the beef?” Wendy’s
                     
                        
Wendy’s

14. Which ones do you know…? Look, Ma, no cavities Crest M’m! M’m! Good!
                        
                  
                        
M’m! M’m! Good!
Campbell’s Soup

15. Which ones do you know…?
Snap! Crackle! Pop
Kellogg’s Rice Krispies
                
                 
                        
                        

16. Which ones do you know…?
Because I’m worth it!
                
                 
                                 
                        
                        
L’Oreal

17. Placement
The more placement a product has the more competitive that product can be
If a product has exclusive distribution in a market, it has a very competitive edge
The big retail stores that specialize in a specific product category such as books (e.g. Chapters), hardware, or pet supplies are called category killers
Why?--
Page

18. Quality
A company can compete with other products in its category by being the best of its type
A company must decide to offer either a product that is of high quality or of low quality—“you don’t want to be stuck in the middle”
Why? -
Page

19. Quality
Low Price,
Low Quality
High Price,
High Quality

20. Benefits of Use
The value of the product is not the product itself, it is what the product will do for the customer
e.g. car – good mileage or prestige
A product that can do more or perform better than another product will have a competitive advantage
Page

21. Price
If a customer believes that one product is equal to another then the cheaper product has a competitive advantage
Only focusing on price as a way of obtaining a competitive advantage will cause problems for that company
Why?-
Page 96

22. Design Features
Design features and changes in design have to catch consumers’ interests and a design that a consumer prefers provides a product with a competitive advantage
E.g. Unique design of a car
Page