The Manager's Guide to Competitive Marketing Strategies, Second Edition

Norton Paley

• Publisher: Routledge
• Year: 2021
• Print ISBN: 9781574442342
• eBook ISBN: 9781351409964
• Edition: 2
• Topic: Business
• Subtopic: Financial Services
• Index: Business

The ability to think strategically is permeating every level of successful organizations - particularly among senior executives and line managers responsible for maintaining a competitive advantage for their products and services. Above all, Manager's Guide to Creative Marketing Strategies is a pragmatic examination of a 21st century manager.The second edition of this popular book will update you on the latest techniques for developing competitive strategies. It examines how to apply strategies and tactics in a confusing global mixture of hostile competitors, breakthrough technologies, emerging markets, fickle customer behavior, and diverse cultures.You will gain practical information about what strategy is, how competitive intelligence contributes to successful strategies - and how to put it all together. The book is an all-in-one resource for analyzing, planning, and developing competitive strategies, a workbook with checklists and forms, and a reference with numerous case histories.

II THE FRAMEWORK FOR COMPETITIVE ANALYSIS

Conducting a competitive analysis initiates the first step in developing competitive strategy. The analysis helps you to systematically view all those factors, both external (Chapter 2) and internal (Chapter 3), that could influence your decisions in selecting a strategy. By using sound analysis as the basis of strategy development, you will be in an excellent position to overcome competitors’ pressures when entering a new market or defending an existing one. You will be able to develop actions to circumvent aggressive competitors, identify areas for product differentiation, and concentrate marketing and sales resources in a way that gains your objectives in a strength-conserving manner.

2 EXTERNAL ANALYSIS

CHAPTER OBJECTIVES

To enable you to

1. Identify the factors related to a customer analysis by segment, behavior, and wants and needs.
2. Conduct a competitor analysis by products, distribution, communications, operations, R&D, overall costs, financial strength, organization, managerial capabilities, and market-product portfolio.
3. Design an industry analysis by size, dimension, cost structure, distribution systems, industry trends, technology development, and stage in the industry life cycle.
4. Develop an environmental analysis by economics, natural resources, legislation, demographics, and socio-cultural values.

Figure 2.1 illustrates the two major components of competitive analysis: external analysis and internal analysis (see Chapter 3).¹ Managers make use of external analysis to obtain an insightful grasp of market conditions. Another aim of external analysis is to help uncover opportunities and threats that will pay off in alternative strategies and, ultimately, in a competitive advantage. External analysis thus concentrates on four market spheres: customers, competitors, industry, and environment. Let’s look at each type of external analysis in turn to see how it contributes to shaping competitive strategies.

¹Similar frameworks for external and internal analyses have been pioneered by David Aaker, Developing Business Strategies (New York: Wiley, 1984) and Michael E. Porter, Competitive Strategy (New York: The Free Press, 1980.)

CUSTOMER ANALYSIS

Strategic marketing is defined as a total system of interacting business activities designed to plan, price, promote, and distribute want-satisfying products and services to organizational and household users at a profit.

From this functional definition you can see that the customer is the center of marketing’s attention. To produce “want-satisfying products and services,” you must know what your customers want, where they can find what they want, and how to communicate to them that you are able to meet their needs and solve their problems.

Figure 2.1 A Framework For Competitive Analysis

The following case illustrates how customer analysis helped one marketingsavvy company develop competitive strategies when competition heated up and targeted its customer base.

CASE EXAMPLE

Charles Schwab & Co.

Here is a marketing scenario that is becoming familiar in a variety of industries. A company originates a decisive breakthrough and enjoys rapid growth in its sector of business. Yet the managers possess enough marketing know-how to realize that jealous and enterprising rivals will quickly present a challenge. Accordingly, they conduct extensive customer analysis and use the data to refine their products and services, initiate high-level customer service, apply new technology to product development, and expand into new geographic and demographic segments.

That briefly describes the situation of Charles Schwab & Co., the first discount stockbroker. The San Francisco company made its remarkable breakthrough in 1974, with an audacious challenge at the full-service, high-commission brokers, such as the formidable Merrill Lynch, Smith Barney, and Dean Witter.

From 1991 to 1994, Schwab’s compounded revenues grew more than twice as fast as the industry average. By 1995-96, its growth was still at a respectable 30%. However, an unwelcome statistic emerged that indicated the industry was averaging 28% growth, meaning the gap was closing between Schwab and its competitors.

Not blind to the threats of giant competitors, Schwab management assumed a resolute attitude toward customers and competition that remains the driving force behind the company’s continuing growth. “Competition is the source of all innovation” asserts CEO Charles Schwab, whose mindset is intent on making things happen.

And innovate he did. Schwab changed the way mutual funds are sold by introducing a supermarket that lets investors choose among a wide range of funds and then consolidate them into one account. Managers and technical personnel harnessed new technology and developed self-help products to assist customers in making investment decisions.

For instance, they introduced a broad range of Internet-based transaction and information services such as Market Buzz. They streamlined customer service to identify those customers who need assistance and provide them with personalized attention. And, catering to the vast numbers of worrisome first-time investors, they simplified mutual fund selection by offering “funds of funds.”

One noteworthy addition to the outstanding results occurred in 1997: Schwab was included in the Standard & Poor’s 500-stock index.

Action Strategy

What can you learn from the Schwab case? Understand your customers — if you expect to sustain growth and maintain a comfortable lead over hard-driving competitors. Beyond wishing for a brilliant idea to flash into your mind, there is a process you can follow to trigger marketing innovation. Use the following guidelines for your analysis:

• Define your customers by demographic and psychographic (behavioral) characteristics. Observe changes in the character of your markets. For instance, look for any unmet customer needs that would enable you to respond rapidly in the form of products, services, methods of delivery, credit terms, or technical assistance. Talk with customers to detect their most troublesome problems and frustrations. Meet with sales people and draw them out on ways to innovate.
• Examine customer usage patterns or frequency of purchase. Watch for alternative and substitute products that could represent an opportunity to replace competitive products. Also observe deviations in regional and seasonal purchase patterns. Check for changes from past purchasing and usage practices th...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication Page
• Table of Contents
• Introduction to the Second Edition
• The Author
• SECTION I: STRATEGY AND ITS BASIC PRINCIPLES
• SECTION II: THE FRAMEWORK FOR COMPETITIVE ANALYSIS
• SECTION III: MARKETING RESEARCH AND PLANNING
• SECTION IV: SPECIFIC COMPETITIVE STRATEGIES
• Appendix: Checklists for Developing Competitive Strategies
• Index