Marketing
Competitive Strategies
Competitive strategies in marketing refer to the methods and approaches used by companies to gain a competitive advantage over their rivals. This can include differentiation, cost leadership, focus strategies, and innovation. By implementing effective competitive strategies, companies aim to position themselves uniquely in the market and attract customers away from their competitors.
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10 Key excerpts on "Competitive Strategies"
eBook - PDFMarket-Driven Management
Strategic and Operational Marketing
- Jean-Jacques Lambin, Isabelle Schuiling(Authors)
- 2012(Publication Date)
- Bloomsbury Academic(Publisher)
Successful diversification strategies are often based on core competencies. Operational versus strategic competitive advantage The search for a sustainable competitive advantage is at the core of the strategy for-mulation process and is one of the main responsibilities of strategic marketing. A com-pany can outperform rivals only if it can establish a difference that it can preserve. In this perspective a distinction can be made here between operational and strategic com-petitive advantages (Porter, 1996). Gaining an operational competitive advantage in a given reference market means performing similar activities better than rivals perform them (Table 10.1) . Being better by offering a higher quality or a same quality at a lower price ■ Being better by offering a product that reduces customers’ costs ■ Being better by offering lower cost and better quality at the same time ■ Being faster in meeting customers’ products or services ■ Being closer to the customer and providing assistance in use ■ Constant improvements in operational effectiveness are necessary to achieve superior prof-itability, but it is not usually sufficient. Every department within the firm has this responsi-bility. Staying ahead of rivals on the basis of operational effectiveness becomes harder every day because of the rapid diffusion of best practices. Competitors can quickly imitate man-agement techniques, new technologies, input improvements and superior ways to meet customers’ needs. In contrast, gaining a strategic competitive advantage is about being different. It means (a) deliberately choosing a different set of activities from rivals or (b) performing similar activi-ties but in a different way , to deliver a unique mix of values. Ikea, the global furniture retailer based in Sweden, has chosen to perform activities differently from rivals. Same is the case for Ryan-Air in the airline market.
eBook - PDFVisionary Pricing
Reflections and Advances in Honor of Dan Nimer
- Gerald E. Smith, Arch G. Woodside(Authors)
- 2012(Publication Date)
- Emerald Group Publishing Limited(Publisher)
1. Competitive Strategy Elements for Pricing Strategy. 82 GEORGE E. CRESSMAN JR. take often have a significant impact on customer and offering design activities. 2. To achieve profitable results from competitive strategy, managers must actively pursue development of sources of competitive advantage, which in turn affects interactions with direct and potential competitors. 3. Because competitive tactics can dramatically impact profits, managers need a longer-term view of competitive strategy, and must carefully ana-lyze the impact of competitive tactics on profitability. The competitive strategy elements depicted in Fig. 1 constitute a hierar-chy of activities for managers incorporating competitive strategy into pric-ing strategy. Successful competitive strategy is built by working from the foundation of customer targeting through tactical activities. Details of each of the hierarchy’s steps are provided below. LINKING COMPETITIVE STRATEGY TO VALUE-BASED PRICING STRATEGY Customer Targets and Offering Design Effective competitive strategy is tied directly to decisions firms make in tar-geting customers and designing offerings. Customer target selection and offering design determine the competitors the firm faces. Given the cus-tomer targets and the firm’s offerings, the starting point for competitive pricing strategy is identification of the firm’s competitors. Based on com-petitors’ strategies, evolution of the seller’s offering structure and sources of competitive advantage must also be planned. Clark and Montgomery (1999) find that managers typically underesti-mate competition by failing to see all their competitors. Hodgkinson (1997) further suggests this can lead to allowing competitors to gain favorable positions with customers, making it difficult, even impossible, to respond. To prevent this problem, the integrated competitive strategy framework uses the customer selection (targeting) process to see competition as defined by customers.
eBook - PDF- Masaaki Kotabe, Kristiaan Helsen, Masaaki Kotabe, Kristiaan Helsen(Authors)
- 2009(Publication Date)
- SAGE Publications Ltd(Publisher)
Naturally, the issue of competitive advantage needs to be examined in detail. In particular the competitive advantages of countries or regions have become more and more impor-tant for marketing strategy at firm level, as those developments are about to reshape the environment in which the businesses are playing to a great extent. Thus, to develop a global competitive marketing strategy, several pillars of the market economy need to be examined. Further, issues of globalization that pertain to global competition need to be identified and translated into meaningful managerial issues. Today’s meaning of strategy – e.g., as concepts such as product life cycle (PLC) or established competitive arenas are undergo-ing fundamental change – needs to be clari-fied and contrasted with other strategic and tactical company activities. Consequently, 13 we will examine issues pertaining to compe-tition, globalization at the country, company and consumer levels and link them to a firm’s global competitive strategy. Competition, global competition and global competitive strategy Competition is viewed as the heart of our market economies. It is the ingenious con-nection of consumers’ and producers’ selfish-ness that makes competition so precise, fast and dynamic. As a result, all stakeholders of society can benefit. More precisely, a pro-ducer’s selfish desire to maximize profits typically translates into better products as consumers tend to be willing to pay higher prices for such products. 1 However, today’s competition is getting more intense than ever and often arises from rather unlikely sources. It is not a new idea that the utility a product fulfills should be considered as the origin of competition. And the basically identical utility may arise out of very different products.
eBook - PDFDarwinian Fitness in the Global Marketplace
Analysing the Competition
- P. Rajagopal(Author)
- 2012(Publication Date)
- Palgrave Macmillan(Publisher)
A firm’s strategy is the route to competitive advantage that will determine its performance. Build, hold, and harvest are the results of a generic strategy, or recognition of the inability to achieve any generic strategy and hence of the need to har- vest. The multinational firms largely practice strategic planning in reference to the market share to describe a competitive position of the firm. Market share per se is not important competitively; competitive advantage is. The strategic mandate to business units should be to achieve competitive advan- tage. Pursuit of leadership for its own sake may guarantee that a firm never achieves a competitive advantage or that it loses the one it has. Conceptual framework of competitive forces in the marketplace has been provided by Michael Porter, 12 as a five-force model for industry analysis. These five forces of competition interact to determine the attractiveness of an industry. The strongest forces become the dominant factors in determin- ing industry profitability and the focal points of strategy formulation. The model identifies the key structural features that determine the strength of the competitive forces within an industry in reference to profitability. It may be explained through the model that the degree of rivalry among dif- ferent firms is a function of the number of competitors, industry growth, asset intensity, product differentiation, and exit barriers. Among these the most influential variables may be identified as the number of competitors and industry growth. The industries with high fixed costs tend to be more competitive because competing firms are forced to cut price to enable them to operate at the economies of scale. However, with the differentiation strategy the rivalry is reduced among the products and services offered by the competitors, in both real and perceived senses.
eBook - PDF- BB Brown, AJ Voges KD Knowles(Authors)
- 2015(Publication Date)
- Macmillan(Publisher)
In Activity 5.1, you identified your preferred competitive strategy. Revisit your notes and, in the light of what you have learnt in this unit, decide whether you made the correct choice. 2. Write down your reasons for remaining with your choice of competitive strategy, or your reasons for changing to a different competitive strategy. 3. Decide which strategy you would prefer to adopt to secure competitive advantage for your business, giving reasons for your choice. 4. Indicate the strategy you would adopt to defend your competitive advantage, giving reasons for your choice. Figure 5.20: Fighting competitors can also show respect and humility 106 Summary • Once you have analysed the competitors in your industry, you need to look at strategies that you can use to secure, and then protect, your business’s competitive advantage. • The three main types of competitive strategy that are appropriate for use in an entrepreneurial business are the low-cost producer strategy, the differentiation strategy and the focus strategy. • Generic Competitive Strategies aim to help you to gain competitive advantage in your marketplace. • The low-cost producer strategy is based on gaining competitive advantage by selling the lowest-priced products in the marketplace. This strategy involves lowering costs to gain competitive advantage. • Low-cost producers continually do zero-cost reviews. These are reviews of the business’s operations that aim to drive every cost in the business down to its lowest point while maintaining a quality standard that makes the product acceptable to consumers. • Differentiation means being different from your competitors, or seeking to be the unique business in your industry. Being unique or having a unique product or service enables you to charge a premium – a higher price – for your product.
eBook - PDFCustomer Relationship Management
Strategic Approaches in Digital Era
- Joao Heitor De Avila Santos(Author)
- 2019(Publication Date)
- Society Publishing(Publisher)
Barney (1991) noted that having the edge over competitors is only sustainable when the competing firms will not be able to replicate the leading strategy. A competitive advantage can be in place only when the efforts to imitate have failed in totality. This is the reason why firms concentrate on coming up with innovations and business process that are difficult to emulate. Customer Relationship Management: Strategic Approaches in Digital Era 28 Porter (1985) made an observation that competitive strategy should be based on its adaptability within an industry to help achieve long-term goals by giving the firm a competitive advantage. It is clear that not all industries give equal opportunities to manage a sustained profitability curve; another matter related to profitability is the firm’s inherence to making profit. A business ruining in a favorable industry may not turn out to be profitable if it is in an inferior competitive position. A good competitive spot will translate to high profits if it is operating in an unfavorable industry.A business with many sources of competitive advantage will have to direct its resources to one that gives the highest competitive edge. 1.8.2. Generic Strategies The fundamental idea of generic strategies is the competitive advantage that is central to any strategy that enables a business to have an advantage over competitor when making a decision. An organization cannot satisfy everyone, and this may also mean that has no competitive advantage. The business has to come up with a decision on what competitive strategy to use to be within the scope of having a better advantage. Generic strategies include things like cost, leadership, customer focus and consumer focus. Cost leadership means that a firm takes the lowest cost in the industry. This is made possible by pursuing an economy of scale, use of technology, overhead reduction, preferential access to raw material and reduction in administrative expenses.
eBook - PDFStrategic Management
Concepts and Cases
- Jeffrey H. Dyer, Paul C. Godfrey, Robert J. Jensen, David J. Bryce(Authors)
- 2020(Publication Date)
- Wiley(Publisher)
Pursue a Differentiation Strategy When possible, companies in competitive mar- kets should pursue a differentiation strategy. To separate themselves from the pack, they can add product features, store locations, bundled services, or other variations to create unique value for customers. However, in markets with many firms selling homogeneous products, this is often easier said than done. Consider book selling on the Internet. For any given title, a book may be obtained from multiple different sources, including Amazon, Barnesandnoble.com, Walmart, Target, or a host of smaller sellers or even used booksellers such as eBay. The firms sell the same book. How can they differentiate? The product is the same no matter where it is bought. In this case, firms are left to differentiate on other aspects of the buying experience, such as the look and feel of the website, its ease of use, or the checkout process. Early in its his- tory, after realizing it could not make money on discounted bookselling, Amazon expanded its business into many other product lines. The fact that a customer can go to Amazon and buy not only a book but also many other items now helps Amazon differentiate its buying experience for books alone. Chapter 5 details differentiation strategies, and these may be especially useful for firms in competitive markets. Dynamic Environments The strategies discussed so far apply to stable market structures. However, some competitive environments are very dynamic, with competition constantly changing. Perhaps technology is changing at a very rapid pace; or new entrants with new technologies, products, or approaches are entering markets very quickly; or market consolidation is changing the landscape in unex- pected ways. In such environments, industry incumbents may not be able to raise entry barri- ers or limit access to scarce resources rapidly enough to stave off competition.
eBook - PDFStrategic Management
Concepts and Cases
- Jeffrey H. Dyer, Paul C. Godfrey, Robert J. Jensen, David J. Bryce(Authors)
- 2021(Publication Date)
- Wiley(Publisher)
Pursue a Low-Cost Strategy Since companies in competitive markets are price takers, they have little control over price. Therefore, in order to realize profit, they must drive down their costs. In fact, it might be said that companies in such markets will live or die on their ability to get costs down. Especially in markets for which differentiation is difficult, rivals can expect other firms to aggressively lower costs. They must respond in kind in order to remain competitive. Chapter 4 details strategies for reducing costs, and any of those strategies can help the firm in a competitive market be successful. Pursue a Differentiation Strategy When possible, companies in competitive markets should pursue a differentiation strategy. To separate themselves from the pack, they can add product features, store locations, bundled services, or other variations to create unique value for customers. However, in markets with many firms selling homogeneous products, this is often easier said than done. Consider book selling on the Internet. For any given title, a book may be obtained from multiple different sources, including Amazon, Barnesandnoble.com, Walmart, Target, or a host of smaller sellers or even used booksellers such as eBay. The firms sell the same book. How can they differentiate? The product is the same no matter where it is bought. In this case, firms are left to differentiate on other aspects of the buying experience, such as the look and feel of the website, its ease of use, or the checkout process. Early in its his- tory, after realizing it could not make money on discounted bookselling, Amazon expanded its business into many other product lines. The fact that a customer can go to Amazon and buy not only a book but also many other items now helps Amazon differentiate its buying experience for books alone. Chapter 5 details differentiation strategies, and these may be especially useful for firms in competitive markets.
eBook - PDFThe Competitive Mind
Strategy for Winning in Business
- Andrew Crouch(Author)
- 2008(Publication Date)
- Wiley(Publisher)
Competition also involves interaction; participants make decisions from among alternative courses of action, much as Dixit and Nalebuff 83 explain from a game theoretic perspective. 84 Competitive thinking involves learning the capabilities and intentions of a rival, investment in the enhancement of one’s own capabilities, hiding intentions from a rival, inducing a competitor to act against their own interests and, of course, a selection of a course of action to promote one’s own interests. As Fahey says in a commercial context: To win against opponents, companies need strategies for three related tasks: outwitting, outmanoeuvring and outperforming competitors. 85 As I explain above, finite games which characterise competition in com- merce typically have limited duration. Vigorous, and especially confronta- tional, competition between firms does not last forever. It is normally interspersed with periods of relatively harmonious interaction as each C O M P E T I T I O N 53 company goes about its business of producing and marketing its goods and services to customers. Confrontation is a self-sustaining state of rivalry between competitors. This kind of competition, so it is proposed, will only revert to harmony under the condition that both competitors perceive their critical interests are no longer under serious threat. History shows that wars between countries come to an end when both decide that enough is enough. 86 The outcome will no doubt be one in which both competitors are prepared to tolerate a new equilibrium, a new state of relationship between them. One will be better off, and the other worse. But a new tolerable equilibrium is achieved, at least for the time being. This view of competitive rivalry accounts for the possibility that compa- nies are in the continuous process of forming and reforming their competi- tive relationships. Strategy is the thinking process which leads from one competitive resolution to the next.
- Linda E. Swayne, W. Jack Duncan, Peter M. Ginter(Authors)
- 2012(Publication Date)
- Wiley-Blackwell(Publisher)
Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980), pp. 40–41. Copyright © 1980, 1998 by The Free Press. All rights reserved. Adapted by permission of Simon & Schuster Adult Publishing Group. 281 The most significant risks for the organization that chooses a differentiation strat- egy are that emphasis on differentiation pushes costs too high for the market or that the market fails to see, understand, or appreciate the differentiation. In addition, there are risks for the organization adopting a focus strategy. Often, the focusing organization is dependent on a small segment that may diminish in size, or purchasers may turn to the broader market for products or services. Movement toward marketwide products and services will occur if the differences in cost or differentiation become blurred. INTERNAL RESOURCES, COMPETENCIES, AND CAPABILITIES Exhibit 7–21 presents the appropriate internal strengths for each of the positioning strategies. For an organization to use a cost leadership strategy, it must have or develop the ability to achieve a real cost advantage (not price) through state-of-the- art equipment and facilities and low-cost operations. This competitive advantage must be maintained through tight controls and emphasis on economies of scale.
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