Principles of Marketing Chapter 18

Questions and Answers

What is competitive advantage?

A group of firms following a similar strategy.

An advantage by offering greater value to consumers. (correct)

A strategy to eliminate competitors.

A firm with the largest market share.

What is competitor analysis?

The process of identifying, assessing, and selecting key competitors.

What are competitive marketing strategies?

Strategies that strongly position the company against competitors.

Competitor myopia refers to a broad focus on many competitors.

False Signup and view all the answers

What is a strategic group?

A group of firms in an industry following the same or a similar strategy. Signup and view all the answers

What does benchmarking involve?

Comparing the company's products and processes to those of competitors. Signup and view all the answers

What is customer value analysis?

An analysis to determine what benefits target customers value. Signup and view all the answers

Most companies prefer to compete with strong competitors.

False Signup and view all the answers

What is the difference between close and distant competitors?

Close competitors resemble the company most; distant competitors are more different. Signup and view all the answers

What is blue-ocean strategy?

A strategy to make competition irrelevant. Signup and view all the answers

What is entrepreneurial marketing?

Marketing driven by individuals who innovate and take initiative. Signup and view all the answers

What does overall cost leadership mean?

Achieving the lowest production and distribution costs. Signup and view all the answers

Define differentiation in marketing.

Creating a highly differentiated product line and marketing program. Signup and view all the answers

What does the focus strategy entail?

Focusing on serving a few market segments well. Signup and view all the answers

What are middle-of-the-roaders?

Firms that do not pursue a clear strategy and perform the worst. Signup and view all the answers

What are value disciplines?

Three strategies for delivering superior customer value. Signup and view all the answers

Define customer intimacy.

Providing superior value by tailoring products to match customer needs. Signup and view all the answers

What is product leadership?

Offering a continuous stream of leading-edge products or services. Signup and view all the answers

What differentiates a market leader from a market follower?

A market leader has the largest market share, while a market follower seeks to maintain its share. Signup and view all the answers

What does a market nicher do?

Serves small segments that are overlooked by others. Signup and view all the answers

What defines a competitor-centered company?

A company that bases its moves mainly on competitors' actions. Signup and view all the answers

What is a customer-centered company?

A company that focuses on customer developments in its marketing strategies. Signup and view all the answers

What is a market-centered company?

A company that pays attention to both customers and competitors. Signup and view all the answers

Study Notes

Competitive Advantage

Competitive advantage refers to the edge gained by offering consumers greater value compared to competitors.
It is crucial for companies to win over consumers and outperform rivals in the market.

Competitor Analysis

Involves identifying and assessing key competitors to inform strategic marketing decisions.
Helps companies understand their position relative to others in the industry.

Competitive Marketing Strategies

Strategies are designed to strongly position a company against its competitors.
Focus on achieving significant strategic advantages in the marketplace.

Competitor Myopia

A narrow focus on a single competitor can lead to neglecting broader strategic threats or opportunities.
Companies risk being overtaken by latent competitors rather than current rivals.

Strategic Group

A strategic group consists of firms within an industry that pursue similar strategies.
Understanding these groups helps in market positioning and competitive analysis.

Benchmarking

The process of comparing a company's products and processes to those of competitors or leading firms in other sectors.
Aims to identify best practices and improve quality and performance.

Customer Value Analysis

This analysis assesses what benefits target customers value and how they perceive different competitors' offers.
Essential for refining marketing strategies based on customer priorities.

Strong vs. Weak Competitors

Competing with weak competitors may require fewer resources but offers limited long-term benefits.
Strong competitors can challenge firms to improve and provide greater returns.

Close vs. Distant Competitors

Close competitors are those that closely resemble a firm, while distant competitors differ significantly.
Avoiding aggressive competition with close rivals may prevent the emergence of tougher challengers.

Good vs. Bad Competitors

Good competitors contribute to market development and help legitimize new technologies.
Bad competitors may undermine industry standards by aggressively pursuing market share without earning it.

Blue-Ocean Strategy

This strategy seeks to create a marketplace free from competition, focusing on innovation and value-added offerings.

Entrepreneurial Marketing

Many new companies start from individual initiatives and creativity, generating fresh ideas in the market.

Formulated Marketing

As companies grow, they typically transition to more structured marketing strategies for consistency and scalability.

Intrepreneurial Marketing

Large companies often need to rekindle the entrepreneurial spirit to innovate and remain competitive.
Encouraging local "intrepreneurship" can lead to diverse brand offerings.

Overall Cost Leadership

Firms aim to achieve the lowest production costs, allowing for competitive pricing and increased market share.

Differentiation

Companies focus on creating unique products and marketing efforts to establish themselves as industry leaders.
Customers are often willing to pay a premium for superior offerings.

Focus

Companies may choose to specialize in serving a specific market segment effectively, rather than pursuing a broad market approach.
Example: Ritz-Carlton targets high-end travelers.

Middle-of-the-Roaders

Firms lacking a clear strategy typically perform poorly due to indecision and ineffective positioning in the market.

Value Disciplines

Three key strategies include operational excellence, customer intimacy, and product leadership for delivering superior customer value.

Operational Excellence

Companies like Walmart focus on providing exceptional value through cost efficiency and convenience.

Customer Intimacy

Firms like Ritz-Carlton excel by tailoring products and services to meet the unique needs of specific customer segments.

Product Leadership

Companies such as Apple continuously innovate to offer cutting-edge products and services, aiming to outpace competitors.

Market Leader

The firm with the largest market share, typically around 40%, that strives to expand demand and protect its position through strategic initiatives.

Market Challenger

This firm, holding about 30% of the market, aggressively pursues a greater share by competing directly with market leaders and rivals.

Market Follower

Firms with a 20% market share that prefer stability and aim to sustain their position without disrupting the industry dynamics.

Market Nicher

Companies serving small segments overlooked by larger firms, typically capturing around 10% market share and achieving high profit margins.

Competitor-Centered Company

A company primarily responds to and is influenced by competitors' actions, potentially at the cost of its own strategic vision.

Customer-Centered Company

Focuses on customer insights to guide marketing strategies, emphasizing the delivery of superior value.

Market-Centered Company

Balances attention between customer needs and competitor actions to inform effective marketing strategies.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge with these flashcards covering Chapter 18 of Principles of Marketing. Learn key terms like competitive advantage and competitor analysis that are essential for understanding marketing strategies. Ideal for students preparing for exams or wanting to reinforce their learning.