Questions and Answers
What is competitive advantage?
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.
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What is a strategic group?
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What does benchmarking involve?
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What is customer value analysis?
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Most companies prefer to compete with strong competitors.
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What is the difference between close and distant competitors?
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What is blue-ocean strategy?
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What is entrepreneurial marketing?
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What does overall cost leadership mean?
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Define differentiation in marketing.
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What does the focus strategy entail?
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What are middle-of-the-roaders?
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What are value disciplines?
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Define customer intimacy.
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What is product leadership?
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What differentiates a market leader from a market follower?
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What does a market nicher do?
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What defines a competitor-centered company?
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What is a customer-centered company?
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What is a market-centered company?
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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.
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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.