Competitive advantage and marketing Szabó Virág Noémi Research methods 2022-12-11 Word count: 1565 TABLE OF CONTENTS Introduction ..................................................................................................................... 3 Literature Review: Competitive Advantage & Marketing................................................... 4 Competitive Advantage: What it is? .......................................................................................... 4 Internal and external analysis ................................................................................................... 4 Corporate and customer objectives ........................................................................................... 4 Assessing the Competition ........................................................................................................ 4 Competitive Advantage and Marketing: What is the link? ................................................. 5 Competition ............................................................................................................................. 5 Competitive Advantage and Marketing: What should a marketing manager do to increase competitive advantage? ................................................................................................... 5 Conclusions ...................................................................................................................... 6 Bibliography ..................................................................................................................... 7 INTRODUCTION In this essay I will attempt to give an insight on what competitive advantage means by definition. After a literature review, a deeper analysis on competitive advantage will be carried out by looking into factors like internal and external analysis and objectives of the companies and well as the customers will be introduced. Further on, the relationship between competitive advantage and marketing will be introduced after which some tools and strategies will be presented that marketing managers of companies can utilize to increase competitive advantage. Competitive advantage is constantly sought by every single company for – profit or non – profit. However, to be able to exceed the competitors and their offered values, companies must constantly monitor and analyse their competitors, as well as the market as a whole, their target market and must assess the value offered by them accordingly. An internal analysis must be performed in order to assess and analyse the company’s capabilities, strengths and weaknesses and the marketing manager has to work out a plan on how to start approaching competitive advantage considering both internal and external factors. LITERATURE REVIEW: COMPETITIVE ADVANTAGE & MARKETING COMPETITIVE ADVANTAGE: WHAT IT IS? Competitive advantage by definition can be anything that gives a business an advantage over its competitors, helping it attract more customers and increase its market share. A competitive advantage can take three main forms. Firstly, cost advantage or cost leadership, when producing a product or providing a service at a lower cost than other competing companies. Secondly, the advantage of the offer or differentiation when differentiating a product by adding features that are highly appreciated by customers therefore, they choose a specific product or service over the competition because of the added benefits. Finally, niche advantage or focus strategy, when the firm is simply able to serve a specific market segment better than anyone else. (Wen-Cheng, Chien-Hung, & Ying-Chien, 2011) Excelling in at least one of these three categories while maintaining a competitive position in the other two places a company in a position of strength relative to its competition. If a company only performs averagely in all three categories, it will not stand out in the market. It then risks underperforming and even failing. INTERNAL AND EXTERNAL ANALYSIS To achieve a strong fit with the environment, businesses may need to make strategic changes. A strong firm-environment fit will enable greater performance. As a result, a company needs to be dynamically capable of reconfiguring its internal and external skills in response to environmental changes (Teece et al., 1997). The organization needs to be ambidextrous in order to create dynamic skills. The ability to effectively identify changes in the external environment and act on these opportunities and risks needs managers to manage two crucial responsibilities. Social, technological, and ecological changes have been taken advantage of by businesses like Facebook, Tesla Motors, and Whole Foods to their own competitive advantage. According to Colby and Dobni (2015) within an internal analysis factors like the company’s processes, its leadership, knowledge management and resources should all be taken into consideration. CORPORATE AND CUSTOMER OBJECTIVES In order to be able to develop a sustainable and successful competitive strategy, it is crucial that the strategy must meet the objectives of the company. A company needs to offer a clear benefit to its target market that is superior to what the competitor has to offer in order to have a competitive edge. The true benefit that the firm’s good or service offers must be clear. Customers must need it, and it must provide genuine and sensible value for them. Business owners must also keep up with any new technologies and developments that have an impact on their product and their market in general. Understanding customer needs, wants and expectations as well as identifying their pains and promblems is a crucial first step. Next the firms should develop solutions to solve the problems and pains of the customer that are next needed to be tested by potential customers. Finally in the implementation phase processes and deliverables should be defined. ASSESSING THE COMPETITION According to Kim et al. (2012) recruitment of trained and skilled staff significally improves competitive advantage of the firm and differentiation among other industries. In other words, a well planned marketing strategy creates a positive brand identity that will give extra value to the customer over the competition. When analysing the competition factors like the target customer’s perception of the competition and the competition’s desired perception by the target customer must be taken into consideration (Kahn, 2009). COMPETITIVE ADVANTAGE AND MARKETING: WHAT IS THE LINK ? An industry's weaknesses can be ascertained by using Porter's Five Forces, a model that identifies and examines five competitive forces that affect every business. Using This marketing tool the link between competitive advantage and marketing will be presented using Porter's Five Forces to Create Competitive Advantage. Porter names five competitive forces that pose a challenge to any company. They make it feasible to gauge how intense competition is and, more importantly, to defend against it. These key traits may serve as motivation for the company as it develops its differentiating strategy. They create a framework for analysis of the ecosystem of the business that can aid in making decisions to get a clear competitive advantage. Porter identified five basic forces, which are as follows: New competitors (or potential competitors) - Depending on the entry barriers to the market, this is a threat (technology, regulations, investments, etc.) The threat of new competitors is lessened by niche placement. Products that can be substituted - They prevent price hikes. They are what? What types of brands and traits? They enable one to consider adjustments. Customers or buyers’ bargaining power - The more they purchase, the more able they get to negotiate product specifications and costs. How many suppliers are there, and what is their purchasing power? their importance? Optimizing the control of costs, delivery schedules, packing requirements, etc. is at issue here. Rivalry and the ferocity of direct rivalry - Competitive forces are influenced by the size of the business, its industry, the expansion of the market, and the uniqueness of its offering. This intensity is quantified by the penetration or saturation rate. Strong product growth and market expansion both diminish competition differentiation. (Porter, 2008) COMPETITION Examining competitive positioning is a method that can be used to to identify attributes that are important to the consumer of the product or the user of the service. It is then a question of determining the best of its competitors on each item and evaluating its performance between 0 and 10, 10 being the maximum score. The company can then proceed in the same way with your own brand and compare the scores, that of the best competitor on each item and yours. This simple method makes it possible to very quickly identify its competitive advantages, as well as its weaknesses. COMPETITIVE ADVANTAGE AND MARKETING: WHAT SHOULD A MARKETING MANAGER DO TO INCREASE COMPETITIVE ADVANTAGE? Marketing and competitive advantage are closely intertwined; as a result, a marketing strategy should be developed by following a series of logical processes. A marketing manager should constantly evaluate internal operations and client goals. There are certain things that Marketing managers can do to create competitive advantage. capturing a new market segment. If all of the competitors are offering a low-end product at a good price, then chances are that certain customer segments in your target market are unhappy. Among them are those who want a luxury product. Offering them such a product and benefit from this competitive advantage. Tesla was the first manufacturer to offer premium electric cars. It also works the other way around. We can take the example of the car manufacturer Dacia, which was one of the first to offer very low-end cars. Creating a strong online presence: A good and active online presence is a must in 2022. There are certain industries in which actors are, in general, quite bad at mastering digital tools. For example, social media activity, an up to date, easy to use website and landing page can make a difference, as they make a business look legit and trustworthy. For example, some businesses often have very basic websites or do not have one at all and do not work at all on their organic referencing with search engines. If there is a new business in the market, the marketing manager can easily take advantage of this gap to build a competitive advantage. Coming up with an innovation: In all industries, the companies with the current innovations are always the ones driving the entire market as everyone else in going to eventually copy them one way or another. Coming up with an innovative solution to the target market’s wants and needs is an excellent and effective way to create competitive advantage. New and innovative products can be marketed for more, and are generally more desirable by the customers if positioned correctly. CONCLUSIONS Due to the everchanging environment businesses are operating in, it is essential for a company’s survival to create competitive advantage and differentiate itself from the competition. This is especially important in todays rapidly changing, digital world where everything is accessible to billions of people non – stop thanks to the internet. There are several strategies to drive competitive advantage, some of which, like Porter’s five forces, internal and external analisys and differentiation were discussed in this essay. BIBLIOGRAPHY Colby, E., & Dobni, C. B. (2015). Innovation – the Next Level of Sustainable Competitive Advantage for Your Organization , and YOU ! Workforce Solutions Review, 6(5), 22–26. Retrieved from: http://eds.b.ebscohost.com.liverpool.idm.oclc.org/eds/pdfviewer/pdfviewer?sid=9af8425a- df9b4cbd-a413-8127d51a9505@sessionmgr104&vid=2&hid=114 Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic management journal, 18(7), 509-533. Retrieved from: https://josephmahoney.web.illinois.edu/BA545_Fall%202022/Teece,%20Pisano%20and%20Shuen%2 0(1997).pdf Khan, B. M. (2009). Corporate Brand Management: Past, Present and Future. Pranjana: The Journal of Management Awareness, 12(1), 21–39. Retrieved from http://proxygsuken1.galileo.usg.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth &AN=58496242&site=ehost-live&scope=site Kim, K; Jeon, B.; Jung, H.; Lu, V., & Jones, J.(2012).Effective employment brand equity through sustainable competitive advantage, marketing strategy, and corporate image, Journal of Business Research, 65: 1612-1617. Retrieved from: https://campusonline.lsdmlondon.com/mod/url/view.php?id=168642 Porter, M. E. "From Competitive Advantage to Corporate Strategy." Harvard Business Review 65, no. 3 (May– June 1987). Retrieved from: https://hbr.org/1987/05/from-competitive-advantage-to-corporate-strategy Porter, Michael E. "The Five Competitive Forces That Shape Strategy." Special Issue on HBS Centennial. Harvard Business Review 86, no. 1 (January 2008): 78–93. Wen-Cheng, W., Chien-Hung, L., & Ying-Chien, C. (2011). Types of competitive advantage and analysis. International Journal of Business and Management, 6(5). doi:10.5539/ijbm.v6n5p100 Retrieved from: https://pdfs.semanticscholar.org/1f88/9cc2deec1cd5b72cf52f563aca6cb8aa3e83.pdf
