Strategic Planning
Chapters 8: Competition
The Marketing Plan
Business Mission
Statement
Objectives
Situation or
SWOT Analysis
Marketing Strategy
Target Market
Strategy
Marketing Mix
Product
Distribution
Promotion
Price
Implementation
Evaluation
Control
Strategy Formulation Competitive Advantage
•
The set of unique features of a company and
its products that are perceived by the target
market as significant and superior to the
competition.
• Types:
–
–
–
Cost Competitive Advantage (bottom line)
Differential (remember differentiation? Must be
relative to the competition)
Niche (doing one thing well – concentrated
approach
Cost Competitive Advantage
Experience Curves
Product Design
Efficient Labor
Reengineering
No-frills Products
Production Innovations
Government Subsidies
New Delivery Methods
Differentiation (product/service)
Competitive Advantage
•
Advantage achieved when a firm provides
something that is unique and valuable to
buyers beyond simply offering a lower price
than the competition.
• Brand name, dealer network, product
reliability, service, image are all possibilities
Niche Competitive Advantage
•
Advantage achieved when a firm seeks to
target and effectively serve a small segment
of the market.
– Used by small companies with limited resources
– May be used in a limited geographic market
– Product line may be focused on a specific product
line
Strategic Alternatives
Present Product
New Product
Present
Market
Market
Penetration
Product
Development
New
Market
Market
Development
Diversification
Market Penetration
• Seeks a larger market share in a market
in which the organization already has an
offering
• Increase buyers usage or consumption
rates
• Attract the competition’s buyers
• Stimulating product trial
Market Development
• Introducing its existing offerings to
markets other than those that the
organization is currently serving
• Competitor SW and retaliation potential
• Modification of basic offer
• Different distribution outlets
• Exporting, licensing, joint venture,
alliances and direct investments
Product Development
• Creating new offerings for existing
markets
• Product innovation (gillette)
• Product augmentation (internet access)
• Product line extension (lite beer, low
carb)
Diversification
• Development or acquisition of offerings
new to the organization and introducing
those offerings to publics not previously
served by the organization
(consolidation in financial services)
Porter’s Five Forces
(Group exercise: Analyze for plan after next slide)
Potential Entrants
(Threat of
Mobility)
Suppliers
(Supplier power)
Industry
Competitors
(Segment rivalry)
Substitutes
(Threats of
substitutes)
Buyers
(Buyer power)
The Industry Concept
• Number of sellers & degree of differentiation
– Pure monopoly, oligopoly, monopolistic
competition (restaurant), pure competition
(airline?)
• Entry, mobility and exist barriers (patents,
tariffs, labeling)
• Costs
• Degree of vertical integration (Good or bad?)
• Degree of globalization
Analyzing Competitors:
Things to consider
• Strategies – the strategic group
(similarities in prod lines and attributes)
• Objectives (short or long term player)
• Strengths and Weaknesses (p. 155)
– Dominant, strong, favorable, tenable,
weak, nonviable
– GROUP EXERCISE: ID in your plan
• Reaction Patterns: Price Wars
If you are a market leader…
• Expand the total market
– New users, new uses, more usage
• Defend the market share – the art of war
• Defense strategies
– Position defense (brand power), flank defense
(new products/advert), preemptive defense
(envelop), counteroffensive defense (subsidize
products), mobile defense (diversify)
• Expand market share
If you are a market challenger…
• Who are you targeting and what do you want
to accomplish?
• Strategies
– Frontal attack (matching), flank attack
(geography/micropolis), encirclement attack,
bypass attack (buy big), guerrilla attack (internet)
• Specific strategies p.163
– Price discount, cheaper goods, prestige goods,
product proliferation, product innovation, improved
service, distribution innovation, cost reductions,
promotion
If you are the market follower…
• Strategies
– Counterfeiter, cloner, imitator, adapter
If you are the market niche(166)
•
•
•
•
•
•
•
•
•
•
End user specialist
Vertical level specialist
Customer size specialist
Specific customer specialist
Geographic specialist
Product/Product line specialist
Product feature specialist
Quality price specialist
Service specialist
Channel specialist
Final Group exercise
• Identify your place in the market (leader,
challenger, follower)
• Match specific strategies to
– Your organization as a whole.
– Your specific product lines or business units.