Chapter 3 (con’t)
REVIEW!
Customer loyalty is a sustainable competitive
advantage customer loyalty because it defies regular
competitive strategies. ...is called relationship
marketing.
 The consumer develops a strong relationship with the
product or the retailer and will not consider another
brand or another store, unless the favoured product
or retailer makes a big mistake.
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FACT: Heinz Ketchup was produced in 1876.
Non-Sustainable Competitive
Advantages (p.91)
Non-sustainable competitive advantages are those that can be used by
competitors to shift sales in their direction. Non-sustainable advantages
include:
promotion,
placement,
quality,
benefits of use,
price, and design features.
Promotion
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Ie, Roll up the Rim to Win...
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What else can you think of??
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Top-of-the-mind means that the consumer
is most likely to think about one brand of
product or service before he or she thinks
of any other. A company that has top-of-themind awareness for its brand has a distinct
competitive advantage.
Placement
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The more placements it has, the more
competitive it is.
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If a product has exclusive distribution in a market, it has a
very competitive edge, because no other similar product has
a placement there. For example, if Naya Inc. sells its Canadian
Natural Spring Water in a vending machine in a fitness centre
and if that is the exclusive distribution for its product in
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that location.
In some cases, businesses engage in fierce battles with
their competition over placement
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The big retail stores that specialize in a specific
product category, such as books, hardware, or pet
supplies, are called category killers.

When these superstores move into an area, the
smaller retail store that has existed on a small
profit from sales to a limited, local market may go
out of business. Large companies may also buy
smaller companies and then discontinue their
brands, thereby eliminating the competition.
Quality

A product can compete with other products in its
category by being the best of its type.
Every day, businesses try to make their products better:
stronger, faster, lighter, easier to open, easier to close.
They add features that will improve the product, and
they take away features that consumers no longer
regard as beneficial. Research and development
departments spend millions of dollars trying to
improve quality.

Brands such as Gucci, Godiva chocolates,
or Lamborghini automobiles represent
high quality.
Benefits of Use

A product that can do more or perform better than
another product will have a competitive advantage.
One automobile manufacturer offers consumers greater
safety in its vehicles; a second manufacturer offers
better service; a third offers greater prestige; and a
fourth offers better mileage. In this very competitive
market, each carmaker tries to present benefits that
it believes will appeal to prospective buyers and will
convince them to buy its products rather than those
of the competition.
Price

All features being equal, price is only a
competitive advantage to a company if its
product or service is less expensive than
a competitor's product or service. If a
consumer believes one product is equal
to another, then the cheaper product has
a competitive advantage, at least for a
while.
Design Features
Every manufactured product is designed,
whether it's a toaster, a tire, or a teacup.
Design influences the way a product looks and
what it does. A car's design makes it move
from one place to another (its function)
and defines its shape and colour (its form).
Companies design cars to perform similar
functions, but no make of car has quite the
same form as any other make of car.
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Package designs compete for the
customer's attention.
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The shape of the bottle, the pattern of
the label, the way a can opens, the
wonderful picture on the box, the jar
with the built-in handle: these are all
examples of design choices that can
give a product an advantage over the
competition.
Homework:
Research the following
(you will need %of market share or some data to prove your research)
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Area of Expertise
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Soft drink manufacturer
Breakfast food manufacturer
Coffee brand
Top music group worldwide
Car rental agency
Mobile phones
World's biggest company
Tire manufacturer
Automobile manufacturer
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Fast-food restaurant
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Leaders
Followers
Service Competition (P.99)
Some businesses are set up solely to
perform specific services for customers.
Other businesses offer value-added
services, which are activities performed to
support the sale of a product or other
service.
 A firm that charges money to deliver a
parcel or letter is a delivery service business.
 A store that provides free home delivery of
customers' purchases is performing a valueadded service.
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Service businesses are in competition with other businesses
that perform the same services.
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IE..Dentists compete with dentists;
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Hairstylists with other hairstylists;
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Retail clothing stores with other retail clothing stores.
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Service businesses do not look for the same competitive
advantages as manufacturing businesses. Service businesses
compete with one another by attempting to gain a
competitive advantage using convenience, degree of service,
selection, reputation, and price.
__________________ means making some
activity easier or more comfortable, and is a
major reason why people shop on the Internet.
To gain a competitive advantage, some service
businesses offer value-added services.
 For example,
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car-rental companies offer pickup and delivery;
pizza companies promise delivery in 30 minutes;
hotels offer express check-in and checkout;
fitness centres provide round-the-clock access;
restaurants and banks install drive-through windows;
A hairstylist in a salon cuts hair. But that salon might also wash,
colour, braid, or style hair, or add hair extensions.
Other salons might offer massages, facials, aromatherapy,
manicures, pedicures.
Still others might provide healthy meals, bottled water, relaxation
lounges, gentle music, soft lighting, and movies.
Most beauty and hair salons, barbershops, health spas, and
aesthetics centres provide similar services, with the competitive
advantage coming from the _____________or quality of those
services.
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Offering a greater _selection___of
services is another way service businesses
compete.
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A store that sells two brands of toasters,
one that toasts regular bread and one
that has wider slots for toasting bagels as
well as bread, has a very narrow selection.
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It is important for a service business to
maintain a good _______ because it does
not have a tangible product to show to
the customer. Customers who have
received good service may tell others...
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Price is a factor in both product and
service competition. If two services are
similar, the business with the lower price
has the competitive edge. However, when
one business's prices are well below
those of the competition, customers may
question the business's reputation and
credibility.
Homework
Page 107 – 2C
Write a review of a book you have read,
movie you have seen,or restaurant you have
visited. Create a rating scale and include a
rating in your review. Share the review with
your classmates, and ask them if your review
might affect their purchasing decisions.
(minimum ½ page single space – due
tomorrow at the end of class!)
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