THE COMPETITIVE MARKET
CHAPTER 3
COMPETITION
• Does competition affect business
decisions? Using your references
provide details to support your
answer.
• How is competition defined? What
makes individuals competitive?
How is Apple Competitive?
List all the ways Macs are competitive against PC
Identify using a ven-diagram determine differences
and similarities
What makes Mac presents itself in a competitive
way?
COMPETITION IN THE
AUTOMOBILE MARKET
LETS COMPARE CARS
Conducting a SWOT Analysis
• SWOT ANALYSIS
• Identifying internal strengths (S) and weaknesses (W)
and also examining external opportunities (O) and
threats (T).
STRENGHTHS
WEAKNESSES
PRODUCTION COST
MARKETING SKILLS
IMAGE
FINACIAL RESOURCES
TECHNOLOGY
INTERNAL
OPPORTUNITY
THREATS
SOCIAL
DEMOGRAPHICS
ECONOMIC
COMPETITIVE
EXTERNAL
IKEA SWOT ANALYSIS
READ THE FOLLOWING CASE STUDY AND
ANSWER THE FOLLOWING QUESTIONS
COMPETITIVE ADVANTAGE
 Competitive advantage is a set of unique
features of a company and its products that
are perceived by the target market as
significant and or superior to the competition.
Exists when a company is able to deliver the
same benefit as competitors but at a lower
cost, or deliver benefits that exceed those of
competing companies.
THREE TYPES OF COMPETITIVE
ADVANTAGE
I.
COST – being the low-cost competitor in an industry
while maintaining satisfactory profit margins and a
positive perception of product and company.
II.
PRODUCT/SERVICE DIFFERENTIATION –
the
provision of something that is unique and valuable to
buyers beyond simply offering a lower price than the
competitor.
III. NICHE COMPETITIVE ADVANTAGE – The
advantage achieved when a company seeks to target and
serve effectively a small segment of the market.
BUILDING A SUSTAINABLE
COMPETITIVE ADVANTAGE
Sources of
Competitive
Advantage
Cost
Product /
Service
Differentiation
$
A vs. B vs. C
Niche
Strategy
TO CREATE SUSTAINABLE COMPETITIVE ADVANTAGE, DO NOT
COPY SOMEONE ELSE, BUILD YOUR OWN
SUSTAINABLE COMPETITIVE
ADVANTAGES
®
SUSTAINABLE COMPETITIVE ADVANTAGES -
methods used to keep customers in spite of the competition.
Strategies include:
1. Developing a Unique Selling Proposition (USP): the one thing
a company’s product has that competing companies don’t have and
will not develop
2. Lowering Production Costs: using other sources to save costs
(i.e. building a plant in another country with lower resource costs)
3. Servicing a Niche Market: providing a product/service for a small
market, keeping competitors out of that market
4. Creating Customer Loyalty: when consumer develops strong
relationship with product or retailer
NON-SUSTAINABLE COMPETITIVE
ADVANTAGES
Can be used by competitors to shift sales in their direction
Strategies used:
1. Promotion
¢ Create top-of-the-mind awareness: consumer most likely thinks
about one brand of product/service before thinking about any other
2. Placement
¢ Category Killers: big retail stores that specialize in specific product
categories (i.e. books, hardware or pet supplies)
3. Quality
4. Benefits of Use
5. Price
6. Design Features
Service Competition
Other businesses offer value-added services: activities
performed to support the sale of a product or other
services
Service businesses compete with one another by
attempting to gain a competitive advantage using:
Convenience
Degree of service
§
Selection
§
Reputation
Price
Competitive Market
Competitive Market:
•
•
consists of specific types of products as well as
the companies that manufacture these
products
The amount of money consumers spend
annually on these specific products defines the
size of the market in dollars
Competitive Market
Market Share:

the percentage that one company’s product takes of
the total dollars spent by consumers on products
within a specific market category. (see Figure 3.23 on
page 110)
Market Segment:
 parts of the market defined by a specific characteristic
2 Ways to Increase Market Share:


Increase size of the overall market
Take away sales from its competitors
Market Share
What do theses charts illustrate?
What could have made the differences in quarters?
How would you increase your market share if you were
Apple?
COMPETING IN
INTERNATIONAL MARKET
PROMOTION
F Some methods are regulated differently in various countries
F Cultural differences must be considered
F Restrictions are placed on promoting certain products
F Media censorship of advertising may be restrictive
PLACEMENT
Form joint ventures to combine resources to make or sell a
specific product in another country
QUALITY
Choose a country that would consider your product highquality and that has no competitors
COMPETING IN
INTERNATIONAL MARKETS
BENEFITS OF USE
Can be expensive if there are no competitors
PRICING
Marketers must know tariff rates (taxes placed on good being imported
into a country in order to protect the local industries from too much
foreign competition
Landed cost: includes shipping costs and currency exchange, as well as
tariff rates
DESIGN
Marketers need to research what the importing country’s design
requirements and standards are of the product they are selling