A Model of Competitive Advantage

MINISTRY OF EDUCATION AND SCIENCE OF THE REPUBLIC OF KAZAKHSTAN

SULEYMAN DEMIREL UNIVERSITY

FACULTY OF ECONOMICS

COURSE WORK THE PRINCIPLES OF MARKETING

Competitors

Prepared by: Maksatzhan Khakim

Group: Management 2

Checked by: Ramiz Akhmedov

Contents

1.INTRODUCTION.. 2

2. MAIN PART

2.1 COMPETITIVE ADVANTAGE. 3

2.1.1 Resources and Capabilities. 4

2.1.2 Cost Advantage and Differentiation Advantage. 4

2.2 STRATEGY - COMPETITOR ANALYSIS. 5

2.2.1 Steps in Analyzing Competitors. 6

1 step - Identifying the company’s competitors. 6

2 step - Determining the competitors’ objectives. 7

3 step - Identifying the competitors’ strategies. 7

4 step - Assessing competitors’ strengths and weakness. 8

5 step - Estimating the competitors’ reactions. 8

6 step - Selecting competitors to attack and avoid. 8

2.3 BASIC COMPETITIVE STRATEGIES. 9

2.3.1 Competitive Advantage. 9

2.3.2 Competitive Strategies. 9

2.3.2.1 Strategy - Differentiation. 10

2.3.2.2 Strategy - Cost Leadership. 11

2.3.2.3 Strategy - Differentiation Focus. 11

2.3.2.4 Strategy - Cost Focus. 11

2.4 COMPETITIVE MARKETING STRATEGIES. 12

2.4.1 Market-Leader Strategies. 12

2.4.2 Market-Challenger Strategies [Expanding Market Share]. 13

2.4.2.1 Attack Strategies. 13

2.4.3 Market-Follower Strategies. 14

2.4.4 Market-Nicher Strategies. 14

2.5 BALANSING CUSTOMER & COMPETITOR ORIENTATION.. 14

3. CONCLUSION.. 15

4. REFERENCES. 16

INTRODUCTION

Under the Marketing concept, companies gain competitive advantage by designing offers that satisfy target consumer needs better than competitor’s offers

To plan effective marketing strategies, the company needs to find out all it can about its competitors. It must constantly compare its products, prices, channels, and promotion with those of close competitors. In this way the company can find areas of potential competitive advantage and disadvantage.

COMPETITIVE ADVANTAGE

When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.

Michael Porter identified two basic types of competitive advantage:

• cost advantage
• differentiation advantage

A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.

Cost and differentiation advantages are known as positional advantages since they describe the firm's position in the industry as a leader in either cost or differentiation.

A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. The following diagram combines the resource-based and positioning views to illustrate the concept of competitive advantage:

A Model of Competitive Advantage

Resources
Distinctive Competencies		Cost Advantage or Differentiation Advantage		Value Creation
Capabilities

Date: 2016-03-03; view: 470