Assessing Competitive Advantages
Assessing competitive advantage
George S. Day and Robin Wensley suggest that there are two distinct approaches to assess the competitive position of the business. One starts with the market and is customer-focused and the other is primarily competitor-centered.
Competitor-centered assessments are based on direct management comparison with a few target competitors. These businesses follow the competitor’s costs closely and quickly match their marketing initiatives. Customer-focused assessments start with detailed analyses of customer benefits in order to identify the actions needed to improve performance. These approaches are found in service-intensive industries. Customer-focused approaches have the advantage of examining the full range of competitive choices, but lack an obvious connection to activities.
The positional advantage requires that the business set up barriers that make imitation difficult. These barriers to imitation are disappearing with a time; in order to sustain the positional advantage firm must continue investing. The creation and sustenance of a competitive advantage are the outcome of a long-run feedback or cyclical process (see figure 1.1).
Sources of advantage * superior skills * superior resources
Positional advantages * superior customer value * lower relative costs
Performance outcomes * satisfaction * loyalty * market share * profitability
Investment of profits to sustain advantage
Figure 1.1
Source: ‘Assessing Advantage: A Framework for diagnosing competitive superiority’, George S.Day, Robin Wensley, Journal of Marketing, April 1988
Sources of advantage represent the ability of the company to perform better and more than its competitors. The positional advantages can be created through lower relative costs or differentiation. Lower relative costs position requires performance of most activities at lower costs than competitors while still offering a parity product. Differentiation can be
George S. Day and Robin Wensley suggest that there are two distinct approaches to assess the competitive position of the business. One starts with the market and is customer-focused and the other is primarily competitor-centered.
Competitor-centered assessments are based on direct management comparison with a few target competitors. These businesses follow the competitor’s costs closely and quickly match their marketing initiatives. Customer-focused assessments start with detailed analyses of customer benefits in order to identify the actions needed to improve performance. These approaches are found in service-intensive industries. Customer-focused approaches have the advantage of examining the full range of competitive choices, but lack an obvious connection to activities.
The positional advantage requires that the business set up barriers that make imitation difficult. These barriers to imitation are disappearing with a time; in order to sustain the positional advantage firm must continue investing. The creation and sustenance of a competitive advantage are the outcome of a long-run feedback or cyclical process (see figure 1.1).
Sources of advantage * superior skills * superior resources
Positional advantages * superior customer value * lower relative costs
Performance outcomes * satisfaction * loyalty * market share * profitability
Investment of profits to sustain advantage
Figure 1.1
Source: ‘Assessing Advantage: A Framework for diagnosing competitive superiority’, George S.Day, Robin Wensley, Journal of Marketing, April 1988
Sources of advantage represent the ability of the company to perform better and more than its competitors. The positional advantages can be created through lower relative costs or differentiation. Lower relative costs position requires performance of most activities at lower costs than competitors while still offering a parity product. Differentiation can be
References: 3. Al Ries and Jack Trout, Positioning: The Battle for Your Mind (New York: McGraw-Hill, 1981). 4. Penny M.Simpson, Marketing Best Practices, chapter 7, 2000, The Dryden Press 5 6. Svend Hollensen, ‘Marketing Planning’, McGraw-Hill Companies, 2006 7 12. Scott Edgett, Stephen Parkinson, ‘Marketing of service industries- A review’, Service Industries Journal, 1993