Strategic Elements of Competitive Advantage
Strategic Elements of Competitive Advantage
IKEA
ü IKEA confront competitors such as supermarkets (Wal-Mart) and other furniture co.
ü they focused on 3 areas for improvement: product assortment, customer service and product availability.
ü Prices are affordable to almost everyone;
ü colors blue and yellow are Sweden national colors;
ü customers see the furniture in showrooms and with names instead of model numbers;
ü shopping is a self-service activity –browse, u write names and look up for them at the lowest level where everything is in flat packs in kit forms that you have to assemble at home.
ü Most Ikeas have children play area, restaurant, baby care and grocery store.
THE ESSENCE OF MARKETING STRATEGY IS SUCCESSFULLY RELATING THE STRENGHTS OF AN ORGANIZATION TO ITS ENVIRONMENT.
As the horizons of markets have expanded from domestic to regional and global, so too have the horizons of competitors.
The reality in almost all industries today is GLOBAL COMPETITION. This fact puts organizations under increasing pressure.
INDUSTRY ANALYSIS: FORCES INFLUENCING COMPETITION
Gain insight into competitors is through INDUSTRY ANALYSIS.
An industry can be groups of co. that are close substitutes for each other.
Harvard university’s Michael Porter developed a five forces model that explains competition in an industry:
1. Threat (amenaza) of new entrants:
a. New entrants bring new capacity, desire to gain market share and position and new approaches to better customer needs
b. New players mean prices will be pushed down and margins squeezed
c. Barriers
i. Economies of scale à decline per unit cost while production per unit increases.
ii. Product differentiation à uniqueness. Achieved as a result of unique product attributes or effective marketing communications, or both.
IKEA
ü IKEA confront competitors such as supermarkets (Wal-Mart) and other furniture co.
ü they focused on 3 areas for improvement: product assortment, customer service and product availability.
ü Prices are affordable to almost everyone;
ü colors blue and yellow are Sweden national colors;
ü customers see the furniture in showrooms and with names instead of model numbers;
ü shopping is a self-service activity –browse, u write names and look up for them at the lowest level where everything is in flat packs in kit forms that you have to assemble at home.
ü Most Ikeas have children play area, restaurant, baby care and grocery store.
THE ESSENCE OF MARKETING STRATEGY IS SUCCESSFULLY RELATING THE STRENGHTS OF AN ORGANIZATION TO ITS ENVIRONMENT.
As the horizons of markets have expanded from domestic to regional and global, so too have the horizons of competitors.
The reality in almost all industries today is GLOBAL COMPETITION. This fact puts organizations under increasing pressure.
INDUSTRY ANALYSIS: FORCES INFLUENCING COMPETITION
Gain insight into competitors is through INDUSTRY ANALYSIS.
An industry can be groups of co. that are close substitutes for each other.
Harvard university’s Michael Porter developed a five forces model that explains competition in an industry:
1. Threat (amenaza) of new entrants:
a. New entrants bring new capacity, desire to gain market share and position and new approaches to better customer needs
b. New players mean prices will be pushed down and margins squeezed
c. Barriers
i. Economies of scale à decline per unit cost while production per unit increases.
ii. Product differentiation à uniqueness. Achieved as a result of unique product attributes or effective marketing communications, or both.