MANAGEMENT

MKTG7501– Marketing

Seminar 2

Creating Value and
Competitive Advantage

1

COMPETITION AND COMPETITIVE
ADVANTAGE
Today understanding your competitor is not enough – Marketers must consider not only the needs of the target market but also the strategies of competitors
 Competitive advantage - An advantage over competitors gained by offering consumers greater value  The first step is the competitor analysis –
Followed by the process of identifying major competitors, assessing their objectives, strategies, strengths and weaknesses, and selecting which competitors to attack or avoid


2

STEPS IN ANALYZING COMPETITORS
Identifying the company’s competitors

Assessing competitors’ strengths and weaknesses Determining competitors’ objectives

Estimating competitors’ reactions

Identifying competitors’ strategies

Selecting competitors to attack and avoid 3

1

WHAT DRIVES INDUSTRY COMPETITIVENESS?
PORTER’S FIVE FORCES MODEL
New entrants
Threat of new entrants
(Barriers to entry)
Bargaining power of suppliers

Suppliers

Industry
Competitors

Buyers

Intensity of rivalry Bargaining power of buyers

Threat of substitutes

Substitutes

25

Costco
Coles

How could competitors react to your marketing strategies? – Examples?

IMPACT OF THE INTERNET
ON PORTER’S FIVE FORCES
 New

entrants Reduced barriers to entry because of less need for sales force.
Access to distribution channels and physical assets.
 Substitutes Additional new substitution threats and potential market expansion from e-tailers offering a wide range of products and services.
5

IMPACT OF THE INTERNET
ON PORTER’S FIVE FORCES
 Suppliers

The internet provides a channel for suppliers to end users as well as enabling procurement processes that can standardize products and reduce differentiation
 Buyers Improves bargaining power through wider choice and reduces switching costs
 Rivalry of