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Chapter Eighteen
Creating Competitive Advantage
Copyright © 2009 Pearson Education, Inc.

Chapter 18- slide 1
Publishing as Prentice Hall
Topic Outline
• Competitor Analysis
• Competitive Strategies
• Balancing Customer and Competitor
Orientations

Chapter 18- slide 2
• Competitive advantages require delivering

more value and satisfaction to target
consumers than competitors do
• Competitive marketing strategies are how
companies analyze their competitors and
develop value-based strategies for
profitable customer relationships

Chapter 18- slide 3
Competitor Analysis
Competitor analysis is the process of identifying,

assessing, and selecting key competitors

Chapter 18- slide 4
Competitor Analysis
Identifying Competitors
Competitors can include:

• All firms making the same product or class
of products
• All firms making products that supply the
same service
• All firms competing for the same
consumer dollars

Chapter 18- slide 5
Competitor Analysis
Assessing Competitors

Chapter 18- slide 6
Competitor Analysis
Assessing Competitors

Chapter 18- slide 7
A ________ is a group of firms in a given industry
that follow the same or similar strategy.
1. cartel
2. strategic group
3. business cohort
4. conglomerate

Chapter 18- slide 8
A ________ is a group of firms in a given industry
that follow the same or similar strategy.
1. cartel
2. strategic group
3. business cohort
4. conglomerate

Chapter 18- slide 9
________ has become a powerful tool for
increasing your company’s competitiveness.
1. Benchmarking
2. Reality-checkmate
3. Direct costing
4. Price cutting

Chapter 18- slide 10
________ has become a powerful tool for
increasing your company’s competitiveness.
1. Benchmarking
2. Reality-checkmate
3. Direct costing
4. Price cutting

Competitor Analysis
Selecting Competitors to Attack and Avoid
Customer value analysis determines the benefits

that target customers’ value and how customers
rate the relative value of various competitors’
offers
• Identification of major attributes that customers
value and the importance of these values
• Assessment of the company’s and competitors’
performance on the valued attributes

Competitor Analysis
• Strong or weak
competitors
• Close or distant
competitors
• Good or bad
competitors

Competitor Analysis
Finding uncontested market spaces

Competitor Analysis
Designing a Competitive Intelligence System
• Identifies competitive information and the best

sources of this information
• Continually collects information
• Checks information for validity and reliability
• Interprets information
• Organizes information
• Sends key information to relevant decision makers
• Responds to inquiries about competitors

A useful tool for assessing competitors’ strengths
and/or weaknesses is a ________.
1. means-end chain
2. competitive preview
3. customer value analysis
4. competitive map locator

A useful tool for assessing competitors’ strengths
and/or weaknesses is a ________.
1. means-end chain
2. competitive preview
3. customer value analysis
4. competitive map locator

The process of identifying key competitors;
assessing their objectives, strategies, strengths,
weaknesses, and reaction patterns; and
selecting which competitors to attack and
avoid is known as ________.
1. competitive marketing
2. competitive intelligence
3. competitor analysis
4. competitor mining

The process of identifying key competitors;
assessing their objectives, strategies, strengths,
weaknesses, and reaction patterns; and
selecting which competitors to attack and
avoid is known as ________.
1. competitive marketing
2. competitive intelligence
3. competitor analysis
4. competitor mining

Which of the following is not performed when
assessing competitors?
1. Determining competitors’ objectives
2. Estimating competitors’ reactions
3. Analyzing competitors’ strengths and weaknesses
4. All of the above are tasks used to assess
competitors.

Which of the following is not performed when
assessing competitors?
1. Determining competitors’ objectives
2. Estimating competitors’ reactions
3. Analyzing competitors’ strengths and weaknesses
4. All of the above are tasks used to assess
competitors.

Competitive Strategies
Basic Competitive Strategies
Michael Porter’s four basic
competitive positioning strategies

Overall cost leadership strategy is when a

company achieves the lowest production
and distribution costs and allows it to
lower its prices and gain market share

Differentiation strategy is when a company

concentrates on creating a highly
differentiated product line and marketing
program so it comes across as an industry
class leader
Focus strategy is when a company focuses its
effort on serving few market segments
well rather than going after the whole
market
Porter believed that a company that pursued

a clear strategy would achieve superior
performance and that companies without
a clear strategy would not succeed
Porter considered no clear strategy to be

“middle of the road”

Which of the following competitive strategies
does the worst (according to your text)?
1. Overall cost leadership
2. Middle-of-the-road
3. Focus
4. Differentiation

Which of the following competitive strategies
does the worst (according to your text)?
1. Overall cost leadership
2. Middle-of-the-road
3. Focus
4. Differentiation

Michael Treacy and Fred Wiersema suggest

companies can gain leadership positions
by delivering superior value to their
customers in three strategies or “value
disciplines:”
• Operational excellence
• Customer intimacy
• Product leadership
Operational excellence refers to a company

providing value by leading its industry in
price and convenience by reducing costs
and creating a lean and efficient value
delivery system

Customer intimacy refers to a company

providing superior value by segmenting
markets and tailoring products or services
to match the needs of the targeted
customers

Product leadership refers to a company

providing superior value by offering a
continuous stream of leading-edge
products or services. Product leaders are
open to new ideas and solutions and bring
them quickly to the market.

Which of the following is not one of the value
disciplines proposed by Treacy and Wiersema?
1. Operational excellence
2. Customer intimacy
3. Price leadership
4. Product leadership

Which of the following is not one of the value
disciplines proposed by Treacy and Wiersema?
2. Customer intimacy
3. Price leadership
4. Product leadership

A company is practicing ________ when it
provides superior value by offering a
continuous stream of leading-edge products or
services.
1. operational excellence
2. customer intimacy
3. price/cost excellence
4. product leadership

A company is practicing ________ when it
provides superior value by offering a
continuous stream of leading-edge products or
services.
1. operational excellence
2. customer intimacy
3. price/cost excellence
4. product leadership

Competitive Positions

Competitive Positions
Market leader is the firm with the largest market

share and leads the market price changes,
product innovations, distribution coverage, and
promotion spending
Market challengers are firms fighting to increase
market share
Market followers are firms that want to hold onto
their market share
Market nichers are firms that serve small market
segments not being pursued by other firms
Market Leader Strategies
• Expand total
demand
• Protect their
current market
• Expand market
share

Expanding Total Demand
Expand total demand by developing:
• New users
• New uses
• More usage of its products

Protecting Market Share
Protect current market by:
• Fixing or preventing weaknesses that
provide opportunities to competitors
• Maintain consistent prices that provide
value
• Keep strong customer relationships
• Continuous innovation
Expanding Market Share
Expand market share by:
• Increasing profitability with increasing
market share in served markets
• Producing high-quality products
• Creating good service experiences
• Building close relationships

Attempting to expand the total demand for its
brand, a market leader might ________.
1. encourage more usage of the product
2. promote new uses for the product
3. find new uses for the product
4. all of the above

Attempting to expand the total demand for its
brand, a market leader might ________.
1. encourage more usage of the product
2. promote new uses for the product
3. find new uses for the product
4. all of the above

Market Challenger Strategies
Challenge the leader with

an aggressive bid for
more market share
Play along with

competitors and not
rock the boat

Market Follower Strategies
Second mover advantage occurs when a

market follower observes what has made
the leader successful and improves on it
Challenges firms its own size or smaller

Market Nicher Strategies
Ideal market niche is big enough to be

profitable with high growth potential and
has little interest from competitors
Key to market niching is specialization
• Market
• Customer
• Product
• Marketing mix
The firm in an industry with the largest market
share is called the ________.
1. market leader
2. industry skimmer
3. market challenger
4. market maker

The firm in an industry with the largest market
share is called the ________.
1. market leader
2. industry skimmer
3. market challenger
4. market maker

What is the key idea when using a niching
strategy?
2. Customer leadership
3. Material excellence
4. Specialization

What is the key idea when using a niching
strategy?
2. Customer leadership
3. Material excellence
4. Specialization

Studies have found that, on average, profits
________ with increases in market share.
1. double
2. rise
3. bubble
4. flatten out

Studies have found that, on average, profits
________ with increases in market share.
1. double
2. rise
3. bubble
4. flatten out

Balancing Customer and
Competitor Orientations
• Companies need to continuously adapt
strategies to changes in the competitive
environment
• Competitor-centered company
• Customer-centered company
• Market-centered company

Competitor-centered company spends most

of its time tracking competitor’s moves
and market shares and trying to find ways
to counter them
• Advantage is that the company is a fighter
• Disadvantage is that the company is
reactive

Customer-centered company spends most of

its time focusing on customer
developments in designing strategies
Provides a better position than

competitor-centered company to identify
opportunities and build customer
relationships
Market-centered company spends most of its

time focusing on both competitor and
customer developments in designing
strategies


A ________-centered company develops a fighter
orientation, watches for weaknesses in its own
position, and searches out competitors’
weaknesses.
1. customer
2. competitor
3. product
4. market

A ________-centered company develops a fighter
orientation, watches for weaknesses in its own
position, and searches out competitors’
weaknesses.
1. customer
2. competitor
3. product
4. market

A ________-centered company, by watching
customer needs evolve, is in a good position to
identify new opportunities and set long-run
strategies that make sense.
1. customer
2. competitor
3. product
4. market

A ________-centered company, by watching
customer needs evolve, is in a good position to
identify new opportunities and set long-run
strategies that make sense.
1. customer
2. competitor
3. product
4. market

“Competitive advantage” requires a firm to deliver
consumers than ________.
1. competitors
2. suppliers
3. channel members
4. middlemen

“Competitive advantage” requires a firm to deliver
consumers than ________.
1. competitors
2. suppliers
3. channel members
4. middlemen

All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.



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Chapter Eighteen

Creating Competitive Advantage

Copyright © 2009 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

• Competitive advantages require delivering

Copyright © 2010 Pearson Education, Inc.

Competitor analysis is the process of identifying,

Copyright © 2010 Pearson Education, Inc.

Competitors can include:

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Customer value analysis determines the benefits

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Finding uncontested market spaces

Copyright © 2010 Pearson Education, Inc.

• Identifies competitive information and the best

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Overall cost leadership strategy is when a

Copyright © 2010 Pearson Education, Inc.

Differentiation strategy is when a company

Porter believed that a company that pursued

Porter considered no clear strategy to be

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Michael Treacy and Fred Wiersema suggest

Operational excellence refers to a company

Copyright © 2010 Pearson Education, Inc.

Customer intimacy refers to a company

Copyright © 2010 Pearson Education, Inc.

Product leadership refers to a company

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Market leader is the firm with the largest market

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Copyright © 2010 Pearson Education, Inc.

Challenge the leader with

Play along with