CHAPTER 5:

RESOURCE-BASED ANALYSIS

Technological Information
resources resources

Financial
Human resources
resources
Organisational
resources

Physical Knowledge
resources assets
(inventory)

Isolation is the ability of an organisation to gain abnormal profits from strategic resources whilst competitors lose profits
because of a lack of strategic resources. The strategic resource fulfils the conditions of VIRO (Value, Imitability, Rarity,
Organisation)

A competitive advantage is supported by the following three key points:

1. A complex structure of marketing resources makes the identification and imitation of them difficult.
2. The strength of resources that are difficult and time-consuming to imitate, for example relationships with specific
stakeholders- due to long-term relationships and good employee treatment.
3. Reputation and routine of purchase help to hold a position in today’s markets. (For example German car
manufacturers, which have lost sales due to scandals, but not their reputation for good quality).

Value creation
Value creation: The operating level that improves the value of products and/or service of an organisation.

Value creation Value capture Value extraction

Product innovation Customer intimacy Operational excellence

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Value creation: Product/service has to convince the consumer of its value. This can be any kind of feature that isolates
the product or service and creates innovative value.

Value capture: Regularly monitor the customers’ exact needs and wants to maintain relationships with the customer.
(Marketers continuously communicate helpful, informative or entertaining firm-generated content)

Value extraction: Operational excellence is reached when the implementation of set business goals is more efficient and
reliable than the competition.

Resource-based view (RBV)

Approach that focuses on identifying and combining strategic resources in order to gain a competitive advantage.

Tangible

Heterogenous

Recourse-based view VIRO resource analysis Competitive advantage

Immobile

Intangible

Tangible resources: Physical assets - Real estate, buildings, equipment and capital. (physical and financial resources)
Intangible resources: Reputation, intellectual property and relationships with consumers (human, information and
marketing resources).
Heterogenous: A Heterogeneous resource mix, differentiates an organisation from other competitors.
Immobile: Resources can't be transferred from organisation to organisation, for example intangible resources are
difficult to pass on and thus intellectual property is usually immobile
The VIRO analysis:

-Value: Value is created by selling price, production cost and quality differentiation.

-Imitability: If resources are difficult to imitate, an organisation might gain a temporary competitive
advantage.

-Rarity: If resources are rare and thus only one or a few organisations are in possession of, or have
access to these resources, a competitive advantage is guaranteed.

-Organisation: Focuses on the organisation and maintenance of the other three key points.

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 Optimal utilisation of marketing resources

Dynamic marketing Marketing

Marketing assets
capabilities capabilities

Marketing assets
Internal support
Knowledge assets Market-based assets Supply chain assets Brand equity assets
assets

Marketing assets are all items or resources used by a firm to promote its offerings.

INTERNAL SUPPORT ASSETS

Helps improve the standpoint of the organisation financially, structurally and internally.

1. Information systems: Provide the organisation with information to support and improve the business process.
2. Market intelligence: Gathers and analyses external information relevant to the organisations’ markets of interest
to improve strategies regarding market opportunity, market penetration strategy and market development.

Market opportunity determines if there is room to attract more customers, introduce new products and achieve
organisational growth.
Market penetration strategies focus on the organisation’s market share in the entire market.
Market development spots and targets new market segments extending the organisation’s scope of influence.

3. Marketing foundation asset: The corporate culture of an organisation (the shared values, morals and guidelines).
It is built on the organisation’s goals, policies, ethics, identity and reputation.

KNOWLEDGE ASSETS

Includes the knowledge of the organisation and its workforce including ideas, insights, cognitive and technical skills,
and memory.

Knowledge assets can be subdivided into:

Experiential knowledge assets: Benefiting the organisation, for example, the capabilities of the organisation’s
members, staff with years of experience and a good work atmosphere (more productive).

Conceptual knowledge assets: focus on the product or service concepts, designs and brand equity. (better quality,
performance characteristics and features).

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MARKET-BASED ASSETS

Focus on market specific properties, customer relationships and distribution channels.

For example:
Market domination: One organisation or a few organisations dominate the market.
Country of origin: Some countries have a good reputation for producing specific goods, which increases their
brand equity. For example, German car manufacturers (Mercedes, BMW, VW) have an international reputation
for well-made, high-quality, reliable cars. This reputation rubs off on other goods and services and the label
‘made in Germany’ increases the value of the goods or services.

SUPPLY CHAIN ASSETS

A distribution channel is the sales chain of a business and/or intermediaries, which a good or service has to go
through before reaching the end-consumer.

There are four ways to distribute goods or services to the end-customer:

• Direct distribution channel: Manufacturer to the consumer. (Consumer buys fruit or vegetables directly from the
farmer).

• Retail channel: Movement of goods from the manufacturer to a retailer and then finally to consumers.
(Woolworths/ Makro/ Edgars).

• Wholesaler channel: The movement of goods from the manufacturer to the wholesaler/distributor to retailers and
finally to consumers. Wholesalers offer discounts on bulk purchases. (For example Amazon).

• Agent channel: Movement of goods from the manufacturer to agents (who have contractual agreements with
wholesalers) who sell products to retailers and eventually to consumers.
This channel can be costly because of the number of middlemen involved who put their mark-up on the products.
Secondly, in the event of defective products, the consumer might be forced to wait a long time before getting
replacements or a solution. Thirdly, there is no customer intimacy in this distribution channel.

BRAND-EQUITY ASSETS

Refers to the value of the brand assets. (Brand strength and brand loyalty build brand equity).
Brand equity therefore includes:
Brand strength
Brand loyalty
Brand image
Company name
Company reputation.

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 Marketing capabilities
Product and service Distributional and Implementation of
Price conception
management logistical planning promotional strategies

Process designed to apply collective knowledge, skills and resources of the firm to market-related needs of the
business, enabling the business to add value to its goods and services, adapt to market conditions, take advantage of
market opportunities and meet competitive threats.

PRODUCT AND SERVICE MANAGEMENT:

Focus on the creative generation, development, maintenance and improvement of products/ services. The
coordination of product design, packaging and the other three Ps of the marketing mix (place, promotion and price) is
crucial to succeed in a competitive market environment.

DISTRIBUTION AND LOGISTICAL PLANNING (PLACE):

Guide and improve all distribution channel steps to the end-consumer. These distributional challenges include the
management of inventory, implementation of a transport strategy, customer service and a facility location.

THE IMPLEMENTATION OF A PROMOTIONAL STRATEGY

Includes advertising, publicity and the activation of sales promotions. The main aim of promotion strategies is to
trigger interest, gain attention increase brand/label awareness, push sales and improve brand loyalty.

PRICE CONCEPTION:
Price of a product is the income for organisations which covers the cost of production, the cost of distribution and
cost of promotion.

Dynamic marketing capabilities

Sensing capability Capturing capability/
Realisation capability
(PESTLE) adaptive capabilities

Dynamic marketing capabilities focus on creating new marketing resources for the organisation which helps identify
and respond to marketing changes.

SENSING CAPABILITY:
Understand what is happening in the external environment such as the PESTLE (Political, Economic, Social,
Technological, Legal, Environmental) factors, competition, new products or services offering. This helps to identify
appropriate strategies and remain competitive.

CAPTURING CAPABILITY/ADAPTIVE CAPABILITIES:

Implies doing things differently in response to market changes. (Includes market targeting, positioning and establishing
customer relationships.

REALISATION CAPABILITY
With the Fourth Industrial Revolution (4IR), changing consumer tastes and preferences, and stiff competition,
organisations have to use the resources at their disposal to produce new products and service offerings for the
market. Innovation and development of the next generation of goods and services is essential for any organisation.

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 Resource portfolio

Four broad types of resources, namely:

Crown jewels: Black holes:

Edge over competitors and resources to These resources provide competitive advantage
differentiate the organisation. but are not important or relevant (They do not
create customer value).
Examples:
Skilled human capital Examples:
Country of origin Diversification of brands.
Diversified product portfolio.

Sleepers:
Achilles’ heels:
These resources do not have competitive
Important resources but competitors use them advantages nor do they enhance customer value.
better:
Examples:
Examples: Lack of skilled human capital.
Financial position
Technological skills (Management might be forced to focus on hiring
Distribution network individuals who are experts in specific areas to
Supply network enable the business to improve its innovations).