MKTG 6113 Marketing Management

Week 10
Creating Competitive Advantage, The Global
Marketplace, and Sustainable Marketing
SUB TOPICS:
CHAPTER 18
COMPETITIVE STRATEGIES
- COMPETITOR ANALYSIS
- BALANCING CUSTOMER AND COMPETITOR ORIENTATIONS
 
CHAPTER 19
GLOBAL MARKETING ENVIRONMENT
- DECIDING WHETHER TO GO GLOBAL
- DECIDING WHICH MARKETS TO ENTER
- DECIDING HOW TO ENTER THE MARKET
- DECIDING ON THE GLOBAL MARKETING PROGRAM
- DECIDING ON THE GLOBAL MARKETING ORGANIZATION

CHAPTER 20
BUSINESS ACTION TO PROMOTE SUSTAINABLE MARKETING
- CONSUMER ACTION TO PROMOTE SUSTAINABLE MARKETING
- SOCIAL CRITICISM OF MARKETING
- SUSTAINABLE MARKETING
 Chapter Objectives
Chapter 18

 Objective 1: Discuss the need to understand competitors as well as

customers through competitor analysis.

 Objective 2: Explain the fundamentals of competitive marketing

strategies based on creating value for customers.

 Objective 3: Illustrate the need for balancing customer and

competitor orientations in becoming a truly market-centered
organization.

1-3
 Creating Competitive Advantage

• Competitive advantages require delivering more

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

18-5
 Competitor Analysis

Competitor analysis
is the process of identifying, assessing, and selecting
key competitors.

FIGURE | 18.1
18-6
 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 18-7
 Competitor Analysis
Assessing Competitors

Competitors’ Competitors’ strategies

objectives
• Profitability • Strategic group offers
• Market share growth the strongest
• Cash flow competition
• Technological
leadership
• Service leadership

Competitors’ Estimating
strengths and competitors’
weaknesses reactions
• What can our • What will our 18-8

competitors do? competitors do?

• Benchmarking
 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

18-10
 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

18-13
 Competitor Strategies

Approaches to Marketing Strategy

Entrepreneurial marketing involves
visualizing an opportunity and constructing
and implementing flexible strategies.
Formulated marketing
involves developing formal marketing strategies
and following them closely.
Intrepreneurial marketing
involves the attempt to reestablish an internal
entrepreneurial spirit and refresh marketing 18-16

strategies and approaches.

 Competitor Strategies

BasicStrategies
Competitive
Michael Porter’s four basic
competitive positioning strategies:
Overall cost
Differentiation
leadership

Middle of the
Focus
road 18-17
 Competitor Strategies

Basic Competitive Strategies

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 18-21

– Product leadership
 Competitor Strategies

Basic Competitive Strategies

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.

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 marke

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.
 Competitor Strategies

Competitive Positions
Market leader Market
strategies challenger
strategies

Market
Market nicher
follower
strategies
strategies

18-25
 Competitor Strategies

Market Leader Strategies

Expand total Protect current Expand market
demand market share
• Fixing or preventing • Increasing
• by developing:
weaknesses that profitability with
• New users provide increasing market
• New uses opportunities to share in served
• More usage competitors markets
• Maintaining • Producing high-
consistent prices quality products
that provide value • Creating good
• Keeping strong service experiences
customer • Building close
relationships relationships
• Promoting
continuous
18-27
innovation
 Competitor Strategies
Market Leader Strategies

Challenge the leader with an

aggressive bid for more
market share.
Second mover advantage:
Challenger observes what
has made the leader
successful and improves on
it.

18-31
 Competitor Strategies

Market Follower Strategies

• Play along with competitors and not rock the boat

• Copy or improve on leader’s products and programs with less

investment

• Bring distinctive advantages

• Keep costs and prices low or quality and services high

18-32
 Competitor Strategies
Market Nicher Strategies

An ideal market niche is big enough

to be profitable with high growth
potential and has little interest
from competitors.
The key to market niching is
specialization:
• Market
• Customer
• Product
• Marketing mix 18-33
 Balancing Customer and Competitor Orientations

FIGURE | 18.3
Evolving Company Orientations 18-40
 Chapter Objectives
Chapter 19

 Objective 1: Discuss how the international trade system and the economic,
political, legal, and cultural environments affect a company’s international
marketing decisions.

 Objective 2: Describe three key approaches to entering.

 Objective 3: Explain how companies adapt their marketing strategies and

mixes for international markets.

 Objective 4: Identify the three major forms of international marketing

organization.

1-20
 Global Marketing Today

A global firm
 Operates in more than one country
 Gains marketing, production, R&D, and
financial advantages not available to
purely domestic competitors
 Sees the world as one market
19-6
 Global Marketing Today

Global firms ask a number of basic questions:

 What market position should we try to establish in our

own country, in our economic region, and globally?
 Who will our global competitors be, and what are their
strategies and resources?
 Where should we produce or source our product? 19-7
 What strategic alliances should we form with other
firms around the world?
 Looking at the Global Marketing Environment

The International Trade System

Tariffs

Quotas
are taxes on certain
imported products Exchange Controls
designed to raise are limits on the
revenue or to protect amount of foreign Nontariff trade barriers
domestic firms imports a country will a limit on the amount of
accept in certain foreign exchange and
product categories to the exchange rate
conserve on foreign against other currencies.
exchange and protect
domestic industry and
employment

Copyright ©2014 by Pearson Education, Inc. All rights reserved

19-9
 Looking at the Global Marketing Environment

The International Trade System

General Agreement on Tariffs and Trade

(GATT):
• A 61-year-old treaty
• Designed to promote world trade
• Reduces tariffs and other international trade
barriers 19-11
 Looking at the Global Marketing Environment

The International Trade System

World Trade Organization: Certain countries have formed

• Enforces GATT rules free trade zones or economic
communities.
• Mediates disputes
• European Union (EU)
• Imposes trade sanctions
• North American Free Trade
Agreement (NAFTA)
• Central American Free Trade
Association (CAFTA)
• Union of South American 19-12
Nations (UNASUR
 Looking at the Global Marketing Environment

Economic Environment

Industrial Structure:
• Subsistence economies
• Raw material exporting
Economic factors economies
reflect a • Emerging economies
country’s (industrializing economies)
• Industrial economies
attractiveness
as a market. Income Distribution:
– Industrial structure • Low-income households
– Income distribution • Middle-income households
19-12
• High-income households
 Looking at the Global Marketing Environment

Political-Legal Environment
• Country’s attitude toward
international buying
• Government bureaucracy
• Political stability
• Monetary regulations
19-17
 Deciding Whether to Go Global

• Can the company understand the consumers?

• Can company offer competitively attractive
products?
• Will company be able to adapt to local culture?
• Can company deal with foreign nationals?
• Do the company’s managers have the
necessary international experience?
• Has management considered regulation and
political environment of other countries?
19-19
 Deciding Which Markets to Enter

• Define international marketing

objectives and policies
• Foreign sales volume
• How many countries to enter
• Types of countries to enter based on:
– Geography
– Income and population
– Political climate 19-20
Deciding Which Markets to Enter

Rank potential global

markets based on:
• Market size
• Market growth
• Cost of doing business
• Competitive
advantage
• Risk level

19-21
Deciding How to Enter the Market

19-24
 Deciding on the Global Marketing Program

Standardized marketing mix involves selling the same

products and using the same marketing approaches
worldwide.

Adapted marketing mix involves adjusting the marketing

mix elements in each target market, bearing more
costs but hoping for a larger market share and ROI.
19-34
 Deciding on the Global Marketing Program
Product
Straight product extension means
marketing a product in a foreign
market without any change.
Product adaptation involves
changing the product to meet
local conditions or wants.
Product invention consists of
creating something new for a
specific country market.
– Maintain or reintroduce
earlier products
– Create new products
Price
Uniform pricing charges the same
price in all markets but does
not consider income or
wealth where the price may
be too high in some or not
high enough in other
markets.
Standard markup pricing is a
price based on a percentage
of cost but can cause
problems in countries with 19-35
high costs.
 Deciding on the Global Marketing Program
Promotion

Promotion Distribution Channels

Companies can either adopt Seller’s headquarters organization
the same communication supervises the channel and is
strategy they use at home also a part of the channel.
or change it for each Channels between nations move
market. the products to the borders of
Even in standardized the foreign nations.
communications campaigns, Channels within nations move the
adjustments may be products from their foreign
required for language or point of entry to the final
cultural differences. customers.

19-36
 Deciding on the
Global Marketing Organization

Typical management of international

marketing activities include:
• Establishing an exporting department
with a sales manager and staff
• Creating an international division
organized by geography, products, or
operating units
• Becoming a complete global organization

19-41
 Chapter Objectives
Chapter 20

 Objective 1: Define sustainable marketing and discuss its importance.

 Objective 2: Identify the major social criticisms of marketing.

 Objective 3: Define consumerism and environmentalism and explain

how they affect marketing strategies.
 Objective 4: Describe the principles of sustainable marketing.

 Objective 5: Explain the role of ethics in marketing.

1-36
 Sustainable Marketing

Meeting the needs of consumers while preserving the ability of future

generations to meet their needs

20-6
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

High prices
Deceptive practices
High-pressure selling

Shoddy, harmful, or unsafe products

Planned obsolescence
Poor service to disadvantaged
consumers 20-9
 Social Criticisms of Marketing

High Prices

Marketing’s Impact on Individual Consumers

Complaint: Response:
• Prices are too high due to • Intermediaries are
high costs of: important and offer value.
• distribution • Advertising informs
• advertising and buyers of availability and
promotion merits of a brand.
• excessive mark-ups • Consumers don’t
understand the cost of
doing business.

20-10
 Social Criticisms of Marketing

Deceptive Practices
Marketing’s Impact on Individual Consumers

Complaint:
Companies use deceptive
practices that lead customers
to believe they will get more
value than they actually do.
These practices fall into three
categories.
– Deceptive pricing
– Deceptive promotion
– Deceptive packaging
Response:
Support legislation to protect
consumers from deceptive
practices
Make lines clear—is it deception,
alluring imagery, or puffery
(exaggeration for effect)?
Products that are harmful
Products that provide little benefit
Products that are not made well
20-11
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

High-Pressure Selling
Complaint: Response:
• Salespeople use high- • Most selling involves
pressure selling that building long-term
persuades people to buy relationships with valued
goods they had no customers. High-
intention of buying. pressure or deceptive
selling can damage these
relationships.

20-13
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

Shoddy, Harmful, or Unsafe Products

Complaint: Response:
• Products have poor • Good marketers
quality, provide realize there is no
little benefit, and value in marketing
can be harmful. shoddy, harmful, or
unsafe products. 20-14
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

Planned Obsolescence
Complaint: Response:
• Producers cause • Planned
their products obsolescence is
to become really the result
obsolete. of a competitive
market.
20-15
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

Poor Service to Disadvantaged Consumers

Complaint: Response:

• American marketers • Some marketers

serve disadvantaged profitably target these
customers poorly. customers and the FTC
has taken action
against marketers that
do.
20-16
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

False Wants and Too Much Materialism

Complaint: Response:
• The marketing • People do have
system urges strong defenses
too much against
interest in advertising and
material other marketing
possessions. tools. 20-17
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

Too Few Social Goods

Complaint: Response:
• Businesses • There needs to
oversell private be a balance
goods at the between
expense of private and
public goods. public goods.
20-18
 Social Criticisms of Marketing

Marketing’s Impact on Individual Consumers

Cultural Pollution
Complaint: Response:

• Marketing • Marketing and

advertising are
and planned to reach
advertising only a target
audience and
create consumers have
cultural alternatives.
pollution. 20-19
 Consumer Actions
to Promote Sustainable Marketing

Consumerism
is the organized movement of citizens and government agencies to
improve the rights and power of buyers in relation to sellers.

Traditional buyers’ rights include:

The right not to buy a
product that is offered for
sale
The right to expect the
product to be safe
The right to expect the
product to perform as
claimed
Comparing these rights, many believe
that the balance of power lies on the
seller’s side.
Advocates call for:
The right to be well informed about
important aspects of the product
The right to be protected against
questionable products and
marketing practices
The right to influence products and
marketing practices in ways that will
improve the “quality of life”
The right to consume now in a way that
will preserve the world for future 20-23
generations of consumers
 Consumer Actions to Promote
Sustainable Marketing

Environmentalism

Environmental Sustainability
New clean technologies involve looking ahead and
planning new technologies for competitive
advantage.

Sustainability vision is a guide to the future that

shows the company that the company’s products,
processes, and policies must evolve and what is
needed to get there. 20-28
 Business Actions
Toward Sustainable Marketing

Sustainable Marketing Principles

Consumer- Customer-
Innovative
Oriented Value
Marketing
Marketing Marketing

Sense-of-
Societal
mission
Marketing
Marketing

20-32
 Business Actions Toward
Sustainable Marketing

Marketing Ethics

Corporate marketing ethics

 policies are broad guidelines that everyone in the
organization must follow that cover distributor relations,
advertising standards, customer service, pricing, product
development, and general ethical standards.
• Who should guide companies?
– The free market and the legal system?
– Individual companies and managers?
20-40
Thank You