Creating Competitive Advantage

Chapter: 18Lec: 10

Competitive Positions• Market Leader The firm in an industry with the largest market share• Market Challenger A runner-up firm that is fighting hard to increase its

market share in an industry• Market Follower A runner-up firm that wants to hold its share in an

industry without rocking the boat• Market Nicher A firm that serves small segments that the other firms

in an industry overlook or ignore

Market Leader Strategies

• Lead the other firms in price changes, new product instruction, distribution etc.

• Members and heads of the chamber of commerce

e.g. Google, Mobilink, Microsoft, Tata Motors, McDonalds

• Leaders have to be vigilant or they’ll lose their position

Leader ChallengesApple’s Ipod

Sony's’ Walkman

Leaders Challenges

Market Leader Strategies

• Three strategies which a market leader can follow

1) Expanding the Total Demand 2) Protect Current market share 3) Expand market Share

Market Leader Strategies

• Expanding the Total Demand - Develop new users, new uses, more usage

New Users

New Uses

More Usage

Protecting Market Share

• They have to guard their share e.g. Mobilink against Telenor Pizza Hut against Domions - Keep competitors happy - Continuous innovation

Expanding Market Share

• Profitability rises with increasing share when unit cost falls

Market Challenger Strategies

• E.g. Telenor, Zong in Pakistan• Which competitors to challenge• Frontal attack…same product, price,

advertising, distribution, • Telenor targeted the rural market

Market Follower Strategies

• Not all runner up companies want to challenge market leader

• It can copy and improve leader’s product with less investment

Market Nicher Strategies

• Specializing in serving specific markets• Normally Smaller firms• Mass marketer achieves high volume, the

Nicher achieves high margins• E.g. Rainbow Vacuum Cleaner• E.g. Salt n Pepper Village

Salt n Pepper Village

Balancing Customer and Competitor Orientations

• Competitor-centered company A company whose moves are mainly based on

competitors’ actions and reactions• Customer-centered company A company that focuses on customer

developments in designing its marketing strategies and on delivering superior value to its target customers.

Balancing Customer and Competitor Orientations

• Market Centered company A company that pays balanced attention to

both customers and competitors in designing its marketing strategies

Evolving Company Orientations

Product orientation

Competitororientation

Customerorientation

Marketorientation

No

No

Yes

Yes

Customer- centered

Competitor centered