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Competitive Strategies Strategies that strongly position the company against competitor and give the company strongest possible strategic advantage. Competitive Strategies helps in:1. Building profitable customer relationships2. Gaining competitive advantage3. Analyzing their competitors
Continued…. No company can follow only one strategy. For example, Johnson & Johnson uses one marketing strategy for its common product such as BAND-AID & Johnson’s baby products; and different marketing strategy for its High Tech healthcare products such as Vicryl Plus, antibacterial surgical sutures or NeuFlex finger joint implants.
Basic competitive strategies Over cost leadership Companies try to achieve the lowest production and distribution cost. Low costs let its price lower than its competitors and win a large market share. Example:- Big bazaar
Differentiation Company concentrates on creating a highly differentiated product line and marketing program so that it comes across as the class leader in the industry. Example:- IBM & Samsung follow this strategy in information, technology and services and consumer electronics and household appliances, respectively.
Focus Company focuses its efforts on serving a few market segments well rather than going after the whole market. Example:- Tetra food supply 80% of pet tropical fish food.
• Companies can pursue any of the three strategies called value disciplines for delivering superior customer value. Operational excellence Customer intimacy Product leadership
First value disciplines1. Operational Excellence : To be a leader in operational excellence, a company must provide reliable products or services that can be purchased at competitive prices and with minimal difficulty or inconvenience. Organizations that have adopted a strategy of operational excellence boast highly efficient delivery processes built around sophisticated information systems.
Wal-Mart is recognized over the world for its cost efficiencies. If a price war were to break out tomorrow, the giant retailer could outlast all its competitors. It can therefore maintain the lowest prices and attract those customers who base their buying decision primarily on price. Likewise, Dell Computer competes successfully with its higher-profile counterparts, because it has a substantially lower cost structure
Second value disciplines2. Customer Intimacy : While companies that excel at operational excellence run their businesses as lean, mean machines and those pursuing a strategy of customer intimacy provide superior value by tailoring and shaping products and services to unique customer needs. Value-added services, focused marketing, and responsive/flexible processes are the hallmarks of this value discipline.
Ritz Carlton Hotels was identified as a customer intimacy leader. The Ritz Carlton has built a database on its customers. Every time a customer stays at the hotel, that information is accessed to establish the needs of that customer. The hotel responds accordingly, whether it is by leaving fruit instead of chocolates in the room, or placing the telephone on the other side of the bed for left-handed guests. It is attentive to customer needs.
Third value discipline3. Product Leadership : A product leader continually develops new and unique products and services that have an emotional and rational surplus value for clients. Product leaders do not have to have the lowest-cost operations because their customers are not price- sensitive — their priority is getting the hottest new product, whatever it might cost.
3M has a policy stating that 25 per cent of its corporate revenues must come from products that have been created in the last three years. Another product leader, Intel, is constantly reinventing the computer chip, often displacing its own products in the market.
Conclusion Classifying competitive strategies as value disciplines defines marketing strategy in terms of single minded pursuit of delivering superior value to customers. Each value discipline defines a specific way to build lasting customer relationship. It helps the firms to analyze their competitors and design effective competitive marketing strategies to gain competitive advantage.