MKTG 5850 Week 5

1. 0 MKTG 5850 Week 5 • Competition

2. Strategic 5 - Cs Context/Collaborators Customer Competitor Company Mktg. Strategy: Achieve max positive differentiation Over competitor (Create greater value)

3. THE ANATOMY OF COMPETITION • All competitors who persist andsurvive have a unique advantage • The more similar competitors arethe more severe the competition • If competitors co-exist, then eachhas a distinctive advantage • Competitors who co-exist must bein equilibrium

4. Natural and Strategic Competition • Natural Competition • Strategic Competition

5. Natural Competition: Survival of the Fittest • Two firms doing business the same way in the same market cannot coexist forever (Olivetti v’s Everest)

6. Strategic Competition

7. 6 Competitive Positions • Dominant • Strong • Favorable • Tenable • Weak • Nonviable

8. COMPETITIVE POSITIONS • Dominant * Controls behavior &/or strategies of competitors * Can choose from widest range of strategic options, independent of competitors’ actions *___________________________________________ • Strong * Can take independent stance or action without endangering long-term position * Can generally maintain l.t. position in face of competitors’ actions * ___________________________________________ • Favorable * Has strengths which are exploitable if industry conditions are favorable * Has more than avge. Ability to improve position * If in a niche, holds a commanding position relatively secure from attack

9. Competitive Positions (cont’d) • Tenable* Has sufficient potential and strengths to continue in business • * May maintain position with tacit consent of dominant company, but unlikely to significantly improve position • * Tends to be marginally profitable * If in a niche, is profitable, but clearly vulnerable * ___________________________________________ • Weak * Has currently unsatisfactory performance, but has strengths which may lead to improvement • * Has many characteristics of a better position, but suffers from past mistakes, or current weaknesses • * Inherently s.t position; must change (up or out) • Nonviable * Has currently unsatisfactory position and few, if any strengths which may lead to improvement (may take years to die)

10. Strategic Groups in the Auto Industry High Quality Low High Low Vertical Integration • Group A • Narrow line • Higher mfg. cost • Very high service • High price • Group C • Moderate line • Medium mfg. cost • Medium service • Medium price • Group B • Full line • Low mfg. cost • Good service • Medium price • Group D • Broad line • Medium mfg. cost • Low service • Low price

11. Optical Distortion Inc. • Problem Issues: • In what geog. region should ODI focus its efforts? • On what market segments should ODI focus? In addition to Geog. • What should the pricing policy be?

12. Geog. Areas to focus on? CA has 13% of all chickens Sth. Atlantic States (Fl, GA NC and SC) a further 23%

13. What Segments to focus on? In CA farms of 20,000 plus number 543 out of 3,023 and had 40 mill of States 46 million birds 87 farms had almost 50% of all birds in CA CA makes economic use of scarce resources Potential savings in big farms are much greater Large farms more likely to be managed by “professionals” (Money-oriented) Large farms easier to conduct scientific tests

14. What Pricing Policy? Penetration Skimming

15. Good Points Innovative solutions Good charts Good analysis of costs of the product

16. What to do to Improve Explain charts/graphs State problem succinctly – not too broadly either Show and explain pros and cons Make sure your alts. solve problem