Competitor Analysis and Sources of
AdvantageChapter SixChapter Six
MMarket-Basedarket-Based Management, 4Management, 4thth editionedition
6-2
Competitor Analysis and Competitor Analysis and Sources of AdvantageSources of Advantage
Chapter Six
– Competitive Strategy– Knowledge as a Competitive Advantage
– Competitive Forces that Shape Competitive Position and Profitability
Industrial Analysis
Competitor Analysis
Sources of Competitive Advantage
6-3
Competitive Advantage and Competitive Advantage and KnowledgeKnowledge
• What is a Competitive Strategies?
• How does a firm establish
a competitive advantage?Knowledge advantage
• How does a firm leverage knowledge as a competitive advantage?
• How does a competitive advantage relate to profit potential? figure 6-3
6-4
Competition and Competitive Competition and Competitive PositionPosition
• How does a firm maintain a competitive advantage?
• What forces affect a firm’s competitive position and profitability?
6-5
Industrial AnalysisIndustrial Analysis
1. Barriers to Entry2. Barriers to Exit3. Customer Buying
Power4. Supplier Selling
Power5. Substitutes6. Competitive Rivalry
• Why should a firm conduct an Industry Analysis?to see if the environment attractive or not
• What are the Industry Forces?
• How are they (the industry forces) related to profit potential? see the text details
• What is the Prisoner’s Dilemma?
6-6
Competitive PositionCompetitive Position
• How does a firm determine its direct competitors? use perceptual mapping
• How does a firm acquire knowledge about its competitors (competitor intelligence)? everyone in the firm, search
• Why is this knowledge important? 知己知彼 百戰百勝
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6-8
Competitor AnalysisCompetitor Analysis
6-9
Sources of Competitive Sources of Competitive AdvantageAdvantage
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Cost AdvantagesCost Advantages
Three Types of Cost Advantage:
1. Variable Cost Advantage
2. Marketing Cost Advantage
3. Operating Cost Advantage
How do firms achieve these advantages?
– Scale effects– Scope effects– Learning effects
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Profit Impact of Cost Profit Impact of Cost AdvantageAdvantage
6-12
Differentiation AdvantagesDifferentiation Advantages
Three Types of Differentiation Advantage
1. Product Advantage
2. Service Advantage
3. Reputation Advantage
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Profit Impact of Differentiation Profit Impact of Differentiation AdvantageAdvantage
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The reputation of a consumer product( 左 1) or service( 左 2) can
have a bigger impact on price premium than a product advantage
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Marketing AdvantagesMarketing Advantages
Three Types of Marketing Advantage
1. Channel Advantage
2. Sales Force Advantage
3. Brand Awareness
How do firms achieve these advantages?
– Marketing Expertise, Training, and Knowledge
– Strong Distribution System
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TakeawaysTakeaways//ReviewReview
• Competitive Advantage
• Competitive and Industrial Analysis
• Profit Impact of Competitive Advantages
• Sources of Competitive Advantages
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Marketing Performance ToolsMarketing Performance Tools
Industry Analysis
Industry Forces -100 -50 0 50 100 Index
Barriers to Entry None Low Some Mod. High 50
Barriers to Exit High Mod. Some Low None 50
Customer's Buyer Pow er High Mod. Some Low None -50
Seller's Selling Pow er High Mod. Some Low None 50
Product Substitutes Many Mod. Some Few None 0
Price Rivalry Intense Mod. Some Low None 50
Industry Structure Metric 25
Unfavorable to Favorable
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Marketing Performance ToolsMarketing Performance Tools
Cost Advantage
Leading Relative Competitive
Cost Advantage Company Competitor Position Advantage
Cost of Goods Sold (% sales) 48.0% 50.0% 96 4.0%
Sales, General & Adm Exp.(% sales) 16.0% 17.0% 94 5.9%
Overhead Expenses (% sales) 10.0% 12.0% 83 16.7%
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Marketing Performance ToolsMarketing Performance Tools
Differentiation Advantage
Company Compared to Competitor Comeptitive
Differentiation Advantage % Behind % Equal % Ahead Advantage
Product Differentiation 0% 85% 15% 15%
Service Differentiation 20% 80% 0% -20%
Brand/Company Reputation 10% 80% 10% 0%
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Marketing Performance ToolsMarketing Performance Tools
Marketing Advantage
Leading Relative Competitive
Marketing Advantage Company Competitor Position Advantage
Market Share 6% 17% 0.35 -65%
Aw areness (% target market) 57% 84% 0.68 -32%
Distribution (% market coverage) 43% 67% 0.64 -36%