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L3: Competitive Strategies (Competition in B2B markets (Challenges (RRP…
L3: Competitive Strategies
Dynamics of Competition
Key elements
Customer needs (External)
Solution to meet those needs (Internal)
What can be charged vs. the costs (Internal)
Competitive positioning with regards to competitors (external)
How it is won against competitors (external)
How Shareholder returns are delivered (internal)
Lean Canvas (?)
Product / Service
The need we think it meets
Product or service features
What we think we can charge
Our Customers
How customers will find it
What customers value
What customers will pay
Competitive positioning
Business model
Target Customer groups (TAM/SAM/SOM)
Verify it meets the needs of customers (survey, focus groups etc.)
Competing through costs or value-basis differentiation
Cost of delivering business model
Porter
Porter's generic strategies for competing
Differentiation strategy (industry wide)
Focus Strategy (low cost) (market segment, narrow)
Focus strategy (differentiation) (market segment, narrow)
Cost leadership strategy (industry wide)
Porter's five forces
Existing players
Bargaining power of suppliers
Bargaining power of buyers
Threat of substitutes
Threat of new entrants
Pros/Cons of Porter
Pro
useful for brainstorming
Structured approach which is practice in today's business
Corresponds to mainstream of economic thinking on competition
Con
Static and qualitative
Less useful for single markets but rather for industries
Blue Ocean Strategy
Exploring new market spaces for growth where no competition is yet.
Examples
Wii
Marvel
Apple
Cirque du soleil
Skype
Pros
Forces companies to think big, beyond smaller moves
Highlights major success stories based on innovative breakthroughs
Cons
Assumes breakthorugh innovations is possible to plan
Assumes that first-mover advantage is profitable and desirable
Ocean doesn't stay blue very long
Competition in B2C
Non-discretionary
Mortages
Washing Powder
Banking
Sell brand and USP
Discretionary
Entertainment
Dining
Treats
Sell benefits, brand, USP
Famous battles
Apple vs. Google vs. Microsoft
Honda vs. Toyota vs. Nissan
Unilever vs. P&G vs. Nestle
Cola vs. Pepsi
Coca Cola Stock is up 9.5 percent over one year (46.32 USD)
PepsiCo is up only 3.7 % over one year (111.69 USD)
PepsiCo focused to much on health and fitness trends as people may report they are invested into their health/fitness but act differently --> Disconnection between what people say and what they actually buy
PepsiCo's aim was in 2010 to triple revenue from so-called nutritious products to 30$bn over next decade
Prisoner's Dilemma: Price cuts don't work when you're No. 2
Deep price cuts hurt most smaller competitors due to lower economics of scale
Larger players can act aggressive to challenger's price promotions
Customers like having the choice between different suppliers
Consumer targeting
Coca-Cola / Pepsi: Energy & Indulgence
RedBull entered the market 1987 (Pure Energy) --> CocaCola/Pepsi established themselves as indulgence and refreshment
RedBull doesn't focus on demographic but state of mind
Competition in B2B markets
Fundamentally different to B2C
Focus on logic, rationality, features, value for money instead of emotion, aspiration, lifestyle
Direct, cost efficient, person-to-person selling, long term relationship instead of distance, mass advertising
B2B usually based on account tiers --> scale/complexity
Standard --> Gold --> Diamond
Challenges
RRP only (Recommended Retail Price)
Pricing therefore subject to retailer priorities and decision making
Ali
Alignment of interest is therefore critical / B2B and B2C skills are necessary
Recap
Comepetitive advantage is fundamental goal
Rational tools are challenged
Smaller companies (private, venture capitalist, entrepreneurs are more agile in approaching new markets
Businesses successful in the long run only when they manage successfully customer engagement & shareholder returns
B2B marketing is learning from B2C