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marketing planning and strategy is to produce multiple sources

Multiple Sources of Advantage

One of the main goals of marketing planning and strategy is to produce multiple sources of competitive advantage in the marketplace.

LEARNING OBJECTIVES

Illustrate the types of corporate competitive strategies

KEY TAKEAWAYS

Key Points

  • Competitive sources of advantage include pricing, operational efficiency, digital presence and employee talent.
  • Sellers must assess factors including business objectives, target audience and market conditions before choosing the competitive strategy most appropriate for their brand.
  • Pricing, differentiation, innovation, operational effectiveness and customer service are strategies companies use to generate competitive advantage.

Key Terms

  • marketing channel: Sets of interdependent organizations involved in the process of making a product or service available for use or consumption, as well as providing a payment mechanism for the provider.

Multiple Sources of Advantage

For most businesses, one of the primary goals of implementing a marketing strategy is producing multiple sources of competitive advantage. These sources encompass a variety of business and marketing channels, including customer service, location or real estate, operational efficiency, product qualities, and employee talent. Thus, it is both possible and advantageous to have multiple sources of advantage to increase sales and maintain brand dominance in the marketplace.

A large McDonalds with light-up signs around it in a city center

Gaining an Advantage: McDonald’s cost leadership strategy makes it the market leader in fast food.

Competitive Advantage in the Internet Age

Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources, such as high grade ores or inexpensive power, or access to highly trained and skilled personnel. Products that use cutting-edge robotics and information technologies can act as a source of competitive advantage for a company.

In fact, information technology has become such a prominent part of the modern business world that it can also contribute to competitive advantage by outperforming competitors with regard to Internet presence. The Internet has supplanted the traditional middleman, serving as an information conduit between the producer and final consumer. As a result, businesses can gain a competitive advantage by building a compelling and visually appealing website or social media business page. Web technologies have significantly reduced the time and effort required to build this marketing advantage, but have also forced companies to become more transparent with end consumers.

Competitive Strategies

Effective strategic planning allows companies to pursue a variety of different strategies for building and retaining competitive advantage across product categories, industries and regions. Sellers must assess factors including business objectives, target audience and market conditions before choosing the competitive strategy most appropriate for their brand.

  • Cost Leadership Strategy – The goal of cost leadership strategy is to produce products and services at the lowest cost in the industry. Walmart, a leader in offering low cost products, uses an automated inventory replenishment system to reduce inventory storage requirements and save floor space for additional goods.
  • Differentiation Strategy – Differentiation is allows companies to provide products that are different or offer more/different features than their competitors. Southwest Airlines has differentiated itself from the airline industry through its low cost and express service features.
  • Innovation Strategy -Companiesthat rely on innovation competitive strategies provide new and different products/services via added features, and new methods of production. Apple is probably one of the best examples of companies that use innovation strategy due to its introduction of revolutionary products such as the iPod, iPhone and iPad.
  • Operational Effectiveness Strategy -The goal of operational effectiveness and efficiency is to perform internal business activities better than competitors. This strategy attempts to increase quality, employee productivity, and customers satisfaction within the company.
  • Customer-Orientation Strategy – Customer-orientation competitive strategies focus on making customers happy through outstanding customer service. This strategy focuses on what the customer wants from the company and how to provide that. This strategy has been most effective with web-based companies due to one-to-one relationships.