Integrated Marketing Management – Week 3

MN52102

Market-led Strategy – How to gain a competitive advantage. 

Dr Thomas Mansell

Today’s content:

•What is a competitive advantage?

•Porter's Generic Strategies & Beyond.

•Breaking the mould with innovative strategies – Blue Ocean Strategy. 

•SOSTAC –

Multichannel Marketing Growth Wheel that underpins your marketing plan.

More information: https://marketingexpert.cim.co.uk/topic-guides/#1778

Part 1: Market-led Competitive Advantage. 

•"A condition or circumstance that puts a company in a favourable or superior business position". - Oxford Dictionary definition. 

•In other words, a competitive advantage is what sets you apart from your competitors, it gives consumers a reason to choose YOU. 

•Think: 

•Why do so many people order products from Amazon?

•Why do so many students have Apple laptops?

•Why did you choose the University of Bath?

What is competitive advantage?

The Marketing Environments – Outside-in Strategy

The outside in approach – this means that competitive advantage is gained through how a firm positions itself given the external environment. 

•Micheal Porter is an academic and strategist whose work has been highly influential in both business and academia for several decades. 

•We have already looked at his 5 Forces as a way to analyse the competitive environment of the firm. 

•Porter's perspective on competitive advantage is that a firm needs to make clear choices about who it serves and align the things that it does (activities) with those choices. 

•Therefore, from Porter's perspective, we need to firm identifies a clear market segment from our external analysis, and then aligns the businesses operations to serve this particular market (hence the outside-in approach)

Enter Micheal Porter – The 'Godfather' of Strategy. 

Porter in the 1980's : Generic Strategies. 

Stuck in the Middle?

Higher profit through lower costs.

Higher profit through higher prices. 

However!

Porter (2015) The Value Proposition. 

Porter has updated his thinking with a more nuanced view: 

•Still with an emphasis on making a clear choice!

•Still with an emphasis of aligning activities. 

Each element should be covered by a short, clear statement. 

•We must make clear choices – not trying to target all customers. 

•This means that there will be trade-offs (in order to make certain customers very happy, we are likely to make other customers unhappy). 

•Developing an effective value proposition relies heavily on the quality of the external analysis that sets out customer segments/requirements. 

Developing a Value proposition:

Aligning activities with the Value Proposition:

This should be unique and aligned with the value proposition:

•Unique Value Proposition. - Do we provide value to customers in a different way to competitors?

•Tailored Value Chain. - Are our activities as a business all geared towards achieving our value proposition & are they different to our competitors?

•Clear Trade-off choices. - Have we made a clear choice to forgo targeting certain market segments in order to better serve our chosen segment(s)?

•Strategic continuity. - Have we been consistent in our efforts to continually improve over time with the same focus?

Porter's tenets of a good strategy. 

•With the people next to you: Think of a firm that you deem successful. 

•Consider what it is that sets them apart from others in the market?

•Have they made clear trade-off choices?

•Does their marketing align with their Value Proposition?

•Be ready to feedback answers in 5 mins.

A Question for you:

•Is it too static in it's assumptions about competitive advantage?

•Can organizations in modern dynamic industries really afford to be consistent in the long term?

•Does it overlook the advantages that resources (things that the firms own) can give?

•How does it deal with innovation?

Critiques of Porter:

Blue Ocean Strategy

•“Value innovation is the cornerstone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.”

•― W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy

What are Red/Blue Ocean's?

•RED OCEAN

•Existing firms fight for market share.

•Firms divide demand and must defend their position.

•You must beat the competition.

•Focuses on better serving buyers in the market. 

•BLUE OCEAN

•Redefines a new market space.

•Therefore, removes the need to be in direct competition with those in the market. 

•The aim is to create and capture new demand. 

•Focus on value needed by all customers. 

•Analyse how does the industry currently compete?

•What are consumer 'pain points'?

•Is there a gap i.e. Is there consumer 'pain' we can solve by doing something differently to the existing competitors. 

•What strategic moves can we make to fill the gap?

Breaking out from Red Oceans

Indian Premier League | Blue Ocean Strategy Online Case

•The Resource Based View

•Dynamic Capabilities

•A review of the different avenues to competitive advantage & case studies to illustrate. 

•Reading: Chapter 6 (Hooley)

Next week: