Question

select 2 brands research the marketing strategies of the competitors -determine if they are marketing to the same segment, the differences, what drives the consumer behavior and why, what recommendations do you have for each company.

Answer 1

Competitive Strategy is defined as the long term plan of a particular company in order to gain competitive advantage over its competitors in the industry. It is aimed at creating defensive position in an industry and generating a superior ROI (Return on Investment). Such type of strategies play a very important role when industry is very competitive and consumers are provided with almost similar products. One can take example of mobile phone market.

Before devising a competitive strategy, one needs to evaluate all strengths, weaknesses, opportunities, threats in the industry and then go ahead which would give one a competitive advantage.

Types of competitive strategies by Porter:

1. Cost Leadership

Here, the objective of the firm is to become the lowest cost producer in the industry and is achieved by producing in large scale which enables the firm to attain economies of scale. High capacity utilization, good bargaining power, high technology implementation are some of factors necessary to achieve cost leadership. e.g Micromax phones

2. Differentiation leadership

Under this strategy, firm maintains unique features of its products in the market thus creating a differentiating factor. With this differentiation leadership, firms target to achieve market leadership. And firms charge a premium price for the products (due to high value added features). Superior brand and quality, major distribution channels, consistent promotional support etc. are the attributes of such products.E.g. BMW, Apple

3. Cost focus

Under this strategy, firm concentrates on specific market segments and keeps its products low priced in those segments. Such strategy helps firm to satisfy sufficient consumers and gain popularity. E.g. Sonata watches

4. Differentiation focus

Under this strategy, firm aims to differentiate itself from one or two competitors, again in specific segments only. This type of differentiation is made to meet demands of border customers who refrain from purchasing competitors’ products only due to missing of small features. It is a clear niche marketing strategy. E.g. Titan watches

Without following anyone of above mentioned competitive strategies, it becomes very difficult for firms to sustain in competitive industry.

EXAMPLE:

An example of two strong competitors in luxury-car industry are BMW and AUDI. Take a look at the picture of two billboards above, where both are dueling, with AUDI's bilboard showing the all new Audi A4 along with the headline: “Your move, BMW”. Santa Monica BMW, a local dealership, took on the challenge and entered a virtual chess game by responding, "checkmate.", with a much bigger billboard showing BMW M3 Coupe. When talking about competitive strategy, companies think through a complete contingent plant. They do not just think about the best, but they try to think and foresee all possibilities that their competitors might do. The advertising battle war between AUDI and BMW is a good example of how BMW could identify its competitor, AUDI. BMW proved to have thought broadly, by responding to take on the challenge using the chess jargon, equipped with a bigger picture of the car on the billboard.

To be able to win a competitive advantage over a competitor, a company needs to not only be creative, but be able to develop competitive actions and reactions that allign with their objectives / goals. Audi and BMW is and will still be competitors, however, both prove to be battling in a healthy competitive environment. Certainly, with different target markets and approaches to the consumers, both companies will strive to achieve their goals / objectives.