Page 318 - DMGT408DMGT203_Marketing Management

Unit 13: Creating Competitive Advantage

During 1999, Bata achieved a turnover ` 774.6 crore, four per cent higher than the previous Notes
year’s sales. Net profit grew by nearly 25 per cent to ` 30.4 crore. Leather footwear accounted
for 58 per cent of gross sales, 30 per cent came from rubber footwear and 9 per cent from
plastic footwear.
The brand is bound to grow, especially since it has emotional value for Indians. The labour
problem also seems to be sorting itself out. Finally, things seem to be falling in place.
Source: Abhishek Agarwal, “The Good Old Days,” A & M, July 31, 2000.

Self Assessment

State whether the following statements are true or false:
15. Demand conditions have a significant effect on strategy choice.

16. Harvesting strategy works best when the business is relatively strong at the beginning of
the decline stage

13.7 Summary

Generally companies view and analyse competition both from an industry and a marketing
perspective. An industry represents a group of companies that offer a product or class of
products that are viewed as close substitutes to satisfy a need category, or a set of needs.
Marketers generally select product type as the basis of analysis for marketing planning
because these products are viewed as close substitutes for one another. It is advisable in
analysing the market and competition to keep in focus the consumer need, but this practice
seems uncommon among marketers.

Managers tend to identify fewer companies as competitors and generally omit the new
companies. In reality, the range of a firm’s actual and potential competitors is much
broader and the chances are more that a company stands to get hurt by potential competitors
or new technologies than the players already competing.

Five important forces should be considered while analysing the attractiveness of industries
and these include present competitors, potential competitors, bargaining power of
suppliers, the bargaining power of buyers, and the threat of substitute products.

During different stages of product-market life cycle, market leaders, followers, challengers,
and niche marketers have several strategic choices depending on the prevailing and
forecasted market conditions.
During growth stage the competition starts increasing in intensity. Near the end of growth
stage, there is a period of transition from growth to maturity and firms surviving this
stage enter the maturity phase of the life cycle. It is advantageous for business to develop
sustainable competitive advantage during the growth stage to be successful during the
maturity phase.

Competitive intensity is at its highest during early maturity to hold share position and
profitability. Normally the share leader stands a better chance of earning large profits by
adopting suitable marketing strategies and programmes.

During decline phase of life cycle, the options are to divest, harvest, or stay longer for the
remaining part of the decline.

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