Marketing Strategy and Competitive Positioning pdf ebook

Underlying assumptions
Assumptions that a firm holds about itself, and the market it operates in, affect the goals 
and objectives it sets and can be a source of opportunity or threat. Examples of flawed 
assumptions and their dire consequences are manifold, and litter the history of businesses 
and organisations. For example, in the 1960s, Cunard assumed that as the cost of transat-
lantic travel was so high people would want a leisurely crossing (getting the most out of their 
investment), rather than spending a large amount of money in flying across the Atlantic in 
Figure 5.3 
Competitor 
objectives
Assess
competitors’
current and
future objectives
What are they trying to achieve?
Why are they trying to achieve it?
Are they satisfied with their achievements?
Key indicators:
Stated goals
Ownership
Market assumptions
Investment priorities

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CHAPTER 5 COMPETITOR ANALYSIS
just a few hours. The result of this faulty logic by Cunard, and other operators of passenger 
liners, was a massive increase in the tonnage of liners constructed in what turned out to be 
the last few years of their useful life. Similarly, Dunlop’s assumption that it was pre-eminent 
in tyre rubber technology meant that it neglected Michelin’s development of steel-braced 
radials. The result was what can only be termed a catastrophic decline in its own market 
share, accompanied by a decline in the total market size that occurred because of the longer 
life of Michelin’s new development. Having assumed pre-eminence in an established market, 
Dunlop’s position was intractable through an inability to develop new products.
Dunlop and Cunard were not atypical in their inability to see changing market condi-
tions, and there is a tendency for incumbent companies to be dismissive of new entrants and 
new technologies as being of little significance or maybe catering for some faddish segment 
of the market. Such was the case of the Swiss watch industry when faced with competition 
from Japanese digital alternatives. An evaluation, or possibly an estimation, of assumptions 
made by competitors can be of major strategic significance, in addition to an understanding 
held by those conducting the analysis. This said, there is a clear gap between the need to, 
and the ability of, firms to question their own assumptions. It is possible that awareness of 
this notion is enough to provoke an interesting and revealing discussion.
Analyses of how major firms react to technological threats show they are rarely able to 
change their historic orientation. O’Shaughnessy (1995) explains how incumbents often 
avoid problems rather than taking evasive action. He suggests that there is a tendency for 
firms to force the evidence to fit preconceptions; to become deaf to any evidence at odds 
with their beliefs; to predict the most feared competitive action as a defence in case there 
is any future post-mortem after such action occurs; and to predict that competitive action 
will be that to which the manager’s favourite strategy is an effective counter-strategy, as a 
way of getting support for that strategy.
5.2.2 Assessing competitors’ current strategies and activities
Assessing the current strategy involves asking the basic question: ‘What exactly is the com-
petitor doing at the moment?’ (see Figure 5.4). This requires making as full as possible a 
statement of what each competitor is trying to do and how they are trying to achieve it. This 
is a complex activity, to which the components of marketing strategy (outlined in Chapter 2) 
can give some structure.
Three main sets of issues need to be addressed with regard to understanding competitor 
strategies. First, identification of the market or markets they operate in (their selection of 
target markets). Second, identification of the way they operate in those markets (the strate-
gic focus they are adopting with regard to the type of competitive advantage they are trying 
to convey). Third, the marketing mix adopted, in order to enable the desired competitive