Marketing Strategy and Competitive Positioning pdf ebook

Marketing and sales activities inform buyers about products and services, provide buyers 
with a reason to purchase and can be a significant value-add when used effectively. Nike 
is a business widely acknowledged for its advertising prowess. In 1988, Nike’s ‘Just Do 
It’ campaign was launched – words that are still used and have great resonance today. At 
the time, Nike’s total sales were around the $800 million mark, but within a decade sales 
had surpassed $2 billion, and they were a world-leading company. Equally, great sales 
activities can add value in competitive markets. Those organisations able to integrate 
these two vital areas are likely to create (or ‘add’) a great deal of value in those areas.
5 
Service includes all the activities required to keep the product or service working effec-
tively for the buyer, after it is sold and delivered. This can involve training, return of 
goods policies, a consultation hotline and other facilities. Since customer satisfaction 
is central to achieving repeat sales and word-of-mouth communication from satisfied 
customers, after-sales service is clearly a major part of added value. The Ritz Carlton 
hotel chain is famous for excellent customer service, delivered in part through front-line 
employees empowered to make decisions that directly enhance customer satisfaction and 
experience.
In support of the primary activities of the value chain, Porter (1985) also identified 
support activities. These are procurement, human resource development, technological 
Figure 5.5 
The value chain and direct product costing
Support
activities
Inbound
logistics
Direct
product
cost
Allocated product
cost
Operations
Outbound
logistics 
Marketing
and sales
Service
Added
value
*Procurement
*Human resource development
*Technical development
*Infrastructure
Primary
activities

---

127
THE DIMENSIONS OF COMPETITOR ANALYSIS
development and infrastructure. Each, of course, feeds into the stages of the primary activi-
ties of the value chain.
There are several ways in which analysis of the value chain can provide an insight into 
competitors:
● 
It can reveal cost advantages that competitors may have because of their efficient manu-
facture, inbound or outbound logistics. It may also reveal why, with better marketing, 
sales and service, a company making intrinsically similar products may be achieving 
higher added value through its operations.
● 
Many conventionally orientated companies perceive operations as their primary source 
of added value and therefore leave opportunities for competitors that take a more 
extended view of the value they can add in the customers’ eyes.
● 
Where the value added is costed effectively, it can help locate economical ways of adding 
value to the customer. There are numerous ways of achieving this, such as: the efficient 
management of single sourcing and just-in-time inbound logistics; total quality being 
incorporated in the operations, thus reducing the service requirements and maybe adding 
to the appeal of the marketing and sales activity by offering extended warranties; well-
targeted marketing and sales activities that ensure that maximum perceived added value 
is communicated to the customer while incurring lower marketing and sales activity than 
if blanket sales activity was attempted.
A company’s assumptions about how costs are allocated across products, and elements 
of the value chain, can provide clear competitive guidelines. For instance, many compa-
nies add most of their overheads to manufacturing operations where inputs can usually be 
measured. This occurs despite products having vastly different inbound logistics, outbound 
logistics, marketing, sales and service expenditures. The result can be that the final price of 
the products in the marketplace has little bearing on the overall inputs and the value chain.
Similarly, where overheads are allocated equally across products, direct product pricing 
can show where some products are being forced to carry an excessive burden of overheads, 
thus allowing a competitor to enter the market and compete effectively on price. When a 
company is competing in many different markets, it is likely that allocated product costs 
are completely out of line with some of the markets in which it is competing, acting as an 
overall constraint upon its intention to support those products. IBM once encountered 
this problem in its PC marketing, where margins were incapable of carrying the allocated 
overheads coupled to its mainframe and mini-PC business, making it uncompetitive on 
price (there were also some quality issues at the time). This became particularly apparent 
with IBM’s misguided venture into the home computer market with the ‘Peanut’, launched 
with an inappropriate and uneconomical performance-to-price ratio, and also not helped 
by particularly strong competitors such as the Commodore 64 and an early Apple offer.
5.2.3 Assessing competitors’ capability profiles
The previous discussion has highlighted what the competitor is seeking to achieve and 
what it may be doing now. Also critical, of course, are the degrees of freedom open to the 
competitor. What might it do in future?
The assessment of a competitor’s resources involves looking at its strengths and weak-
nesses. Whereas a competitor’s goals, assumptions and current strategy would influence 
the likelihood, time, nature and intensity of a competitor’s reactions, its resources, assets 
and capabilities will determine its ability to initiate and sustain moves in response to 
environmental or competitive changes (see Figure 5.6).
Competitor resource profiles (see Section 5.1 on benchmarking) can be built in much the 
same way as a firm conducts an analysis of its own assets and capabilities. A useful starting 
point is to profile competitors against the key factors for success in the particular industry. 
Among these could be operational areas (such as research and engineering, or financial 

---

128