Marketing Strategy and Competitive Positioning pdf ebook

Differentiation and cost leadership
The two strategies are not mutually exclusive, and could be pursued simultaneously. Car 
manufacturers, for example, constantly seek to drive cost from their businesses (often 
working with suppliers); however, they are also adept at advertising and branding activities 
Figure 2.11 
Routes to 
competitive 
advantage
Competitive
advantage
Stuck in the middle!
Competitive
disadvantage
Valued
uniqueness
High
Low
High
Low
Relative delivered cost

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IMPLEMENTATION
(linked closely with design) that clearly differentiate their products from competitors’. Fur-
thermore, differentiation, especially through superior quality, can often result in lower unit 
costs through gains in market share and attendant economies of scale and/or experience 
effects. 
Each of the two basic approaches to creating a differential advantage has its attendant 
risk. Cost leadership may be impossible to sustain due to: a) competitor imitation (using, 
for example, similar technology and processes); b) technological change, which may make 
it cheaper for later market entrants to produce the products or services; or c) competitors 
finding and exploiting alternative bases for cost leadership (see the discussion of cost drivers 
in Chapter 10 ). Cost leadership is also a risky strategy where there is a high degree of differ-
entiation between competitive offerings. Differentiation creates reasons for purchase, while 
cost leadership does not. In addition, cost leadership typically requires minimal spending 
on R&D, product improvements and image creation, all of which can leave the product 
vulnerable to competitively superior products. 
Differentiation as a strategy is also open to a variety of risks. If differentiation is not 
based on distinctive marketing assets, it is possible that competitors will try to imitate. For 
example, low price positioning might seem attractive in harsh economic times, but unless 
costs are also low comparably with competitors, it could spark costly price wars that seri-
ously erode or eliminate margins. This risk can be minimised by building differentiation 
around competencies or marketing assets that the company alone possesses, and that com-
petitors cannot copy. In addition, the basis for differentiation may become less important 
to customers over time, or possibly new bases for differentiation become more important. 
These latter points, however, can be mitigated through customer and competitor monitor-
ing and benchmarking. A further danger of a differentiation strategy is that the costs of 
differentiating may outweigh the value placed on it by customers, and as such this would 
be an untenable approach. 
For cost leadership and differentiation approaches that seek an ‘industry-wide’ appeal, 
there is the added risk that focusers or nichers in the market (competitors that focus activi-
ties on a selected segment or segments) may achieve lower costs, or more valued differentia-
tion, in specific segments. Thus, in markets where segmentation is pronounced, both the 
basic approaches carry high risks. ( Chapter 10 explores further these approaches to creating 
a defensible position in the marketplace.)
2.5 
Implementation 
Once the core strategy and the competitive positioning are selected, the task of marketing 
management is to implement those decisions through marketing effort. Three basic elements 
of implementation – marketing mix, organisation and control – are discussed next. 
2.5.1 Marketing mix 
The marketing mix of products, price, promotion and distribution is the means by which 
the company translates strategy from a statement of intent into effort in the marketplace. 
Each element of the mix should be aligned (and designed) to deliver the positioning required 
by the strategy. 
Viewed in this light, it is evident that decisions on elements of the mix, such as pricing or 
advertising campaigns, cannot be considered in isolation from the strategy being pursued. 
For example, a premium positioning that might differentiate a company’s offerings from 
the competition in terms of high product quality, could be destroyed through charging too 
low a price. Similarly, to achieve such a positioning, the product itself will have to deliver 
the quality claimed, and the promotions will have to communicate premium quality. The 

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