Course: SLF 130 Marketing Practices for the Small Business

Unit 2 Reading

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- Unit 2
- Table of Contents (Selected)
- Unit 2 Glossary (Selected)

Competitive Advantage Page_2

Start with the strategy

Successful marketers must develop an overall plan and strategy (a purposeful and intentional plan) to offer value to their customers. The strategy chosen must be well thought out and must represent a match between a marketer’s capabilities and resources and the sales objectives that are set.
We can step back and look at familiar companies and understand what types of strategies are being implemented.
- Cost Leadership Strategy - The goal of cost leadership strategy is to produce products and services at the lowest cost in the industry. Wal-Mart, a leader in offering low cost products, uses an automated inventory replenishment system to reduce inventory storage requirements and save floor space for additional goods.

- Differentiation Strategy - Differentiation allows companies to provide products that are different or offer more/different features than their competitors. Southwest Airlines has differentiated itself from the airline industry through its low cost and express service features. Most recently it has featured no charge for baggage.

- Innovation Strategy - Companies that rely on innovation competitive strategies provide new and different products/services via added features, and new methods of production. Apple is probably one of the best examples of companies that use innovation strategy due to its introduction of revolutionary products such as the iPod, iPhone and iPad.

- Operational Effectiveness Strategy -The goal of operational effectiveness and efficiency is to perform internal business and/or manufacturing activities better than competitors. This strategy attempts to increase quality, employee productivity, and customer satisfaction within the company. Toyota offers high quality models at varying price ranges with consistently high customer satisfaction ratings. Their ability to survive some temporary quality issues and bad public relations is a testimony to the brand loyalty developed through decades of meeting their brand promise.

- Customer-Orientation Strategy - Customer-orientation competitive strategies focus on making customers happy through outstanding customer service. This strategy focuses on what the customer wants from the company and how to provide that. This strategy has been most effective with web-based companies due to one-to-one relationships.

And finally…
Too often small businesses overreach – they try to do too much with too little. And the quality suffers. |
The volume of business must be adequate to make a profit, but doing what you do well is the key.
One of the main goals of marketing planning and strategy is to produce multiple sources of competitive advantage in the marketplace. Pricing, differentiation, innovation, employee talent, operational effectiveness and customer service are strategies companies use to generate competitive advantage.

Marketers must assess factors including business objectives, target audience and market conditions before choosing the competitive strategy most appropriate for their brand.