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Chapter 3- Competition In a free market businesses can

Make a profit


Drives business

Profit can go to:

1. 2. 3. 4.

reinvesting growth debts the owner

In a free market people can hold

Private property

Free market encourages


Types of competition

Perfect Monopolistic Oligopoly Monopoly

Perfect Competition

Large number of small companies, none of whom have an opportunity to control the market-requires government legislation to restrict growth

Monopolistic competition

Large number of companies, each having an opportunity to control the market


Small number of large companies, each with a substantial amount of market control


Single company has all market control

Communist countries or dictatorships

Do no permit free enterprise; they ban competition and forbid private ownership

Competition contributes to the economy by

Encouraging the creation of new businesses and products

Another Benefit of competition

The wide selection of goods and services

Competition leads to:

1. 2. 3. 4.

better products better prices new technology increased productivity

5. improved service 6. improved selection Increasing productivity means:

Company uses the same resources to produce more or better products or services

Research and development

Supports scientists and technicians who work on ideas

Improvements in one area can

Lead to turmoil in others

Examples of new products that hurt existing products

1. HD TV’s 2. 3. 4. 5.

Ipods Tablets 3D TV’s Cars

Direct competition

Products that are very similar

Indirect competition

Products or services that are not directly related to one another

3.2 Competitive Advantages Sustainable competitive advantages are

Methods by which a business holds on to its customers, in spite of competition


1. 2. 3. 4.

Unique selling proposition Lower production costs Niche marketCustomer loyalty

Unique selling proposition

Something that a product has that the competition does not and will not have. Domino's Pizza: "You get fresh, hot pizza delivered to your door in 30 minutes or less -or it's free." FedEx: "When your package absolutely, positively has to get there overnight" M&M's: "Melts in your mouth, not in your hand" Wonder Bread: "Wonder Bread Helps Build Strong Bodies 12 Ways"

• • •

Lower costs

Produce cheaper: technology, process, location

We have lost many jobs in Niagara because others have been able to produce the same products at lower prices. How have they achieved this advantage? (not in book)

Answer: They have achieved this advantage by getting some other place such as Mexico or China to make the products cheaper.

Niche Market

Product is destined for a small market, not worthy of competitors-magazines

Customer Loyalty is more like

Customer intimacy and is called relationship marketing

Which of the four types would a marketer have the most control over? Which is the easiest to manipulate? (not in book)

Answer: I think they have the most control over the niche market. And I also think the unique proposition would be the easiest to manipulate.

Non sustainable advantages

Can be used to shift sales in their direction


1. 2. 3. 4. 5. 6.

Promotion Placement Quality Benefits of use Price Design Features


Brand awareness is the major goal of most advertisers and marketers Direct increase in sales is another


To Compete: A product must have a placement in the market

The more placement it has…

The more competitive it is

How would you ensure that your product was in as many locations as possible? Which marketing technique would you employ? (not in book)

Answer: To make sure that your product was in as many locations as possible I would use advertisement, to get the product out. And the marketing technique would be promotion.

Category Killers

Big retail stores that specialize in a specific category such as books, hardware or pet supplies.

Examples of super stores: 2 (not in book)

Answer: Walmart and Kmart


The higher the quality the higher the cost Lower quality goods will usually cost:

Benefits of Use

Values is not in the product itself so much as:

Marketers add benefits to their products:

To distinguish them from those of their competitors then highlight those benefits

Price; If a product or service is: Less expensive than a competitor’s Design Features influence

The way a product looks and what it does

Package designs compete

For consumer’s attention

Some packages attract attention More valuable to the consumer but also make the product…

3.3 Service Competition 2 Types

1. strictly service 2. value added service

Value added service:

Activities performed to support sale or other product


Things that cannot be touched

Competitive advantages within service industries:


Examples of things that aren’t convenient:

1. 2. 3. 4. 5.

convenience degree of service selection reputation price

Making some activity easier or more comfortable

1. 2. 3. 4.

poor parking line ups/bagging your groceries stairs poor location

Degree of Service

Customers know that service costs: money

Why do you think prices are higher at convenience stores than they are in grocery stores? (not in book)

Answer: I think prices would be higher at convenience stores than the prices at grocery stores because people are there getting gas and they might see something there and pick it up instead of going to another grocery store.

What are the factors that make Answer: Some factors that make convenience stores convenience stores convenient? convenient would be how it makes shopping at the (not in book) store easier. Such as getting the gas and groceries at the same place. Selection

2 Types: 1. wide: different types of products 2. deep: large quantity of 1 type of product


Important to service because: it has no product to show

People who receive good service:

May tell others

But people who receive bad service

Almost always tell others


Potential problem with prices that are too low: Customers may question the quality

Prices are affected by:

Supply and demand

3.4 The Product/ Service mix Retail and wholesale merely

Provide a service to both consumer and manufacturer

Most consumers think they are paying for:

The products

Retailers make money from the Manufacturer and consumer service the provide to: Retailers also make money from Added value services examples

Businesses that sell service can Examples:

Added value services

1. 2. 3. 4.

delivery installation extended warranties gift wrapping

Add products to their mix 1. 2. 3. 4.

movie popcorn video store treats salons sell hair products sport teams sell apparel

3.5 The Competitive market Competitive market

Consists of specific types of products as well as the companies that make them

Market Share

Percentage of sales within a specific market category

Market Segments

Narrower part of a broad category, with an identifiable characteristic

Beverages would be a


Juice would be a

Segment of the beverage category

Grapefruit juice can be a

Segment of the juice category

How to increase market share

Few companies experience more than How to improve market share

One of the most important roles of every marketing department is to

1. increase the size of overall market(competition is good) coke and pepsi! 2. Take customers away from competitiors A one or two share point increase or decrease within a year 1. successful advertising campaign 2. good distribution deal-placement Track and explain market share alterations in every segment

3.6 Competing in International markets The most important Research activity for any business to perform before entering any market Promotion (considerations)

1. regulations 2. cultural differences 3. religions

PlacementDistribution options

1. use existing distributors 2. set up its own office and hire locally 3. Joint ventures

Joint Venture

2 businesses with similar goals combine resources


Countries that lack the natural resources that Canada has, might offer several opportunities for Canadian companies.

Entering a market where your product does not exists would require

a large advertising budget and a creative, educational ad campaign

Pricing foreign products competitively requires

Specialized knowledge

Tariffs are

Taxes placed on goods being imported into a country in order to protect the local industries from too much foreign competition

Landed costs=

Product+shipping+currency exchange+tariffs

Design considerations

1. legal design requirements 2. instructions 3. translation

Chapter 3 Notes  

Marketing Notes

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