Competitive Stance Of Different Companies 6q4d26

REUBEN ABRAHAM OOMMEN STRATEGIC MANAGEMENT ID NO – H00172088 BBA – 3RD YEAR Lecturer - UMMESALMA MUJTABA Word Count - 1597

Global competition and increasing pressure from third-world economies and formulate new competitive strategies to help them compete and at times just to survive. As longterm investors, people invest in those companies with competitive advantage as they have a greater chance to outperform their peers . Competitive stance is used to gain competitive advantage. (McClelland, 1994). Strategy refers to two things, deciding where the business has to go and how to get there. Competitive advantage is defined as the differential value that is endured between the products and services of one organization to that of its competitors in the mind of the consumers. (Mende, Thompson& Coenen,2015). Every organization should strive to create a sustainable competitive advantage as it helps differentiate it from its competitors. It is the uniqueness of every organization that will help it thrive in a competitive environment. (Gould, 2015) As a strategist, competitive advantage allows a company to have a large base of customers who have a preference for their products over those that are offered by their rivals, despite efforts to offset its appeal (Gamble and Thompson, 2009). For example, a company can either compete with its rival by selling its product by keeping its costs low and selling products at low prices or it can aim to providing a better product at high prices with more customer service, regardless of the strategic approach chosen, the aim has to be to produce a product that will appeal to buyers which will set it apart from the competition. (Harvard Business Review, 1997) Any company can have four competitive stances on the basis of competition. Economic strategy, Differentiation strategy, strategy and Blue Ocean strategy (MacIntosh and Maclean, 2014). (Porter, 1996) explained that any company can have generic strategies, which a company uses to pursue its competitive advantage over a market space. A company can choose to pursue one of the two types of competitive advantage either by providing its customers with products at a low costs (Cost Leadership/Economic strategy) or by differentiating its product compared its rivals (Differentiation strategy). A firm when it uses Economic strategy aims to win market share by providing products to cost-conscious customers. We can use the automobile industry as a example. Toyota and Kia are famous for producing cars for the masses. These firms can use the strategy and can provide its customers with low priced products due to their economies of scale; having greater profit margins cause of low cost of production and having control over their external environment. (Murray, 1988). The differentiation strategy on the contrary is the opposite, this is appropriate to target customers who are not price sensitive are willing to pay to be seen as unique. A strategy of differentiation is usually developed around firm or product driven innovation and marketing strategies which maybe hard to imitate very quickly. (Banker,, Mashruwala, & Tripathy 2014). In the automobile industry, Toyota entered the luxury car segment with a completely new brand name ‘Lexus’. They differentiated themselves from other luxury car manufacturers by producing a highly sophisticated luxury executive car and entering the market at a lower price point than its competitors and by branding it a luxury car for everyone. They differentiated themselves by marketing itself as a single brand and not a brand that was attached to its parent company ‘Toyota’. This strategy helped them

undercut their competition and gain early market share . (academiccommons.columbia.edu, 2014) Mercedes-Benz uses the competitive stance for its products. This strategy was adapted from Cliff Bowman’s view of Porters focused on differentiation. Luxury , high performance and rarity are some of the features that people in this segment demand for. Innovation is the most important concept of a successful strategy; educated consumers are willing to pay more for innovation, trading up for higher priced products. The price is usually justified due to high value for the customer and the high quality of the product. (MacIntosh and Maclean, 2014). Tesla Motors wants to become the first company, which can deliver a high value electric car at low costs. They use the Blue Ocean strategy. A blue ocean strategist should gain insight about reconstructing market boundaries by not looking at existing customers but instead looking at the non-customers and how a product can be created which will provide value to them. (Randall, 2015) In of blue ocean terminology, Tesla is successful because of a superior feature set and creating a ‘green performance vehicle’ market space. Value innovation backed with commercial and consumer backing is key element for blue ocean strategy (Kim & Mauborgne 2004). As a marketing communication strategist, we can analyze the different types of communication strategies used by Mercedes-Benz and Tesla in the automobile industry on the basis of their competitive stances and how it helps them achieve their strategy. A marketing communication strategy is essentially about positioning, putting in consumers mind what the brand means and how it differs from the competition There are four strategic approaches to marketing communication strategy , they are – Positioning , Audience , Platform & Configuration. (Fill, 2013), (Smith& Zook 2011).

(P.T.O)

STRATEGIC COMMUNCATION OPTIONS

MERCEDES BENZ ( stance)

 POSITIONING

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AUDIENCE

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TESLA MOTORS (Blue Ocean)

Luxury vehicle sedan market with high focus on safety and reliability Old average age of typical Mercedes-Benz customers is age 46 Now their marketing strategy is more life style oriented and is focused more on presenting the more fun loving, approachable, and energetic side of Mercedes Benz

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They use a combination of Push & Pull strategy is used with the product being the main message focus with a communication goal of being that to purchase. Push strategies include trade shows, showrooms, and creating a supply chain to facilitate distribution, Pull strategies include mass media advertising, referrals, customer relationship management, and sales promotions.

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Currently in the Luxury vehicle sedan market, moving towards a more Mainstream vehicle consumer segment Its image and positioning has characteristics of being high-tech , reliable, attractive and most importantly environmentally friendly (Mangram, 2012)

They use Pull strategy in motivating customers to seek out their brand in an active process. They have a high focus on word of mouth referrals and customer relationship management.

PLATFORM

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 CONFIGURATION 

They use a combination of traditional media with a greater focus on social media as they want to increase their market segmentation with millennials. Traditional Media such as billboards, newspapers, TV , sponsorship etc. Online platforms such as their multimedia car configurations on their website, interactive online films and engaging in conversations with consumers on social media. (Dialmer,2016).

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They use bi-directional communication as it results in increased and results . Their content is direct & product orientated as they use social networks and online communities serve to influence consumer attitudes to change behaviour.

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They do not use the traditional media of advertising to promote their product (Forbes.com, 2013). Only focus digital advertising to inform consumers of their product Founder Elon Musk, uses website blog to communicate directly with consumers and update them with developments

In order to compete in the industry and establish the new market space , their focus is to deliver the positioning statement very frequently . It is bi-directional and it is customer focused product development. Their content is indirect and they use various platforms to inform consumers as well as building long term collaborative relationships. (Mangram, 2012)

In true essence, the job of a strategist is to understand the competition and how to cope with it , how managers usually find competition that is narrow which are their direct competitors , yet competition is far greater than its immediate rivals , they include four competitive forces ; Buyers , Suppliers , potential entrants and substitute products. These define the structure of the industry and how competitive interacts within the industry. These are known as Porters competitive forces. (Porter, 2008)  Threat of substitutes for Mercedes-Benz They are basically the existence of products outside the common boundaries, which give customers an option switch between the alternatives (Porter,2008).Despite the high competition in the automobile market, it is harder for consumers to substitute this brand as they have invested heavily in producing innovative and high quality vehicle brands. They have unique differentiation features which cannot be matched by other manufacturers There are more luxurious brands other than Mercedes than some consumers may prefer. They are also various government policies and regulations which urge people to use public transport to reduce traffic and environmental pollution in the city. This may to lead to substitution of private vehicles with public service vehicles. But their differentiation stance helps them as the s of Mercedes will be loyal and prefer the strong quality brand.  Threat of new entrants for Tesla Motors There were high barriers of entry as they wanted to enter the automobile market, which had a number of luxury sedan brands and then enter a un-contested space of a electric motor car which was aimed at being environment friendly. They have overcome initial barriers and helped pioneer electric cars. It required high initial investment with a focus on R&D along with highly skilled personnel who can take the company forward. (Stringham, Miller & Clark, 2015). Unique part of the strategy being , after creating the market space – they have kept low barriers of entry for other competitors to come into the electric car market as they have released patents & rights so others can copy their product. This will help them create economies of scale within the industry and then give them a first-mover advantage in order to produce the first mass produced – low cost electric car.

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