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The steps to getting a sustainable competitive advantage: Competitor analysis: The process of identifying, assessing and selecting key competitors. The company needs to find out everything about its competitors, and compare the Intel to their own marketing strategies, products, prices, channels and promotions. In this way they can find their strengths and weaknesses in comparison to their competitors. Selecting competitors to attack and avoid: Now that the company knows their competitors better, they need to asses which competitors they are going attack and avoid.
Most companies like to compete against the smaller and weaker competitors, because it requires less time and fewer resources. This also means that they would gain little, while if they would attack the stronger competitors, and win, they would have bigger gains. A useful tool for assessing competitors strengths and weaknesses is the C.V. (customer value analysis). It basically shows the major attributes customers value so a company can assess its performance and the performance of their competitors in these attributes.
Designing a well performing intelligence system: This is a very obvious and impel step, if the company has a well performing intelligence system, they can work more efficiently with the gathered Intel because it will be easier to use. Having a good marketing strategy: There are a lot of different ways of developing effective competitive marketing strategy, there has to be a balance between the creative side and the formulated side of marketing. There are many different strategies, which we won’t discuss in this assignment because it doesn’t add to the definition of a sustainable competitive advantage.
Competitive positions: Lastly there are the different competitive positions: . Market Leader: The company with the largest market share. 2. Market Challengers: Runner-up companies that are working hard to get to the top position. 3. Market Followers: Companies that want to hold their share without rocking the boat. 4. Market Niche’s: Companies that serve small segments and aren’t being pursued by other companies It’s important to realize in what position your company is in, because this will determine what kind of strategies you can use as a company.
For example a market leader wants to expand the demand and protect or expand its share, while a market niches will seek market segments that are big enough to make a profit, while they also are still small enough to be of little interest to major competitors. If a company follows these steps and performs well in all the different steps, then they will have a sustainable competitive advantage. The definition of sustainable competitive advantage is to have an advantage over the competitors, in a way that isn’t temporarily, but will hold for a longer period of time.
B) Now we are going to execute a competition analysis for Albert Heist, but before we go to their competitors we must look at our own company’s nominative advantages. Albert Heist is the biggest supermarket chain in the Netherlands and they are the market leader in the industry. They focus on high quality and high service while still offering some low price brands like AH basic for the lower incomes. What is a competitor analysis? Now we will look at some of Albert Heist’s major competitors: 1.
Laid: Laid is a market challenger, they have a very big market share but are a very different type of supermarket than Albert Heist. Where Albert Heist focuses on high quality and service the Laid tries to have the lowest prices. This is why they don’t along to the same strategic group because they work with a very different marketing strategy in the target market. They use a focus strategy right now, they are focusing on a small segment (low prices, high quality) while ignoring luxury and service which Albert Heist does.
While they have a very clear target group it is also a weakness, since higher incomes will more likely go to Albert Heist. – Laid is a strong competitor, they have a big market share and they are a market challenger, attacking Laid would be a big risk but it could have big rewards as well. – Laid is a distant competitor since they have very different marketing trainees and target groups. At last think Laid is a good competitor since they play by the rules and don’t take any big risks. Now we have identified Laid as a competitor, we can decide if Albert Heist should attack or avoid Laid.
Albert Heist is already sort of attacking Laid with the introduction of AH basic, a very cheap brand while they still offer the high service that Albert Heist gives. But I think they should avoid Laid, both are very big supermarkets but I think they are just too different. Albert Heist would have to invest a lot and don’t think this is a risk they should take. 2. Jumbo: Jumbo is a market challenger as well, they have a big market share and they are in the same strategic group as Albert Heist. They both focus on quality and this also means their average prices are higher than in example Laid or Lid.
Jumbo is using a Second-Mover advantage: they have the same target group as Albert Heist and try to use (and improve) the formula Albert Heist uses as well. One of their weaknesses is the fact that while they have a big market share, they are still much smaller than Albert Heist and can get documented. – Jumbo is a strong competitor; they have a big market share and are still rowing. – Jumbo is a close competitor because they have the same target group as Albert Heist, they both try to focus on quality and service for a higher price. You could say that Jumbo is a bad competitor since they bought a lot of their market share by buying franchises like “Super De Boer” and a big part of “SOCIO”. Think Albert Heist should attack Jumbo since they are both in the same strategic group but Albert Heist has the larger share. This means that if Albert Heist attacks Jumbo that they will have a lot more resources and a bigger success to make the attack successfully. . Lid: Lid is a market challenger like the others two supermarkets that we chose, they have a big market share and are growing rapidly.
They are in a different strategic group as Albert Heist but in the same as Laid, since they focus on low prices but less luxury and services: this is why they are using a focus strategy. This is also a weakness though since it makes their target group much smaller. -Lid is a strong competitor; they have a big market share and a lot of recourses as well. -Lid is a distant competitor; we already found out earlier that they are n the same strategic group as Laid and that their marketing strategy and target group is very different than Albert Heist. Lid is a good competitor; they play by the rules and don’t take any extremely big risks. Should Albert Heist attack or avoid Lid? I think the answer that we gave about Laid applies here as well. Albert Heist is competing slightly with Lid with AH basic: offering high quality for a low price. We still think that Albert Heist should not attack Lid though because they are very different from each other so that it would be a very big risk and would require a lot of unnecessary recourses. Who is Albert Heist’s biggest competitor? Hint Lid is the biggest competitor for Albert Heist right now, they are a very different kind of supermarket and they are growing rapidly (faster than Laid, with a bigger market share already). And while Albert Heist can easily attack and compete with Jumbo, it is hard to attack Lid since they are a distant competitor.