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c)“Good” or “Bad” Competitors: Every industry contains “good” and “bad”competitors. A company should support its good competitors and attack its badcompetitors. Good competitors: play by the industry’s rules make realistic assumptions about the industry’s growth potentialset prices reasonable in relation to costs; they favor a healthy industry; limit themselves to a portion or segment of the industrymotivate others to lower costs or improve differentiation; and Accept the general level of their share and profits. Bad competitors try to: buy share rather than earn ittake large risks; they invest in overcapacity; and upset industry equilibrium3.2.2.Competitive StrategiesA company must design a broad competitive strategy by which to gain competitive advantage.However, no one strategy is best for all companies. According to Michael Porter (1980) the basic or generic competitive strategies include the following.Activity 3What is the purpose of identifying competitors' objectives, strategies, strengths, weaknesses, strong, and weak competitors?Activity 3What is the purpose of identifying competitors' objectives, strategies, strengths, weaknesses, strong, and weak competitors?CommentaryCurrent profitability, market share growth, cash flow, technological leadership, service leadershipCommentaryCurrent profitability, market share growth, cash flow, technological leadership, service leadership
MARKETING THEORIES AND PRACTICES1.Cost -leadership - Cost leadership is gained by being the lowest-cost producer in theindustry. This provides the company flexibility in responding to competitive moves byalways being able to offer the lowest price to the consumer.2.Differentiation - This strategy creates competitive advantage by offering products withunique customer benefits or features not available from competitive offerings. Here thecompany concentrates on creating a highly differentiated product line and marketingprogram so that it comes across as the leader in the industry. This image helps it tocompete against lower cost rivals.3.Focus - This strategy achieves competitive advantage by concentrating on a narrowsegment of a larger market. Emphasis is often on quality or benefit in a tightly definedmarket sub-segments.Firms competing in a given target market, at any point in time, differ in their objectives and resources. These firms might take four different forms.1.Market leader - the firms with the largest market share.2.Market challenger - the runner-up firm which fights to overtake the leader.3.Market follower - the firm that also has a runner-up status but seeks to maintain share andnot challenge the leader.4.Market nicher - the firm that serves small segments that the other firms overlook orignore.