Competitive advantage
The modern world is characterized by great rivalry. That is why every firm or enterprise should struggle for its success, trying to win in this fight. First of all, a firm should be competitive in the sphere in which it suggests its services. Every company should try to obtain a competitive advantage, which will guarantee its further existence. Usually, there are two main types of advantages. They are low cost and differentiation. Moreover, these types “lead to three generic strategies for achieving above-average performance in an industry: cost leadership, differentiation, and focus” (Porter’s generic competitive strategies (ways of competing) n.d., para.1). In low-cost strategy a firm is trying to become a low-cost producer in concrete sphere. If a firm obtains cost leadership, it will rise above all other firms. The second strategy is differentiation, which can be described as a firms intention to become unique in its sphere, making emphasis on the most popular among customers’ dimensions. The last strategy is the focus. It means that a company should choose a certain sector of industry and try to make its strategy.
As a result of the study of rivalry which exists nowadays, Potters 5 forces model appeared. Michael Potter suggested that there are 5 forces that influence each industry. They are rivalry, the threat of substitutes, power of customers to buy, suppliers power, and intensity of competitive rivalry. It is very easy to understand them without having professional knowledge in this sphere. The rivalry is one of the most important forces, influencing every firm and making it work more effectively. Powers of customers and buyers determine the number of services which company is able to produce and to sell.
Promotions
Taking into account great rivalry and the fact that the popularity of service provided by a company determines its competitiveness, it is possible to say that the promotion of its main services is the main aim of every company. “The four main tools of promotion are advertising, sales promotion, public relation, and direct marketing” (Tools of promotion – advertising, sales promotion, public relation & direct marketing n.d., para. 1). Advertising is a tool that uses different media to inform customers about services of a company, stressing their unique quality for customers to prefer this firm.
Sales promotion is a tool which main aim is to persuade customers to make this purchase and to pay for some service. The main purpose of public relation tool is to create image of a company, providing its communication with society. The last tools main aim is to organize firms interaction with other representatives directly, without any intermediaries. Every tool has its advantages and disadvantages. Advertising is very impersonal, while personal selling is very costly and it is easy to lose control while using public relations. However, each tool can compensate drawbacks of another, that is why it is better to use them in complex.
There are a lot of possible objectives for marketing promotions. Awareness is one of them. It is very important for a new company to devote a lot of its sources to its building. Very often a new company is unknown to market. That is why it is very important for a company to create its identity trying to tell customers as many as it is possible about it and its services. This process should be effective and able to reach a customer and inform all representatives of the market for them to create an image of this company. Another important step is to provide information for a customer for him to understand idea of a firm better. A firm can use any tools, including comparison with other services of their rivals
Segmentation, targeting and positioning
Every company has its unique peculiarities, however there are some common strategies which can guarantee its success and competitiveness. They are brand positioning strategy, product positioning strategy, competitive pricing strategy, competitive positioning strategy (Marketing consulting for market positioning n.d.). The main aim of each strategy is to make firm more successful. The main sense of each strategy can be seen from its definition. For example, the first strategy centers round creation of image of a new brand which means analyzing market and suggesting effective steps.
Another important method which can help to understand what each customer wants and interest him is a method of market segmentation. It is used for better understanding of interests of a customer. There are some main ways to do it. This segmentation can be made according to geographical location of the market, taking into account peculiarities of a country. Another way is by industry, demographics, offered services, lifestyle and interest. All these ways take into account customers needs and guarantee firms better functioning.
To become successful every company should analyze and define its target market. It is impossible to become effective without it. There are some main steps to do it. First of all it is necessary to understand a problem you are going to solve and create an image of potential customer. Next step is to determine costs of work. There also should be analysis of a market, its geographical location and main customers. The last thing to do is to look at a company one more time and decide whether there are some more things which can be done.
There is also one technique which can also help to determine customers needs more precise. It is called perceptual mapping and its main sense it to determine customers view on some product by asking them direct questions about it.
References
Marketing consulting for market positioning n.d. Web.
Porter’s generic competitive strategies (ways of competing) n.d. Web.
Tools of promotion – advertising, sales promotion, public relation & direct marketing n.d. Web.