"Competitive advantage is at the heart of modern marketing. Discuss"

Essay by smarty123College, Undergraduate March 2008

download word file, 6 pages 5.0

Modern Marketing is about meeting the wants and needs of today's customers, it's about understanding the customers and finding new ways to provide them with services that they demand. If the marketing process is carried out effectively not only will it ensure that the business is seen and heard of, but it will give the business flexibility to adapt to, changing customer demands and changing of the business environment.

Competitive advantage, which is also referred to, as value proposition is when a company has an advantage that they have gained, by offering consumers greater value. Either by lowering their prices or by providing greater service or benefits, which justifies the reasons to their high pricing.

According to Michael Porter there are four generic strategies that could be adapted in order to gain competitive advantage. The four strategies are:vDifferentiationvCost LeadershipvDifferentiation FocusvCost Focus.

Differentiation strategy involves creating a unique product. For the strategy to be successful, the unique features or benefits should provide better value for the buying customer.

The product can be seen as unrivalled and unequalled while the price elasticity is reduced customers tend to have more brand loyalty. This can provide a considerable insulation form competition.

Cost Leadership is a strategy where a company has the ability to produce quality products that are acceptable to customers, at a low price in the market. This strategy is usually associated with large businesses offering standard products with fairly little differentiation, which is perfectly acceptable to the majority of customers. Occasionally, a low-cost leader may discount their product to maximise sales, particularly if they have a significant cost advantage over their competition and in doing this they can increase their market share.

Differentiation Focus, in this strategy a business aims to differentiate between one or a small number of target segments. The...