Bsad 665: Applied Marketing Management - Kotler Case Study

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All these efforts are a way to differentiate Beta Holdings from other competitors in the brick making industry. Kotler et al (1999) points out that differential advantages are sometimes not permanent, this means that in the case of Beta Holdings, other brick makers can follow suit and upgrade their services. This means that in order to be always a step ahead of competitors, an organisation must be continuously identifying new potential advantages through environmental scanning and introduce them gradually. This is because it is usually difficult to gain a substantial permanent advantage. Ferrell et al (2013) echoes the same sentiments, the only way to get out of commodity status is to give consumers a compelling reason to choose your product over competitors and the only way to achieve this is through innovation. Traditional camera manufacture, Kodak, filed for bankruptcy in early 2012 due to stiff competition from other camera makers and smartphones with improved camera technology. This shows that Kodak is lagging behind in terms of innovation.

Some organisation offer better service than their counterparts by ensuring swift, reliable deliveries, quick response to customer enquiries and complaints. A study of the importance of service responsiveness to users of small business-computer-based systems shows how speed is valued. Eighty-five per cent of users were willing to pay a 10 per cent premium price for same-day service; 60 per cent would pay 20 per cent more; and 40 per cent would pay a 30 per cent premium. Southwest Airlines has differentiated its service by offering no bag fees promotion which sets its apart from its competitors as most airlines charge fees for baggage.

Starbucks offers one of the most commoditized products, coffee, but according to Starbucks Chairman, Howard Schultz, they are not in the coffee business. Instead, Schultz sees Starbucks as a third place to hang out, with home and work place taking the 1st and 2nd positions respectively. Thus armed with this mentality, Starbucks offers its customers more than coffee, they also provide wireless internet connection, music, food and a relaxing atmosphere. This is the reason behind Starbucks ‘success.

Other firms differentiate by employing highly skilled, creative and motivated personnel who are customer oriented in their approach to business. e.g IBM is well known for highly skilled staff.

Differentiation through brand name or company image is achieved by building brand recognition and ensuring that their brand is associated with quality. According to Ferrell et al (2013), firms move away from commodity status by developing a distinctive brand position that separates them and their products from the competition. This includes the likes of Apple and Coca-Cola. By offering compelling reasons for consumers to buy products, brand building allows firms to increase margins. Apple, in particular, enjoys the highest profit margins of any firm in the technology sector. The Apple brand is associated with quality and their products e.g. I-phone are expensive compared to other smartphone brands.

FOCUS DIFFERENTIATION AS SOURCE OF COMPETITIVE ADVANTAGE

According to Keegan (2014), focused differentiation offers a narrow target market the perception of product uniqueness at a premium price. Examples include Rolls-Royce manufacturer sells limited number of high-end, custom-built cars for premium prices. Rolex watches are expensive and sold to a target market focused on exhibiting a certain image. These products, are usually bought by the elite in society .Brand loyalty is high as customers feel they get value for money.

Kotler (1999) sums up the issue of competing successfully in markets by pointing out that companies that pursue a clear strategy ,from the above mentioned strategies are likely to perform well. The firm that carries out that strategy best will make the most profits. Firms that do not pursue a clear strategy ,’middle-of-the-roaders’ do the worst. He cites some companies, namely Olivetti, Philips and International Harvester all came upon difficult times because they did not stand out as the lowest in cost, highest in perceived value or best in serving some market segment.

REFERENCES

1.Ferrell O.C, Hartline M.D (2013) Marketing Strategy,6th Edition, South-Western Cengage

Learning, Ohio

2.Keegan W.J, Green M.C (2014) Global Marketing 7th Edition, Pearson Publishers, Boston

3.Kotler Pet al (1999),2nd European Edition, Principles of Marketing, Prentice Hall, New Jersey