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Flashcards in Competition Deck (9)
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1

What is the product-related definition of competition?

We compete with all companies offering similar goods in terms of architechture, design, main technical properties, manufacturing process or process of delivery

2

What is the Benefit or need-related definition?

We compete with all companies that in specific use context provide the same benefit or fulfill the same need for their customers

3

What is the goal of timing?

Reach advantages by entering markets at the right time or find conclusive evidence to leave markets when conditions imply insufficient success potential

4

Describe the three types of timing strategies?

Pioneer - First to provide a new product or service in the market, often a new market.
Early follower - Follows short after Pioneers, often with improved products or services.
Late follower - Steps into market after it stabilizes and the demand has evolved

5

What can be a companys complementary assets?

- Distribution and sales (exclusive access to communication channels, close customer relationship, long market experience of the sales of staff)
- Advertising, public relations or sales promotion
- Product and service execution
- Supply (long term contracts with high-quality suppliers)

6

Explain switching costs

Switching costs are the costs that a consumer incurs as a result of changing brands, suppliers or products. Ex: Phone company (cancellation fees), or switching computer brand (Microsoft - Apple) - new software (money), but also costs in time and effort to learn it
-> prevent customer from leaving

7

What are the pros of the Pioneer strategy?

- Building barriers for market entry (Patents, quality leadership image, strategic determent of imitators)
- Efficiency (Realizing learning curve effects, developing complementary resources, high efficiency of promotional activities)
- Positioning and commitment (Benefiting from switching costs, customers have quality uncertainty regarding followers)
. Shaping customer preferences (Image advantage of pioneers, intensive learning on the product, pioneer product becomes mental prototype)

8

What are the cons of the pioneer strategy?

- Free riding followers (Pioneer has the highest R&D investment, and highest investment for opening and developing a new market)
- Technologies and customer requirements change quickly (followers may use more efficient tech., followers may meet new emerging customer needs in a better way, followers may develop a more attractive market position)
- Pioneer Inertia (Investment in fixed and specilized production facilities, specilized sales organization, hesitation due to product cannibalization)

9

Why can it be difficult for pioneers to adapt to environmental change because of the various types of pioneer inertia?

- Pioneer may be locked into a specific set of fixed assets
- The firm may be reluctant to cannibalize excisting product lines
- The firm may become organisationally blind with the current product and technology it has that it might underestimate the value of innovation