LEARNING MODULE IN TECHNOPRENEURSHIP

AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY

College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Lesson 4: Competitive Advantage and Markets

Introduction

“If a company advertises a product for a price that's lower than a similar product
from a competitor, that company is likely to have a competitive advantage. The same is true
if the advertised product costs more, but offers unique features that customers are willing to
pay for.”

The main challenge for business strategy is to find a way of achieving a sustainable
competitive advantage over the other competing products and firms in a market.

At the end of the lesson, the students will be able to:

1. Discuss the classes of competitors.
2. Discuss product differentiation, positioning.
3. Define market structures.

Competitors: How to Identify?

“We help you stay ahead of the competition!” This is a promise that Business to
Business companies make all the time to their potential clients. But, when you dig down deep,
do you really know and understand who your competition is?

Do you know who your primary competitors even are?

It is possible to achieve success by ignoring the competition and doing your own thing,
but it’s a risky road. So what are the advantages of knowing and studying your competition?
Your competitors are walking the same road you want to walk on to succeed in business.
They are certainly doing some things right and some things wrong. By studying them, you can
get a masterclass on what to do and what to avoid in your business niche.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Also, by knowing your competitors you can find out where you can stand out among
the crowd. Knowing where you’re different and making a stand on that will give your audience
a clear choice between competitors.
In other words, by looking at your competitors, you can save a LOT of time, money,
and heartache. AND you can use your competition as a source of ideas. But maybe you think
you have something so unique that you have no competition? While it’s possible, you may
have more competitors than you think.

Types of Competitors

Before we start on the ways that you can identify your competitors, let’s first talk about
the types of competition that you have in the field. There are 5 types of competitors: direct,
potential, indirect, future, and replacement.
1. Direct competitors are competitors who are directly vying for your customers. If
you’re a residential painter, your direct competitors are other residential painters in your
service area. If you have an online course about confidence, they’re the other ones who
have courses about confidence. When most new business owners think about their
competition, direct competitors are what come to mind.
2. Potential competitors are those competitors who do the same thing that you and target
the same kinds of customers but aren’t selling in your market area and aren’t likely to
do so. They could be your competition if they decided to enter, but either don’t have
the infrastructure or have chosen to ignore your area. An example of a potential
competitor would be a residential painting company in another city.
3. Indirect competitors are businesses that are in the same category, but they sell
different products and services than you. This would be the difference between a strictly
industrial painter and a residential painter. You’re still doing similar things, but the
target market between the two of you are different.
4. Future competitors are like potential competitors, but they’re much more ready and
likely to enter your market. This might be the larger national company that hasn’t
entered your local market yet. Think of them as between potential and direct
competition.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

5. Replacement competitors are those who provide an alternative to the services that you
offer that solves the same pain points. If there is more than one way to solve the
problems you solve with your business, you may have a replacement competitor. For
our residential painter, this would be any DIY store that sells painting supplies.

All these types of competitors can pull market share away from your company now or
in the future. But how do you start finding out which ones are actually your competitors? Now
that businesses focus on digital marketing to advertise their businesses, your first step is to visit
a search engine.

Gathering Keywords

You could start by looking through local business directories, and that’s not a bad place
to start. Since most people perform online searches for what they need well before they go
driving around the neighborhood, those are the directories where hidden competition might be
pulling your audience away.
The first step is to identify the keywords that people use to search for businesses like
yours or are related to the problems that you solve. You likely already have a list of keywords
you’re targeting for SEO, but if you don’t then think about the sort of things your clients would
search for that would bring up your business.
People search on three types of queries:
 Navigational – They want to find a particular site
 Informational – They want a particular piece of information
 Transactional – They want to do something through the web (e.g. make a
purchase)
Do some brainstorming and come up with some relevant search queries for your
business and the different types of competitors. Later, you may want to use this list to employ
on-page, off-page, and technical SEO to rise in the ranks for those search terms. But for
competitor research, you just need the queries.

So How Do I Identify My Competitors? Once you have your list of keywords, the next step
in the process is to find out who your competitors are using this list. There are several methods

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

you can use to find them, including through social media and forums, looking through the pages
of Google, and market research.

a. First Page of Google Search and Bing. Perhaps the easiest way to discover the
competitors in your area is through doing a Google search for your keyword. Most of
your customers will search for you through a simple search like ‘<service you provide>
+ city name,’ so you might search “painters in atlanta” or “atlanta painters” to start.

Note the top ten companies which show up in your searches, including the ones which
show up in the advertisement section at the top of the page and in the map section for
each of your keywords.

1. Social Media and Forums

Search Facebook, Twitter, Instagram, and Pinterest for your keywords if that
makes sense. These places will give you a better view of the competitive landscape –
and may even be more up fresh than the original search that you did using your original
search parameters.
It’s easy to forget that there have been searches for everything out there and that
the answer was most likely recorded on Quora, Reddit, or another similar forum.

b. Market Research. Some companies hire market researchers and do surveys to discover
their list of their client’s competitors and where they fit into the ecosystem. You can
perform your own market research by digging into searches, looking through trade
journals, and more, but if you have a lot of competitors then it may be faster to leave it
up to the experts. Once you have your list, sort the competitors into the five areas we
mentioned above.

Choosing Your Competition

When you dig into this process, you might find possible competitors coming out of the
woodwork. Don’t get overwhelmed! The list is just an overview of the entire field. Some of

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

these competitors will be more of a threat than others. If you’ve already been in business for a
while, you’re probably beating some of them already.
The first focus is direct competitors closest to you in the search engine rankings. People
use the internet to find businesses, so find the sites that are just above you in the rankings. We
trust search engines to make choices for us, so getting ranked higher will make searchers more
likely to investigate your business over the competition. By focusing on the sites closest to you
in the rankings you’ll avoid over-analyzing all the competition.

Identifying Competitors

Potential and future competitors can be used for market research. If you see someone
is doing well, investigate what they’re doing. Could you be using those strategies yourself?
The goal with indirect competitors is to highlight the differences between you and them.
The general public may not know the things that might differentiate two indirect competitors,
like between a handyman and a general contractor, for instance. Both do carpentry but a general
contractor will wave off jobs that are too small. You can use your site to educate people about
the differences and target keywords that are specific to your market segment. A contractor
might focus on home renovation keywords, while a handyman would focus on small repair
keywords.
Finally, to compete with replacement competition you’ll need to educate the visitor on
why you’re the better option than the competition. What do you offer that the competition
can’t? Do you save time? Money? Offer a superior experience? Lean in on that and make your
case.
As you move up in rankings and grow your business, the competition priority might
change. You might grow big enough to attract the attention of a future competitor. A direct
competitor could go out of business. Competitor analysis shouldn’t be done once. Do an update
of your list once or twice a year and see what has changed in the whole field, but do a monthly
or quarterly analysis on your closest competitors to see how you’re doing against them. That
will let you know if your strategies are working.

What is Competitive Advantage?

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Competitive advantage is what makes a customer choose your business over another
one. By understanding, and promoting such advantage, companies can win a greater amount of
market share. A competitive advantage may stem from the user experience — that is, a better,
more affordable or more enjoyable product — or it may be another tangible or intangible asset,
such as the intellectual property or the customer service team.

Examples of competitive advantage

Competitive advantage separates a surviving business from a thriving one, but the
source can change from sector to sector and company to company.
Some common examples of competitive advantage include:
 The team
 Unique access to technology or production methods
 A product that no-one else can offer (protected by IP law or patents, etc.)
 Ability to produce and sell at a lower cost (known as cost leadership)
 Brand and reputation
Whilst you may launch into the market with a totally novel idea, it may not be long
until rivals catch up. That’s when you may need to revisit what your competitive advantage
can be. In the case of sectors with many copycat brands, such as soft drinks, brand and
reputation may be the most powerful advantage to harness.

How to identify your business’s competitive advantage

What can you offer to your audience, that none of your rivals can claim to?
To identify your advantage, you must map out:
 How you deliver value or benefits to customers
 Who your target market is
 Who else is operating in the same, or similar, space to you
Your competitive advantage lies in unlocking the most engaging benefit, for your target
audience, and delivering it in a way that no other business can.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

It’s possible you’ll have several possible competitive advantages, the one you choose
to promote in your marketing and brand communication should be the one with the greatest
differentiation and potential to engage. This will help you to get a bigger market share.

What is sustainable competitive advantage?

Sustainable competitive advantage helps businesses rise above the competition over a
long period of time. It helps influence consumer decision making and often results in higher
profits.
Sustainable competitive advantage refers to assets, characteristics, or capabilities that are
unique to a business. They are difficult to replicate and allow a business to meet customer
demands better than its competitors. Without a sustainable competitive advantage, you risk
your business just being another drop in the ocean.
There are three main types of sustainable competitive advantage: differentiation, cost
leadership, and focus advantage.

a. Differentiation as sustainable competitive advantage.

Differentiation refers to how a business tailors its strategies to help clearly set them
apart from its competitors. This could come in the form of high-quality products, strategic
assets, intellectual property, brand identity, and so on.
b. Cost leadership as sustainable competitive advantage.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Companies that can bring down their costs and pass those savings down to the customer
have what we call pricing power. This competitive advantage allows businesses to price lower
than their competitors so consumers choose their products on the basis of financial value.
c. Focus advantage as sustainable competitive advantage.
Focus advantage is when businesses target a specific section of their target audience to
build greater customer satisfaction and loyalty.
Sustainable competitive advantage is one of the most valuable things a business can
have. It’s a major driver of long-term business and is often the most sought after part of any
business acquisition.

Competitive advantage framework

The most common competitive advantage framework is the VRIO framework. VRIO
is an internal analysis tool that can be used to categorize resources based on whether they hold
certain traits that are outlined within the framework.
This categorization allows organizations to identify which company resources are
actually competitive advantages.
There are four stages to the VRIO competitive advantage framework, each resource
goes through the four stages to help identify if that resource is a competitive advantage.
 Valuable - Does this resource offer a tangible benefit?
 Rare - Is this resource found within other organizations, or is it unique?
 Inimitable - Is this resource difficult to reproduce or copyrighted?
 Organized - Is this resource organized in a way that captures value?
A resource that is valuable, rare, hard to imitate, and organized to capture value is a
long-term competitive advantage. It’s worth keeping in mind that a single resource that offers
a competitive advantage is not a guarantee of value or success, and it may only be a temporary
situation. The best companies know this and always have an eye on the future.

Product Differentiation: What It Is, How Businesses Do It, and the 3 Main Types

What Is Product Differentiation?

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Product differentiation is a marketing strategy designed to distinguish a company's

products or services from the competition. Successful product differentiation involves
identifying and communicating the unique qualities of a product or company while highlighting
the distinct differences between that product or company and its competitors. Product
differentiation goes hand in hand with developing a strong value proposition so that a product
or service is attractive to a target market or audience.
If successful, product differentiation can create a competitive advantage for the
product's seller and ultimately build brand awareness. Examples of differentiated products
might include the fastest high-speed Internet service or the most gas-efficient electric vehicle
on the market.

KEY TAKEAWAYS
 Product differentiation depends on consumers' attention to one or more key benefits
of a product or brand that make it a better choice than similar products or brands.
 The elements of differentiation include product design, marketing, packaging, and
pricing.
 A product differentiation strategy should demonstrate that a product has all the
features of competing choices but with additional exclusive benefits no one else
offers.
 Companies gain a competitive advantage and market share through product
differentiation.
 Product differentiation increases market competition and controls prices for
consumers.

How Product Differentiation Works

Product differentiation is fundamentally a marketing strategy to encourage the

consumer to choose one brand or product over another in a crowded field of competitors. It
identifies the qualities that set one product apart from other similar products and uses those
differences to drive consumer choice.
Differentiation marketing can also involve focusing on a niche market. For example, a
small company might find it challenging to compete with a much larger competitor in the same

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

industry. As a result, the smaller company might highlight exceptional service or a money-back
guarantee.

Promoting Product Differentiation

The references to a product's differentiating qualities are reflected in the product's

packaging and promotion and, often, even in its name. The cat food brand name Fancy Feast
implies a high-quality cat food that cats love, and the advertising reinforces that claim. The
FreshPet cat food brand highlights its use of natural ingredients. Hill's Science Diet conveys
the message that the cat food was developed by animal nutrition experts.
A product differentiation strategy may require adding new functional features or might
be as simple as redesigning packaging. Sometimes, differentiation marketing does not require
any changes to the product but a new advertising campaign or other promotions.

Measuring Product Differentiation

As stated earlier, the differences between the products can be physical in nature or
measurable, such as the lowest-price gym in a region. However, the differences between the
products could be more abstract, for example, a car company that claims their cars are the most
luxurious on the market. Retailers and designers often spend a significant amount of advertising
dollars showing their clothes on young, hip models to emphasize that their clothing is on-trend.
In actuality, no company can measure or quantify the level of style their product offers.\
As a result, product differentiation is often subjective since it's aimed at altering
customers' evaluation of the benefits of one item compared to another. The advertising slogan,
"Gets out the toughest stains" implies that a certain detergent brand is more effective than
others, but the actual difference in the product compared with competing products might be
minuscule or nonexistent.
When the functional aspects of two products are identical, as in bottled water, non-
functional features can be a differentiator—the packaging or bottle design, for example.

Types of Product Differentiation

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Ideally, a product differentiation strategy should demonstrate that the product can do
everything the competing choices can but with an additional benefit that is exclusive to that
product. Below are a few of the most common strategies employed to differentiate a product
or service.

a. Price
Price can be used to differentiate a product in two ways. Companies can charge the
lowest price compared to competitors to attract cost-conscious buyers—the retailer
Costco is an example. However, companies can also charge high prices to imply quality
and that a product is a luxury or high-end item, such as a Bugatti sports car.

b. Performance and Reliability

Products can be differentiated based on their reliability and durability. Some batteries,
for example, are reputed to have a longer life than other batteries, and consumers will
buy them based on this factor.

c. Location and Service

Local businesses can differentiate themselves from their larger national competitors by
emphasizing that they support the local community. A local restaurant, for example,
will hire locally and may source its food and ingredients from local farmers and
purveyors.

Vertical Product Differentiation vs. Horizontal Product Differentiation

There are two strict forms of product differentiation: horizontal and vertical. In some
cases, however, a consumer's choice in a purchase may be a mix of the two.

Vertical Differentiation
An example of vertical differentiation is when customers rank products based on a
measurable factor, such as price or quality, and then choose the most highly ranked item.
Although the measurements are objective, each customer chooses to measure a different factor.
For example, a restaurant might top one customer's list because their meals are lower in

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

calories. Another customer might choose a different restaurant because the meals are cheaper,
and price is the most important factor for them.

Horizontal Differentiation
An example of horizontal differentiation is when customers choose between products
based on personal preference rather than an objective measurement.
For example, whether someone chooses a vanilla, chocolate, or strawberry milkshake
comes down to personal taste. If most of the products on the market cost about the same and
have many of the same features or qualities, the purchase decision is based on subjective
preference.

Mixed Differentiation
More complex purchases tend to consider a mix of vertical and horizontal
differentiation. When buying a car, for example, a consumer may consider safety metrics and
gas mileage, both of which are objective measures and examples of vertical integration.
However, the consumer may also consider what colors the car is available in or the brand
image. Each consumer will place a different weight of importance on each of the criteria.

Benefits of Product Differentiation

A differentiated product can increase brand loyalty and even survive a higher price
point. If a product is perceived to be better in some way than its competitors, consumers will
consider it worth the higher price.
Differentiation marketing can help companies stand out when a product isn't perceived
to be much different from a competitor's, such as bottled water. The strategy might be to focus
on a lower price point or that it's a locally owned business. When functional aspects of the two
products are identical, nonfunctional features can be highlighted. The strategy can be an
appealing change in design or styling.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

A successful product differentiation campaign raises consumer interest and gives the
consumer a reason to believe they need one product rather than another.

Examples of Product Differentiation

Companies introducing a new product often cite its cost advantages. If Company X
produces a coffee maker virtually identical to that of Company Y, Company X may offer a
version at a lower cost. If it comes with a reusable filter, the savings on paper filters are
highlighted in packaging and advertising.
For example, product differentiation is vividly on display among the many coffee
maker brands on today's market. KitchenAid coffee makers have a hefty, substantial feel and a
premium price to match. Keurig differentiates itself with the ease of use of coffee pods.
Amazon Basics, as always, sets an unbeatably low price point.

What are the 3 types of product differentiation?

The three types of product differentiation are vertical, horizontal, and mixed. A
common example of vertical integration is when two products are similar but priced differently.
However, if the price of both products was the same, one would be considered "the best"
because of its perceived quality. For example, a Hanes T-shirt vs. a Gucci T-shirt. Horizontal
differentiation occurs regardless of a product’s quality or price point. The customer chooses a
product or brand according to personal preference, for example, Coca-Cola or Pepsi.
Mixed differentiation is complex and involves factors of both vertical and horizontal
differentiation. For example, a consumer may choose a new car from the same class of vehicle
and consider the price points of the different brands (vertical differentiation) but also the colors
of the interior (horizontal differentiation).

Why is product differentiation important?

Product differentiation is important because it allows different brands or companies to

gain a competitive advantage in the market. If differentiation were unachievable, the bigger
companies with economies of scale would always dominate the market because they can

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

undercut smaller producers in terms of price. Product differentiation is also a way to control
costs for the consumer by maintaining a competitive market.

Reading: Defining Positioning and Differentiation

What Makes You Different and Better?

Positioning is a strategic process that marketers use to determine the place or “niche”
an offering should occupy in a given market, relative to other customer alternatives. When you
position a product or service, you answer these questions:
 Place: What place does the offering occupy in its market?
 Rank: How does the product or service fare against its competitors in the areas
evaluated by customers deciding what to buy?
 Attitude: How do we want customers to think about this offering and the benefits it
offers them?
 Outcomes: What must we do to ensure the product or service delivers on the
positioning we select?
Marketers use the positioning process to identify the distinctive place they want a
product or service to hold in the minds of a target market segment. Effective positioning is
always aimed at a specific target segment. In fact, positioning tailors the generally focused
value proposition to the needs and interests of a particular target segment.
Positioning can be subtle and hard to detect, but it can also be easy to spot when it
conforms to your perceptions as a consumer. Perhaps one of the following positions appeals
to you:

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Volvo, for example, positions itself as a family of premium vehicles that are well
designed for performance, innovation, and safety. Kia strives to position itself as delivering
practical, utilitarian vehicles that offer high quality and value for the price. Cadillac is, well,
the Cadillac of automobiles: powerful, luxurious, and catering to every need of its well-heeled
drivers and passengers.

Differentiation is closely related to positioning. Differentiation is the process

companies use to make a product or service stand out from its competitors in ways that provide
unique value to the customer. Differentiation identifies a set of characteristics and benefits that
make a product different and better for a target audience.
Ideally these qualities are things that:
1. Customers value when they are evaluating choices in a purchasing decision, and
2. Competitors cannot easily copy. When both conditions exist, the offering is more
attractive to target customers.

Differentiation is at work any time you’re choosing between two products in the same
category. For example, when you’re buying a soft drink, why do you choose Coke, Pepsi,
Sprite, or Mountain Dew? Is it because of the taste? The cost? The level of sugar or caffeine?
Or is it something less tangible, like the way you just want to smile when you drink Coke, or
you feel amped up when you drink Mountain Dew? These tangible and intangible qualities are
what differentiate one soft drink from another.

Interconnected Strategies

Positioning and differentiation are connected in important ways. Effective positioning

for a product or service is based on the differentiating characteristics or qualities that make the
product/service better than the competition in the minds of the target segment. Positioning and
differentiation are strategic activities: marketers work to create a desired position for a product
or service in the market, rather than waiting for it to be created by customers, the public,
or competitors. The end result of positioning is the successful creation of a market-focused
value proposition: “This is the compelling reason why the target segment should buy the
product.” Positioning shapes key elements of the marketing mix: which features matter most

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

in the differentiation of a product or service, what messages to communicate about the offering,
how to price it relative to competitors, and the role distribution might play in satisfying the
customer.
To illustrate, think about American retail chains targeting American households as a
target segment. The table below identifies the ways in which three large retail chains position
themselves to attract customers and the key differentiators they use to set themselves apart.

Name Positioning Differentiators

Wal- Wide selection of products people

Wide selection; low prices
Mart want, at the lowest prices

Trendy, fashionable products at Continually refreshed, on-trend product

Target
reasonable prices selection

Preferred “go-to” shopping

Broad selection of most-wanted, upscale
Macy’s destination for upscale brands and
brands; engaging shopping experience
current fashions.

Note that, in each case, positioning is based on factors that are important to the target
segment(s) each retailer focuses on. Wal-Mart customers are very brand-loyal because of the
company’s commitment to low prices and huge selection. Loyal Target customers love
browsing the latest, on-trend apparel, accessories, and home fashions. Macy’s shoppers
appreciate a more elegant, upscale shopping experience and are willing to pay more for upscale
brands. Each of these positioning strategies carves out a “niche” of the retail market that defines
the particular, differentiating strengths of each chain in the minds of customers.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Positioning is essential for launching a new product or service, because it helps

marketers and customers understand how the new offering fits into the set of available choices,
and it makes a set of claims about why customers should consider it. Positioning can also be
useful at any other stage of the product life cycle to help clarify what makes a product or
service different from competitors and why people should prefer it.

Positioning Is a Statement

Positioning plays an important role for marketers in expressing how they will make an
offering attractive to customers. It also helps customers become educated about the options
available to them so they can evaluate and select the product or service that’s the best fit.
Positioning is most often articulated as a positioning statement. A positioning
statement is one sentence that concisely identifies the target market and what you want
customers to think about your brand. This statement should include 1) the target market, 2) the
brand name, 3) the key points of differentiation, 4) the product/service category or frame of
reference in which you are establishing this market position, and 5) the reasons customers
should believe the positioning claims.
Positioning statements should also be statements of truth. Effective positioning is
credible and convincing, reflecting customers’ actual experiences with the product or service.
If a positioning statement does not reflect the customer’s reality, the positioning will fail
because it will not take hold in the minds of consumers. Likewise, positioning must be based

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

on qualities that matter to customers as they consider which product/service to purchase. If

positioning is based on characteristics or customer benefits that do not matter, customers will
opt for other offerings that deliver what they care about. We will discuss positioning statements
in more detail later in this module.

Same Offering, Different Positioning

Because effective positioning is always linked to a specific target segment, it is worth

pointing out that the same basic product or service may be positioned differently for different
market segments. When this happens, it is because companies recognize that their target
segments are looking for different qualities when they make their purchasing decisions.
Different positioning strategies for the same product enable marketers to communicate the
value of the product or service more effectively to each target audience.

For example, the airline JetBlue caters to two “sweet spot” target segments: 2) “high-
value leisure travelers” and 2) “mixed-wallet customers,” who fly for both business and
leisure. The airline’s positioning for “high-value leisure travelers” focuses on attractively
priced airfare and packages to fun vacation destinations, along with a comfortable flying
experience. For “mixed-wallet customers,” JetBlue positions itself as providing a competitively
priced and convenient flying experience with features like expedited security and multiple fare
options in case travel plans need to change. In both cases, JetBlue is selling air travel, but the
positioning for each target segment is built around the differentiating qualities that make
JetBlue particularly attractive to those segments.

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AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Market Structure

“How different industries are classified and differentiated based on their degree and nature
of competition for services and goods”

What is Market Structure?

Market structure, in economics, refers to how different industries are classified and
differentiated based on their degree and nature of competition for goods and services. It is based
on the characteristics that influence the behavior and outcomes of companies working in a
specific market.

Some of the factors that determine a market structure include the number of buyers
and sellers, ability to negotiate, degree of concentration, degree of differentiation of products,
and the ease or difficulty of entering and exiting the market.

Summary
 Market structure refers to how different industries are classified and differentiated
based on their degree and nature of competition for services and goods.
 The four popular types of market structures include perfect competition, oligopoly
market, monopoly market, and monopolistic competition.
 Market structures show the relations between sellers and other sellers, sellers to
buyers, or more.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

Understanding Market Structures

In economics, market structures can be understood well by closely examining an array
of factors or features exhibited by different players. It is common to differentiate these
markets across the following seven distinct features.
1. The industry’s buyer structure
2. The turnover of customers
3. The extent of product differentiation
4. The nature of costs of inputs
5. The number of players in the market
6. Vertical integration extent in the same industry
7. The largest player’s market share

By cross-examining the above features against each other, similar traits can be
established. Therefore, it becomes easier to categorize and differentiate companies across
related industries. Based on the above features, economists have used this information to
describe four distinct types of market structures. They include perfect competition, oligopoly
market, monopoly market, and monopolistic competition.

Types of Market Structures

1. Perfect Competition
 Perfect competition occurs when there is a large number of small companies
competing against each other. They sell similar products (homogeneous), lack price
influence over the commodities, and are free to enter or exit the market.
 Consumers in this type of market have full knowledge of the goods being sold. They
are aware of the prices charged on them and the product branding. In the real world,
the pure form of this type of market structure rarely exists. However, it is useful
when comparing companies with similar features. This market is unrealistic as it
faces some significant criticisms described below.
 No incentive for innovation: In the real world, if competition exists and a company
holds a dominant market share, there is a tendency to increase innovation to beat the
competitors and maintain the status quo. However, in a perfectly competitive market,

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AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

the profit margin is fixed, and sellers cannot increase prices, or they will lose their
customers.
 There are very few barriers to entry: Any company can enter the market and start
selling the product. Therefore, incumbents must stay proactive to maintain market
share.

2. Monopolistic Competition
 Monopolistic competition refers to an imperfectly competitive market with the traits
of both the monopoly and competitive market. Sellers compete among themselves
and can differentiate their goods in terms of quality and branding to look different.
In this type of competition, sellers consider the price charged by their competitors
and ignore the impact of their own prices on their competition.
 When comparing monopolistic competition in the short term and long term, there
are two distinct aspects that are observed. In the short term, the monopolistic
company maximizes its profits and enjoys all the benefits as a monopoly.
 The company initially produces many products as the demand is high. Therefore,
its Marginal Revenue (MR) corresponds to its Marginal Cost (MC). However, MR
diminishes over time as new companies enter the market with differentiated
products affecting demand, leading to less profit.
3. Oligopoly
 An oligopoly market consists of a small number of large companies that sell
differentiated or identical products. Since there are few players in the market, their
competitive strategies are dependent on each other.
 For example, if one of the actors decides to reduce the price of its products, the
action will trigger other actors to lower their prices, too. On the other hand, a price
increase may influence others not to take any action in the anticipation consumers
will opt for their products. Therefore, strategic planning by these types of players is
a must.
 In a situation where companies mutually compete, they may create agreements to
share the market by restricting production, leading to supernormal profits. This
holds if either party honors the Nash equilibrium state or neither is tempted to

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AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

engage in the prisoner’s dilemma. In such an agreement, they work like monopolies.
The collusion is referred to as cartels.
4. Monopoly
 In a monopoly market, a single company represents the whole industry. It has no
competitor, and it is the sole seller of products in the entire market. This type of
market is characterized by factors such as the sole claim to ownership of resources,
patent and copyright, licenses issued by the government, or high initial setup costs.
 All the above characteristics associated with monopoly restrict other companies
from entering the market. The company, therefore, remains a single seller because
it has the power to control the market and set prices for its goods.

Beachhead Strategy

“The practice of focusing resources on a small market area to turn it into a

stronghold in the future”

What is the Beachhead Strategy?

The beachhead strategy comes from the military strategy of winning a small border area
that becomes a stronghold, and from which you can advance to the rest of the territory. The
small border area is referred to as a beachhead.
In business, the idea is to focus your resources on a small market area (such as a product
category or smaller market segment) to turn it into a stronghold before advancing to the broader
market or product categories. The beachhead strategy enables a company to dominate the small
areas from which it can then enter and dominate the rest of the market.

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LEARNING MODULE IN TECHNOPRENEURSHIP
AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

The alternative to the beachhead strategy is the spray and pray technique. The latter
strategy involves spreading a generic message to a wide market of prospects and relying on
sheer numbers to make wins in that market. Businesses that use the spray and pray technique
often set unrealistic larger plans for dominating the market segments or product categories.
They reach a large number of people, but their efforts are not as targeted as is the case with a
beachhead strategy.

Beachhead Defined

The term beachhead is derived from a military strategy that advocates that, as you are
approaching an enemy territory, you should plan and focus all your resources on winning a
small border area that becomes a stronghold area from which to advance into the enemy
territory.
The term references the 1944 invasion of Normandy where allied troops focused their
attention on the Normandy beaches, which they used to stage a counter-invasion of Europe and
win the Second World War. The concept was first presented in Geoffrey Moore’s
book, Crossing the Chasm.

Beachhead Acquisition

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AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

The beachhead strategy is also replicated in mergers and acquisitions. A beachhead

acquisition occurs when a business acquires another business in a new geographical location
as a way of establishing itself in that location for future growth potential. A business can
implement a beachhead strategy when the market is very large and it does not want to take the
risk of making a huge investment in a new, untried market.
Beachhead acquisition also enables a company to test the acceptance of the company’s
products in the new market, and decide whether to invest more capital into the market or
abandon the whole plan if the market is unreceptive to its products.
The strategy can also be implemented by purchasing a minority interest in a company,
as the first move in a hostile takeover. Most often, when the target is aware of the takeover
plans of an acquirer, it may take actions that may prevent the takeover from happening. Some
of these actions may include transferring majority shares into a voting trust, taking legal
actions, or voting down the acquisition.
However, by acquiring a minority interest in the target company, the acquirer may
advance its plans of owning a majority of the company’s shares gradually without raising the
alarm. The strategy can also help the acquirer assess if the target is an ideal company for
investment since it will get a better view of the company’s operations when it owns a minority
interest in the target company.
Beachhead Market

A beachhead market can be defined as a small market with specific characteristics that
make it an ideal target to sell a new product or service. The choice of the market is based on
the compatibility between the resources available, the product, and the market itself. The
market should help the business serve specific goals that will help it advance from its infancy
to other markets.
Here are some of the conditions that define a beachhead market:
 Customers purchase similar products
A business should go into a market where the potential customers are already
purchasing a similar product to that which the business intends to offer.
 Customers have similar sales cycles

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AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

The customers within the potential market should have similar sales cycles, and they should
expect to get the product value in similar ways. Sales cycles are predictable phases when a
company expects to sell its products or services to customers in a specific market segment.
 Word of mouth communication between customers
A market where customers frequently spread information or ideas by word of mouth is
potentially a good market for implementing the beachhead strategy. The customers can
belong to specific communities or regions where they share information with other
potential customers. These markets, where existing customers serve as references for
potential customers, serve as ideal hubs where new businesses can create dominance.

Segmentations for the Beachhead Market

A business should have a focused segmentation for the beachhead market to enable it
to refine its propositions. The market segmentation can be based on:

Geography

Geography refers to the home market where the business wants to launch its products
or services. Since venturing into a home market will require relationship building and face-to-
face confidence, local promoters will enjoy distinct advantages. The local promoters will be
well-versed with the culture of the local market, the cost of travel and access to the market will
be minimized, and the local customers will be comfortable dealing with local suppliers.

Industry vertical

Customers value products that are specifically designed for them. A business should
target and position its products and services so that customers can differentiate the company’s
products from those offered by its competitors.

Customer profiles

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AGUSAN DEL SUR STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Engineering and Information Sciences
MAIN CAMPUS, BUNAWAN AGUSAN DEL SUR

The characteristics of early adopters of the product or service offered by a company can
be defined to identify which segment of the market to target. The ideal customer profiles should
comprise early adopters and customers seeking specific solutions since they are more receptive
to new relationships or product offerings.

Process

A company may decide to offer a new product in the target market that provides a
variety of applications for different business processes and technology environments. For better
targeting in a beachhead environment, the company should minimize the variety of uses so that
it can focus on specific categories of customers first, before advancing to the rest of the market.

References:

https://airfocus.com/glossary/what-is-competitive-advantage/

https://onceinteractive.com/blog/how-to-identify-your-competitors/

https://www.tutor2u.net/business/reference/competitive-advantage

https://www.techtarget.com/searchcio/definition/competitive-advantage

https://corporatefinanceinstitute.com/resources/knowledge/strategy/beachhead-strategy/

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