There is a framework in this course that can be employed by companies to think like a market leader. This framework of Market Leadership is based on 3 key assumptions about the market:
- Competitive Market – companies are always trying to know what the competitors are focusing on, what kind of marketing is being deployed, and constantly catching up with the competition.
- Customers Decides All – customers compare products and services across all competing businesses before making a decision. Businesses will have to deliver value.
- Be The Best – if the first 2 assumptions hold, then a company will need to be the best compared to other competition, at certain aspect of the business, in order to attract customers.
If a company is merely doing decently in all aspects, then it will not survive the competition as customers will be attracted to the various other market leaders.
These assumptions help to build the following framework of Market Leadership:
These are the 3 aspects of business that companies focus on as part of their leadership strategy.
The first is Operational Excellence. This is about being the most efficient producer, being able to bring the product to the market at the cheapest cost or shortest time compared to other companies. The second is Performance Superiority. This is about having the best product design and style such that customers will prefer the product over all other competition. The last is Customer Intimacy. This is about understanding customer needs and trying to be responsive to those needs.
A company looking to use the framework will go through the following steps:
- Figure out the product attributes that correspond to each of the 3 aspects that is particular to the market of interest, and have them clearly defined.
- Next, anticipate the fair value of each aspect. These are the average standard or quality that are still decently acceptable to the customers.
- Map out where the company is currently performing in the market on the three axes, relative to the fair value.
- Figure out where the competitors are performing on the same axes.
- Finally, design the marketing strategy required to move the company further out along the axes to become a market leader and beat the competition. The company may set short term and long term goals.
Companies aim to be the best in one of the aspect, while delivering at least fair value in the rest of the aspects, to be a market leader. Based on the assumptions established, being mediocre in all aspects is not a good strategy. Also, as the market is competitive, any premium value introduced by a market leader will eventually be imitated and eroded by the competition, turning into fair value. Therefore, businesses are constantly improving to stay ahead of the competition.
(Reference: Coursera Wharton Online Introduction to Marketing)