Competitive Advantage Versus Differential Advantage

How Marketing Management of a competitive firm accomplishes a long-term competitive advantage?
Does the concept of Differential Advantage reflect on Marketing creativity and brand substantiation?

The answers to these two generic Marketing questions can be facilitated by defining the two terms:

Competitive Advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices.

Differential Advantage means a Competitive Advantage that customers perceive as creating superior value with respect to competition.

Conceptually, the essence of Marketing Management is to build and sustain Differential Advantage through advanced Brand Management, close customer relationships and upgraded service quality standards.

Damian Giannakis

Personal Views

There are strong debates whether the design and implementation of Direct Marketing applications and practices are beneficial or not for the business purposes of customer-oriented firms. In my understanding, Direct Marketing practices can only be beneficial to both customer and organization, if they result as an outcome of an organized and systematic Relationship Marketing Service-Dominant process (Vargo and Lusch, 2004). Most fundamentally, Direct Marketing can produce measurable -thus worthy- outcomes under the following conditions:

 A) Sequencial Selling to existing customer groups. In this case, Marketing Management has processed customers' data in CRM and Data Mining systems to conclude on segmentation criteria, thus targeting specific "product/service solutions" to satisfy specific, existing customer group needs (e.g customer retention tools).

B) Organized Relationship Management corporate approach to 1st year specific customer groups (e.g. customers with shared characteristics / needs). Such a Relationship Management approach involves three distinct stages:

1. The "First-Moment activities". Organization encourages the dynamic interaction between sales-reps and customers, investing into a long-term business-customer relationship (e.g. customer acquisition).
2. Development and application of sound Customer Segmentation Criteria. Marketing Management launches Welcome and Building Relationship cross-selling activities to enhance and maintain a holistic Relationship Management approach (e.g. Customer Activation).
3. Initiation of Direct Marketing campaigns. These campaings should involve sequential direct marketing activities and event management - preferably from the front-line employees, that have already been in contact with the customer / group.

Otherwise, ad-hoc, non systematic implementation of Direct Marketing practices would score low as a Marketing activity, creating customer's mistrust and lack of commitment.

Damian Giannakis, 2010

Sales Strategy Customer Care

Reforming Marketing Practice (2)

Getting the line from the previous posts, it seems that Marketing Management within a customer-oriented firm (as previously defined) is differentiated to Marketing Management position within a Transactional-oriented firm.

The literature indicates that Marketing Management in the transaction context is primarily concerned with the product and achieving organisational objectives that emphasise product profitability (Coviello et al., 1997; Webster, 1992). In this circumstance, Marketing focuses on achieving profit maximisation that revolves around the application of the firm’s resources to markets, customers and products in the most efficient and cost effective manner. As Webster (1992, p. 6)though comments, “there is no need to consider people or social processes when the units of analysis are products, price, costs, firms and transactions”.

However, in a customer-oriented firm, Marketing Management would adopt and further implement a Relationship Marketing business approach into markets as the means of sustaining a competitive advantage.

This is in essence to establish, maintain and enhance relationships with customers and other parties at a profit so that the objectives of the parties involved are met. This is done by a mutual exchange and fulfillment of promises. (Bennett, 1996; Brodie et al.,1997; Grönroos, 1989; 1990; 1994; 1997 in Ravald and Grönroos, 1996; Gummesson, 1994; Hunt, 1997; Robicheaux and Coleman, 1994; Storbacka, 1997)

A set of critical questions need to be further analyzed and discussed: What are the roles, skills and competences of the Product Manager into a Relationship Marketing Management business environment?
What is needed in order that a Relationship Marketer (within a customer-oriented firm) find corporate space for inter-departmental optimum cooperation?

Damian Giannakis

How to Reform Marketing?

An optimum Marketing, Business approach into a saturated product environment reflects on the achievement of corporate goals through meeting and hence exceeding customer needs better than the competition.
This competitive, customer-focused Marketing approach can be effective through:

A) A definite, unbiased Customer Strategic Orientation where corporate activities are focused upon providing customer satisfaction.

B) An integrated, accumulated business effort where the fulfillment of corporate goals is the core job of everyone in the organization (see internal Marketing applications and practices) and not just through a "silo", product management business approach.

Most fundamentally, an interdepartmental, aligned Marketing effort reflects on line managers' professional development of required skills and competences such as: creativity, problem solving, communication and entrepreneurial orientation.

C) Goal Achievement. The corporate belief that organizational strategic and operational goals can be achieved through long-term, customer satisfaction and upgraded relationship quality standards.

Damian Giannakis

Reforming Marketing Practice (1)

In the competitive business world, Marketing has undergone various organizational modifications. In this direction, Marketing has developed from the traditional Transactional business approach to Customer-oriented approach in generating sound values for the customer and develop a sound and sustainable competitive advantage for the organization.

In reforming Marketing practice the American Marketing Association (2007)produced the following definition: "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large".

This definition adopted a distinct Customer-oriented perspective and moved away from the former AMA (2004) definition : "Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders".

Marketing is thus regarded as an "activity" instead of a "function". Marketing "activity" is positioned as a broader perspective in a company/organization, and not just as a single functional department, providing long-term value rather than narrowly an exchange of money (short-term) for the benefit of the shareholder/organization.

This newer Marketing business approach reflects on the impact/role of talented people-marketers in best Marketing implementation practices. Most pragmatically, the role of human resources of an organization that adopts the new Marketing definition as its core business focus, becomes strategically imperative.

Implementation of Marketing theory

"One of the concerns about Marketing as a management discipline is the inability of organizations to put into practice the policies devised in its name". Meldrum (1996, pp. 30)

Critical issues in implementing marketing