Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

4. Evaluating Opportunities
   in the Changing Marketing
   Environment

Text © The McGraw−Hill

Companies, 2002

100 Chapter 4

Avoiding pure competition is sensible and certainly fits with our emphasis on target

marketing and the need to find a competitive advantage on which to differentiate the

firm’s marketing mix. This is why effective target marketing is fundamentally differ-

ent from effective decision making in other areas of business. Accounting, production,

and financial managers for competing firms can learn about and use the same stan-

dardized approaches—and they will work well in each case. By contrast, marketing

managers can’t just adopt the same “good” marketing strategy being used by other

firms. That just leads to head-on competition and a downward spiral in prices and

profits. So target marketers try to offer a marketing mix better suited to customers’

needs than competitors’ offerings.

Most marketing managers would like to have such a strong marketing mix that cus-

tomers see it as uniquely able to meet their needs. This competitor-free ideal guides

the search for breakthrough opportunities. Yet monopoly situations, in which one firm

completely controls a broad product-market, are rare in market-directed economies.

Further, governments commonly regulate monopolies. For example, in many parts of

the world prices set by utility companies must be approved by a government agency.

Although most marketing managers can’t expect to operate with complete control in

an unregulated monopoly, they can move away from head-on competition.

In monopolistic competition, a number of different firms offer marketing mixes

that at least some customers see as different. Each competitor tries to get control (a

monopoly) in its “own” target market. But competition still exists because some cus-

tomers see the various alternatives as substitutes. Most marketing managers in

developed economies face monopolistic competition.

In monopolistic competition, marketing managers sometimes try to differentiate very

similar products by relying on other elements of the marketing mix. For example,

Clorox Bleach uses the same basic chemicals as other bleaches. But marketing man-

agers for Clorox may help to set it apart from other bleaches by offering an improved

pouring spout, by producing ads that demonstrate its stain-killing power, or by getting

it better shelf positions in supermarkets. Yet such approaches may not work, especially

if competitors can easily imitate each new idea. Efforts to promote real, but subtle,

Competitor-free
environments are rare

Monopolistic
competition is
typical—and a
challenge

Dodge would like to avoid head-
on competition with other auto
producers, but that is difficult if
potential customers view
competing autos as very similar.