Page 301 - Marketing Management

278 PART 4 BUILDING STRONG BRANDS

Bertolli Unilever’s Bertolli, a line of frozen Italian food, experienced a steady 10 per-
Bertolli cent growth in sales through the recent economic recession, in part due to its clever positioning

as “restaurant quality Italian food that you can eat at home.” Targeting men and women with
“discerning palates,” Bertolli has aggressively innovated with a stream of high-quality new dishes
to keep target customers interested. In its marketing for the brand, Bertolli deliberately chooses
to go to places “appropriate for a fine dining brand but not a frozen food brand.” Advertising “Spend a Night
In with Bertolli,” the brand has advertised during the Emmys and Golden Globes award show telecasts and
hosted celebrity chef dinners in Manhattan.

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We can examine competition from both an industry and a market point of view. An industry
is a group of firms offering a product or class of products that are close substitutes for one another.
Marketers classify industries according to number of sellers; degree of product differentiation;
presence or absence of entry, mobility, and exit barriers; cost structure; degree of vertical integra-
tion; and degree of globalization.
Using the market approach, we define competitors as companies that satisfy the same
customer need. For example, a customer who buys a word-processing package really wants
“writing ability”—a need that can also be satisfied by pencils, pens, or, in the past, typewriters.
Marketers must overcome “marketing myopia” and stop defining competition in traditional
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category and industry terms. Coca-Cola, focused on its soft drink business, missed seeing the
market for coffee bars and fresh-fruit-juice bars that eventually impinged on its soft-drink
business.
The market concept of competition reveals a broader set of actual and potential competi-
tors than competition defined in just product category terms. Jeffrey F. Rayport and Bernard
J. Jaworski suggest profiling a company’s direct and indirect competitors by mapping
the buyer’s steps in obtaining and using the product. This type of analysis highlights both the
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opportunities and the challenges a company faces. “Marketing Insight: High Growth through
Value Innovation” describes how firms can tap into new markets while minimizing competition
from others.

25-screen, 7,600-seat Kinepolis megaplex. Despite an industry
slump, Kinepolis has thrived on a unique combination of features,
such as ample and safe free parking; large screens and state-of-
the-art sound and projection equipment; and roomy, comfortable,
Marketin g oversized seats with unobstructed views. Through smart planning
Marketing InsightInsight
and economies of scale, Bert Claeys created Kinepolis’s unique cin-
ema experience at a lower cost.
This is classic blue-ocean thinking—designing creative busi-
ness ventures to positively affect both a company’s cost structure
High Growth Through Value and its value proposition to consumers. Cost savings result from
Innovation eliminating and reducing the factors affecting traditional industry
competition; value to consumers comes from introducing factors the
INSEAD professors W. Chan Kim and Renée Mauborgne believe too industry has never before offered. Over time, costs drop even more
many firms engage in “red-ocean thinking”—seeking bloody, head- as superior value leads to higher sales volume, and that generates
to-head battles with competitors based largely on incremental im- economies of scale.
provements in cost, quality, or both. They advocate engaging in Here are other marketers that exhibit unconventional, blue-ocean
“blue-ocean thinking” by creating products and services for which thinking:
there are no direct competitors. Instead of searching within the con-
• Callaway Golf designed “Big Bertha,” a golf club with a large head
ventional boundaries of industry competition, managers should look
and expanded sweet spot that helped golfers frustrated by the dif-
beyond those boundaries to find unoccupied market positions that
ficulty of hitting a golf ball squarely.
represent real value innovation.
The authors cite as one example Bert Claeys, a Belgian • NetJets figured out how to offer private jet service to a larger group
company that operates movie theaters, and its introduction of the of customers through fractional ownership.