Resource-Based View and the Competitive Positioning of the Organization
200415450 / B1809 Resource-Based View and the Competitive Positioning of the Organization
Resource-Based View and the Competitive Positioning of the Organization
By
Muawiya Abu Jubain
Student No.: 200415450
Student Ref.: B1809
For Submission to:
The University of Hull
Master in Business Administration
Module: Marketing
Module Code: 56652
Word Count: 3690
Date: July 6, 2005
Lecturer: Graham Spickett-Jones
Table of Contents
1. INTRODUCTION
- Introduction
Marketing studies and theories claim that organizations follow two main theories, Marketing Orientation and the Resource Based View, to create the needed competitive position for themselves. The purpose of this paper is to explore in detail the affect the resource based view theory has on the Creation of the differential advantage and the selection of the Target Market. The first part of the paper will discuss the different views of the Resource Based View and discuss its components. The second part of the paper provides a case study of a Middle East Professional Services Organization called International Turnkey Systems (ITS). The case study will illustrate the use of both theories especially the RBV in positioning ITS and in the creation of its differential advantage.
- Competitive Positioning Models.
The strategies organizations use to position themselves in the market are mainly driven from two major concepts that must be put together to make these strategies work. The first concept being the Financial Growth and Gains the organization wants to achieve in a given period of time, whether long term or short term (Porter, 1985). The second concept is the level of customer satisfaction the organization wants to achieve and to position itself in to. In other words, what value the organization wants to deliver to the customer. These two factors dictate the base strategy any organization wants to adapt to position itself in the market. All other factors are in fact derived from these two main concepts. On the other hand, the Financial Growth strategy does not go hand in hand the Value Addition strategy. In other words, organizations who seek fast financial growth, normally, do not really care about the type of value they really want to add to the customer and/or the community. While the opposite is true (Hooley, Greenley, Fahy and Cadogan 2001).
From the above one can say that the Competitive Position any organization wants to achieve is really derived from the Financial Status it wants to accomplish. In order to create a sustainable Competitive Position the organization must first choose the target market or the target customers segments it wants to address and the type of products and/or services it wants to offer. For any organization to succeed in its business it must also differentiate itself from the its competitor by creating a hard to copy or imitate differential/competitive advantage (Hooley, Greenley, Fahy and Cadogan 2001).
Knowing that the Competitive Position any organization chooses is a collection of the Competitive Advantage and the Target Market, an organization can choose one or more of the Competitive Positioning models to place itself in the market and make itself different from its competitors. Such competitive positioning models could include:
- Attribute Positioning (Kotler, 2003): Such as size, location and or history. For example organizations that are located in the Middle East and enjoy the understanding of the culture or the Middle East can position themselves as the Local Organization Next door. They are here to stay while others aren’t. This type of positioning gives some kind of commitment to customers who are from this part of the world.
- Benefit Positioning (Kotler, 2003): Organizations in this respect must find a special benefit that the customers would want to make them go for their products. For example, Professional Services organizations can position themselves to implement projects is shorter time than the competition and produce products that have low cost of ownership to the customer. For that to happen, organizations must address a certain segment of customer base to offer such market position.
- Use or Application Positioning (Kotler, 2003): Such positioning model dictates that the organization produces a product that is specific for a certain industry or business. For example, ORACLE is known for its Financials software solution that can address almost any organization financial needs and is well known for its flexibility and customization ability.
- User Positioning (Kotler, 2003): Some organizations use this positioning model to address specific organizations. For example, International Turnkey Systems (ITS) position themselves as the Application Solutions Provides to Organizations that use Critical Mission Application such as Banks and Telecommunications companies.
- Competitor Positioning (Kotler, 2003): Here the organization offer products that have better quality or more features than the competitors do. ITS claim that they have Banking Solutions that are richer in functionality than any other product supplied by the competitors.
- Price (Hooley, Greenley, Fahy and Cadogan 2001): Some organizations use low price as a competitive positioning model but others use high price. Organizations who use high price positioning model normally associate that with the high Quality positioning.
- Quality (Hooley, Greenley, Fahy and Cadogan 2001): This is one of the major differentiators use to position organizations especially when it come to commodity products. Quality is also used to target certain customer segments. Organizations who want to establish good name for themselves and build an image of a value adder must produce high quality goods and/or services.
- Innovation (Hooley, Greenley, Fahy and Cadogan 2001): Organizations who are in leading position or want to achieve a leading position in the market must apply this competitive position. The opposite to innovation is imitation. Innovative organization must maintain a degree of confidentiality to protect its investment and it competitive advantage from the rivals.
- Superior Service (Hooley, Greenley, Fahy and Cadogan 2001): With this competitive positioning model the organization must obtain all the needed skills to build the relationship with the customers and all the necessary infrastructure, which must include business processes and training programs, that will enable them to provide such excellent services to their customers. Providing superior service is also connected heavily to the culture of the organization in question.
- One to One Marketing (Hooley, Greenley, Fahy and Cadogan 2001): One to One (1:1) Marketing is considered the oldest and yet the newest trend competitive positioning. It depends on building a 1:1 relationship with the customer. Organizations must gather and know enough information about their target customer so that a relationship can be built. Personal Preferences, Professional, Financial and even social information is gathered depending on the type of products the organization is trying to market. With 1:1 positioning the concept of Customized Product started to appear (Peppers and Rogers, 1993:5).
- Differentiation (Porter, 1985): In this model the organization positions itself to be the only supplier for certain products or services. This can be achieved by the products the organization it is offering, the services they provide the customer, the supply chain process they have and many other factors that contribute to the organization being different from others. For such model, normally, organizations charge high prices.
- Focus (Porter, 1985): Using this model the organization positions itself as a focused organization for a specific target customers segments. In fact, this model is a combination of the many models such as differentiation, benefit, quality and superior service.