Final answer:
Thompson Manufacturing uses marketing research to become competition-oriented, driving innovation for higher profits and market positioning. By focusing on physical product features and strategic location, the company can achieve a competitive advantage. This approach differs from the price-taking nature of firms in a perfectly competitive market, marking the significance of research in developing a competition strategy.
Step-by-step explanation:
Thompson Manufacturing, by utilizing marketing research to understand its environment, can position itself to be competition-oriented. This involves acknowledging that market competition drives innovation and technological advancements, leading to higher profits through cost-effective production or by offering products with desirable features. Gregory Lee, CEO of Samsung, highlights this principle by asserting that innovation enables consumers to explore a myriad of technological possibilities and provides firms with a temporary advantage over competitors, allowing them to generate above-normal profits.
Furthermore, attention to the physical aspects of a product, such as durability, convenience, and design, can significantly differentiate a firm's offerings from those of its competitors. Additionally, the strategic choice of a firm's location, just like the gas station positioned in a high traffic area or a supplier located near an automobile manufacturing plant, can create a competitive edge.
In a perfectly competitive market, firms are known as price takers and must accept market-determined prices. However, a firm like Thompson Manufacturing, which actively engages in market research to better its competition strategy, may find ways to influence its market position, as opposed to being a passive participant in a price-taking scenario.