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Marketing Management

Dr. Mohamed Hesham Mansour

MARKETING MANAGEMENT
12th edition

11 Dealing with Competition

Kotler

Keller

Chapter Questions
How do marketers identify primary competitors? How should we analyze competitors strategies, objectives, strengths, and weaknesses? How can market leaders expand the total market and defend market share? How should market challengers attack market leaders? How can market followers or nichers compete effectively?
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Competition in the Jeans Market

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Five Forces Determining Segment Structural Attractiveness

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Identifying Competitors

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Industry Concept of Competition

Number of sellers and degree of differentiation Entry, mobility, and exit barriers Cost structure Degree of vertical integration Degree of globalization

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Industry Concept of Competition

Pure Monopoly
Oligopoly (pure& differentiated) Monopolistic Competition Pure Competition
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Market concept of competition Competitor Map

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A Competitors Expansion Plans

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Analyzing Competitors
Share of market

Share of mind

Share of heart

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Analyzing Competitors

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Hypothetical Market Structure

10% 20% Market Market Nichers Follower

30% Market Challenger

40% Market Leader

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Market Leaders Strategies

I. Expanding The Total Market

New users New uses More usage

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Expanding the Total Market

New users
New uses More usage

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Market Leaders Strategies

II. Defending The Market Share

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Market Leaders Defense Strategy

II. Defending Market Share (1of 6)

1. Position Defense Fortification around ones territory. (e.g.) Maginot Line It is static and it is a form of marketing myopia

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Market Leaders Defense Strategy

II. Defending Market Share (2 of 6)

2. Flanking Defense To protect weak fronts against possible invasion Of little value if lightly defended

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Market Leaders Defense Strategy

II. Defending Market Share (3 of 6)

3. Preemptive Defense
Launch an attack on the enemy before it start its offense An Ounce of Prevention is Worth More than a Pound of Cure Could be a guerilla action across the market to keep every one off-balance Using market signals to demoralize competitors It could extend to a real punishment for competitors 11-19

Market Leaders Defense Strategy

II. Defending Market Share (4 of 6)

4. Counteroffensive Defense When attacked respond with a counter attack Counterattacks could be frontal or flank attacks

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Market Leaders Defense Strategy

II. Defending Market Share (5 of 6)

5. Mobile Defense Stretch domain over new territories that can serve as future centers for defense and offense (strategic depth) Market broadening and market diversification

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Market Leaders Defense Strategy

II. Defending Market Share (6 of 6)

6. Contraction Defense Useful when forces are spread too thin and competitors are attacking several fronts. Strategic withdrawal by giving up the weaker territories and reassigning forces to stronger territories.

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Market Leaders Strategies

III. Expanding Market Share

Profitability rises with relative increase in market share , but three facts should be considered: 1. Competitors retaliation 2. Economic cost 3. Select the right market mix

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Market challenger strategies

Defining the strategic objective and opponents Attack Market leader Attack firms of the same size ( not doing the job or underfinanced) Attack small firms (not doing the job or underfinanced)

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Market Challenger

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Market Challenger Strategies

Attack Strategies (1 of 5)

1. Frontal attack ( Head on) Attacking strengths rather than its weaknesses Matching opponents product, advertising, price, and so on Attacking forces to be at least 3:1 advantage in combat fire power. Modified frontal attack.
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Market Challenger Strategies

Attack Strategies (2 of 5)
2. Flank attack Concentration of strength against weakness Attack weak spots blind sides. Particularly attractive to the aggressor possessing fewer recourses. Along two strategic dimensions geographical and segmental It is all about discovering gaps and filling them. More likely to be successful than frontal

attacks.

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Market Challenger Strategies

Attack Strategies (3 of 5)

3. Encirclement attack Launching a grand offensive on several fronts. Offering the market everything the opponent offers and more so that the offer is unrefusable Makes sense where the aggressor commands superior resources.
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Market Challenger Strategies

Attack Strategies (4 of 5)

4. Bypass Attack Bypassing the enemy and attacking easier markets to broaden ones resource base :
a. Diversifying into unrelated products. b. Diversifying into new geographical markets for existing products . c. Leap frogging into new technologies to supplement existing products
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Market challenger strategy

Attack Strategies (5 of 5)

5.

Guerrilla attack Especially for smaller undercapitalized ones. Could be expensive Launching small, intermittent attacks on different narrow territories of the opponent The aim is to harass and demoralize the opponent. Losses on the aggressor side must be less than the losses on the opponent side Price cuts , intense promotional bursts and occasional legal actions
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Market challenger strategy

Attack Strategies (5 of 5) cont.

5. Guerrilla attack

?Few major attacks or continual stream of minor attacks ?Attack small, isolated, weakly defended markets or major strong hold markets

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Optimal Market Share

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Pepsi buys Gatorade in a Bypass Strategy

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Specific Attack Strategies

Price discounts Lower-priced goods Value-priced goods Prestige goods Product proliferation Product innovation Improved services Distribution innovation Manufacturing-cost reduction Intensive advertising promotion

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Samsung Attacks Using Innovation

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Market Follower Strategies

Counterfeiter
Cloner Imitator Adapter
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Market Nicher Strategies

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Balancing Orientations

CompetitorCentered

CustomerCentered

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Marketing Debate
How do you attack a Category Leader? Take a position: 1. The best way to challenge a leader is to attack its strengths. 2. The best way to attack a leader is to avoid a head-on assault and to adopt a flanking strategy.
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Marketing Discussion
Pick an industry. Classify firms according to the four different roles they might play. How would you characterize the nature of competition? Do the firms follow the principles described in this chapter?
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THANK YOU

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