Vous êtes sur la page 1sur 27


Dealing with Competition

Marketing Management, 13th edA South Asian Perspective

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?

Five Forces Determining Segment Structural Attractiveness

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

Barriers and Profitability

Exit barriers
Low High

Entry Barriers


Low, stable returns

Low, risky returns


High, stable returns

High, risky returns

Competitive Strategy
Industry Force
Entry Barriers

Generic Strategies
Cost Leadership
Ability to cut price in retaliation deters potential entrants.

Customer loyalty can discourage potential entrants.

Focusing develops core competencies that can act as an entry barrier.

Buyer Power Supplier Power

Threat of Substitutes Rivalry

Ability to offer lower price to powerful buyers.

Large buyers have less power to negotiate because of few close alternatives.

Large buyers have less power to negotiate because of few alternatives.

Better able to pass on Better insulated from supplier price increases to powerful suppliers. customers.
Can use low price to defend against substitutes. Better able to compete on price. Customer's become attached to differentiating attributes, reducing threat of substitutes. Brand loyalty to keep customers from rivals.

Suppliers have power because of low volumes, but a differentiation-focused firm is better able to pass on supplier price increases.
Specialized products & core competency protect against substitutes. Rivals cannot meet differentiationfocused customer needs.

Analyzing Competitors

Competitor Actions

Reaction Patterns

Strengths & Weaknesses

A Competitors Expansion Plans

Customers ratings of competition on Key Success Factors: An example

Customer Awareness Product Quality Product Availability P G E Technical Assistance E G F Selling Staff E G P Junaid Jamshed E E R-Sheen G G Shahid Afridi F P Note: E= Excellent, G= good, F = Fair, P= poor

Strengths and Weaknesses

Share of market
(The competitors share of the target market)

Share of mind
(The first company that comes to mind)

Share of heart
(The company from which you would prefer to buy)

Selecting Competitor
Market Share Junaid Jamshed R-Sheen Shahid Afridi 2006 50% 30 20 2007 47% 34 19 2008 44% 37 19 2006 60% 30 10 Mind Share 2007 58% 31 11 2008 54% 35 11 2006 45% 44 11 Heart Share 2007 42% 47 11 2008 39% 53 8

Strong Vs Weak (Fewer Resources required) Close Vs Distant (Resemblance) Good Vs Bad

Competitive Strategies for Market Leaders

Market leader Market challenger Market nicher Market follower

Expand Market Defend Market Share Expand Market Share

Attack leader Status quo



Expanding the Total Market

New customers
(Penetration/new market segmentation/geographical-expansion)

More usage
(Consumption Amount/Frequency)

Defense Strategy- Creative/Anticipative/Responsive

A market leader should generally adopt a defense strategy Six commonly used defense strategies Position Defense

e.g. Mercedes was using a position defense strategy until Toyota launched a frontal attack with its Lexus.
By market broadening and diversification (Dialog Telekom Srilanka) Secondary markets (flanks) are the weaker areas and prone to being attacked Withdraw from the most vulnerable segments and redirect resources to those that are more defendable

Mobile Defense

Flanking Defense

Contraction Defense

Pre-emptive Defense

Detect potential attacks and attack the enemies first

Responding to competitors head-on attack by identifying the attackers weakness and then launch a counter attack e.g. Toyota launched the Lexus to respond to Mercedes attack

Counter-Offensive Defense

Market Challenger Strategies

The market challengers strategic objective is to gain market share and to become the leader eventually How? By attacking the market leader By attacking other firms of the same size By attacking smaller firms

Market Challenger Strategies (contd)

Types of Attack Strategies

Frontal attack Flank attack Encirclement attack Bypass attack Guerrilla attack

Frontal Attack

Seldom work unless

The challenger has sufficient fire-power (a 3:1 advantage) and staying power, and The challenger has clear distinctive advantage(s)

e.g. Japanese and Korean firms launched frontal attacks in various ASPAC countries through quality, price and low cost Surf Vs Ariel

Flank attack

Attack the enemy at its weak points or blind spots i.e. its flanks Ideal for challenger who does not have sufficient resources e.g. Google Vs ChaCha and or Wikipedia

Encirclement attack

Attack the enemy at many fronts at the same time Ideal for challenger having superior resources e.g. Seiko attacked on fashion, features, user preferences and anything that might interest the consumer Zong???

Bypass attack

By diversifying into unrelated products or markets neglected by the leader Could overtake the leader by using new technologies

e.g. Pepsi used a bypass attack strategy against Coke by acquiring Tropicana Vs. Minute Maid Telenor in Pakistan Instead of launching carbonated drinks Nestle brought pure jiuces vs. the carbonated drinks

Guerrilla attack

By launching small, intermittent hit-andrun attacks to harass and destabilize the leader Usually use to precede a stronger attack

e.g. airlines use short promotions to attack the national carriers especially when passenger loads in certain routes are low local water brands vs. multinational water brands

Which Attack Strategy should a Challenger Choose?

Use a combination of several strategies to improve market share over time

Market-Follower Strategies

Theodore Levitt in his article, Innovative Imitation argued that a product imitation strategy might be just as profitable as a product innovation strategy e.g. Product innovation--Sony Product-imitation--Panasonic

Market-Follower Strategies (contd)

Each follower tries to bring distinctive advantages to its target market--location, services, financing Four broad follower strategies:

Counterfeiter (which is illegal) Cloner (emulation of leaders product, name & package) e.g. New Joshanda Brand Vs Qarshi S&S Cycle Vs. Harley Imitator e.g. car manufacturers imitate the style of one another Adapter e.g. many Japanese firms are excellent adapters initially before developing into challengers and eventually leaders

Market-Nicher Strategies

Smaller firms can avoid larger firms by targeting smaller markets or niches that are of little or no interest to the larger firms e.g. Zippo Digicel Bullet-Proof Cars

Market-Nicher Strategies (contd)

Nichers must create niches, expand the niches and protect them

e.g. Nike constantly creates new niches-cycling, walking, hiking, cheerleading, etc Market niche may be attacked by larger firms once they notice the niches are successful

What is the major risk faced by nichers?

Multiple Niching
[A] firm should `stick to its niching but not necessarily to its niche. That is why multiple niching is preferable to single niching. By developing strength in two or more niches the company increases its chances for survival. Philip Kotler

Balancing Orientations