HOW CAN MARKET LEADERS EXPAND

THE TOTAL MARKET AND DEFEND

EXPANDING
TOTAL
MARKET
DEMAND

New Customers
More Usage

NEW
CUSTOMER
S

Market Penetration Strategy

New Market Segment Strategy
Geographical Expansion Strategy

MORE
USAGE
Additional Opportunities to Use the Brand
New Ways to Use the brand

PROTECTIN
G THE
MARKET
SHARE

Proactive
Marketing
Defensive
Marketing

 Proactive Skills
Responsive Anticipation
Creative Anticipation

PROACTIVE
MARKETING

Proactive Firms are:

Are ready to take risks and make mistakes

Have a vision of the future and of investing in it
Have the capabilities to innovate
Are flexible and nonbureaucratic
Have many managers who think proactively

DEFENSIVE
MARKETING

Six types of defense strategies

INCREASING
MARKET
SHARE

The possibility of attracting legal action for violating

the competition Act or Antitrust law
Economic Cost
The danger of pursuing the wrong marketing activities
The effect of increased market share on actual and
perceived quality

Competitive
Strategies
for Market
Leaders

Market leaders have the largest share and usually

lead in price changes, new product introductions,
distribution coverage, and promotional intensity.
Kotler Example:
One such well-known brand and market leader is Xerox
more than just a copier company, it paved the way for
color printing and the overall boom of the printing
service market through continuous development and
revamping their machines.

 Local Example:

Competitive

Strategies
for Market
Leaders

The now multinational fast food chain,

Jollibee, dominates the fast-food
industry in the Philippines today, owning
around 65% market share. Perhaps its
main competitive advantages over fast
food giants such as McDonalds and KFC
are its relatively higher turnover rates
and very low prices.

Medical Example:

The two main competitive advantages

that pharmaceutical giant Pfizer has
over a lot of its adversaries is its large
and diversified portfolio and tremendous
brand recognition for quality.

When Your
Competitor
Delivers
More for
Less

Companies offering the powerful combination of low

prices and high quality are capturing the hearts and
wallets of consumers all over the world.
In order to compete, mainstream companies need to
utilize the old imperatives of DIFFERENTIATION and
EXECUTION to gain a much needed competitive
advantage.

 Kotler Example:

When Your
Competitor
Delivers
More for
Less

Low-cost operations set up by HSBC, ING, Merrill Lynch,

and Royal Bank of Scotland succeed in part thanks to
synergies be- tween the old and new lines of business.

Local Example:
PAL, Cebu Pacific, and Air Philippines offering their own
low-cost carriers.

Medical Example:
Many health care providers, such as The Medical City,
have found out that electronic health records (EHRs)
can help improve medical practice by being more
efficient (e.g., in receiving labs faster) and increasing
cost savings.

Expanding
Total Market
Demand

When the total market expands, the dominant firm

usually gains the most.
In general, the market leader should look for new
customers or more usage from existing customers.
This involves gaining NEW CUSTOMERS and giving
them NEW WAYS and ADDITIONAL
OPPORTUNITIES to use your brand.

 Kotler Example:
In addition to sales through company-operated retail
stores, Starbucks sells whole bean coffees through a
specialty sales group and supermarkets, and by
selling bottled Frappuccino coffee drinks and ice
cream through its joint venture partnerships.

Expanding
Total Market
Demand

Local Example:
There is currently a growing market for premium ice
cream, most notably Magnum, Baskin-Robbins, and
Ben & Jerrys, here in the Philippines, mostly because
of our sense of adventure in terms of taste, and
strong purchasing power.
Medical Example:
Dra. Vicki Belo, the CEO of the Belo Medical Group,
has an unending drive to pioneer many cosmetic
breakthroughs and deliver the latest innovations, as
seen in her skin products. That way, she is at the
forefront of the cosmetics industry in the Philippines.

 The most constructive response to actively defend

any business is CONTINUOUS DEVELOPMENT.

Protecting
Market
Share

The front-runner should lead the industry in

developing new products and customer services,
distribution effectiveness, and cost cutting.
Comprehensive solutions increase its competitive
strength and value to customers.

 Kotler Example:

When Philip Morris recognized the growing curbs

against smoking, they purchased several industries
whose products are unrelated to theirs, such as beer,
liquor, and soft drinks.

Protecting
Market
Share

Local Example:

The more competitive global marketplace has

compelled some Filipino remittance service providers
like Western Union to better market and promote their
existing products, mostly as a way of protecting their
market share and potential from existing competitors.

Medical Example:

It is widely recognized that the pharmaceutical industry

faces serious financial challenges. Large numbers of
blockbuster drugs are losing patent protection and
going generic. Without patent protection, the
pharmaceutical company is unlikely to invest the
capital needed to develop innovative medications.

 Gaining increased share does not automatically

produce higher profits, however, especially for laborintensive service companies that may not experience
many economies of scale.

Increasing
Market
Share

Because the cost of buying higher market share

through acquisition may far exceed its revenue value,
a company should first consider four factors:
The possibility of provoking antitrust action
Economic cost
The danger of pursuing the wrong marketing activities
The effect of increased market share on actual and
perceived quality

 Kotler Example:

Increasing
Market
Share

FairPoint Communications struggled to

integrate the 1.3 million customers it
gained in buying Verizon
Communicationss New England franchise.
A slow conversion and significant service
problems led to massive customer
dissatisfaction, and eventually bankruptcy.

Local Example:

In the Philippines, Jollibees store

expansion pace is quite aggressive, and
despite price adjustments, they still see
growth in volume.

Medical Example:
None of note.

HOW SHOULD MARKET CHALLENGERS

ATTACK MARKET LEADERS

MARKETCHALLENGE
R
STRATEGIES

MARKETCHALLENGE
R
STRATEGIES

Defining the Strategic Objective and Opponents

Choosing a General Attack Strategy
Choosing a Specific Attack Strategy

DEFINING
THE
STRATEGIC
OBJECTVE
AND
OPPONENTS(
S)

It can attack the Market Leader

It can attack firms its own size that are not doing the
job and are underfinanced
It can attack small local and regional firms

Frontal Attack
Flank Attack

CHOOSING A
GENERAL
ATTACK
STRATEGY

Encirclement Attack
Bypass Attack
Guerrilla Attack

CHOOSING A
SPECIFIC
ATTACK
STRATEGY

Any aspect of marketing can serve as basis for attack

Lower priced products

Discounted products
New or improved products and services
Wide variety of offerings
Innovative distribution strategies etc.

 Market Challenger
A company that can attack the leader and other
direct competitors in an aggressive bid for further
market share.

MarketChallenger
Strategies

Many market challengers have gained ground or

even overtaken the leader.
Kotler Example:
SoBe; positioned against Snapple and Arizona, The
first successful product was SoBe Black Tea 3G with
ginseng, guarana, and ginkgo. The lizard character on
the packaging, from an iconic South Beach hotel,
became an integral part of SoBes brand imagery.
SoBes explosive growth was based on a combination
of functional benefits (the 3 Gs), colorful packaging, a
powerful sales force establishing strong shelf
presence in the store.

 Local Example:

MarketChallenger
Strategies

With the advent of social media comes the need for

faster Internet connections. The biggest Internet
service providers in the country today include PLDT,
Globe, and Smart.

Medical Example:
Pascual Labs and United Labs are among the most
venerable and prolific pharmaceutical industries in the
Philippines.

HOW CAN MARKET FOLLOWERS OR

NICHERS COMPETE EFFECTIVELY

Copy or improve
the new product
Achieves high
profit because no
innovation cost

Market Followers

Market Leaders

MARKETFOLLOWER
STRATEGIES

Innovator bears
the expense of
developing a new
product, getting
distribution,
educating the
market
Reward for work
and risk- market
leadership

Counterfeiter
MARKETFOLLOWER
STRATEGIES

Cloner
Imitator
Adapter

 Kotler Example:

MarketFollower
Strategies

Pepsi vs. Coke. Although Pepsi may never be as wellconsumed, it used a bypass approach to battle Coke by
finding new markets to enter.

Local Example:
Nissin cup noodles and Lucky Me pancit canton are
among the most consumed instant noodle brands in the
country today.

Medical Example:
South Star Drug and Grace Pharmacy are among the
most common drugstores in the Philippines today.

MARKETNICHER
STRATEGIES

Leader in a small market

Large profitable firms also use niching strategies
ROI in smaller markets > larger markets
Nicher achieves high margin, mass marketer achieves
high volume

MARKETNICHER
STRATEGIES

Creating
niches

Expandi
ng
niches

Protectin
g niches

High risk of drying up

Can weaken the firm => continually create
new ones
Multiple niching
Entrants should focus at niches initially

End-User
Specialist
Vertical-Level
Specialist
Customer-Size
Specialist

Nic
he
Sp
eci
ali
st
Rol
es

MARKETNICHER
STRATEGIES

SpecificCustomer
Specialist
Geographic
Specialist
Product Line
Specialist
Product-Feature
Specialist
Job-Shop
Specialist
Quality-Price
Specialist
Service
Specialist
Channel
Specialist

 An alternative to being a follower in a large market is

to be a leader in a small market, or NICHE.

MarketNicher
Strategies

Smaller firms normally avoid competing with larger

firms by targeting small markets of little or no interest
to the larger firms, but even large, profitable firms
may choose to use niching strategies for some of
their business units or companies.

 Kotler Example:

With smoking on a steady decline, Zippo

Manufacturing is finding the market for its iconic
metal cigarette lighter drying up. Its marketers need
to diversify and broaden their focus to selling
flame.

MarketNicher
Strategies

Local Example:

Vista Land, a Filipino property development group,

has a new unit called Lessandra that will focus on
the specialized housing needs of a lower-bracket
market, that of the P800,000 to P1.2 million bracket.

Medical Example:

Many physicians have nichepatient marketing

strategies. For example, in pediatrics, the parents of
young children are likely to relate well to topics such
as primary care, pediatrics, vaccinations and
illnesses common among children.

WHAT MARKETING STRATEGIES ARE

APPROPRIATE AT EACH STAGE OF THE
PRODUCT LIFE CYCLE

Introduction
Growth

PRODUCT
LIFE CYCLE

Maturity
Decline

Product
Life-Cycle
Marketing
Strategies

A companys positioning and

differentiation strategy must change as
the product, market, and competitors
change over the PRODUCT LIFE CYCLE
(PLC). To say a product has a life cycle is
to assert four things:

Products have limited lives

Product sales pass through distinct stages,
each posing different challenges,
opportunities, and problems to the seller.
Profits rise and fall at different stages of
the product life cycle.
Products require different marketing,
financial, manufacturing, purchasing, and
human resource strategies in each lifecycle stage.

 Kotler Example:

Product
Life-Cycle
Marketing
Strategies

Electrolux uses an elaborate seg- mentation plan and

an expansive product line to make sure its brand is not
stuck in the middle of a shrinking market.

Local Example:
None of note.

Medical Example:
The concept of healthcare as a product with a life cycle
can be used to develop strategies to anticipate and
manage change. By this analysis, healthcare is a
mature product and will need to be rejuvenated or face
decline.

COMMON
PLC
PATTERNS

Growth Slump
Maturity

Cycle-Recycle Pattern

Scalloped

STYLE,
FASHION
AND FAD
LIFE CYCLES

MARKETING
STRATEGIESINTRODUCTI
ON

Inform potential
Induce product trial
Secure distribution

MARKETING
STRATEGIESINTRODUCTI
ON

Long term Market Leadership

Vision of Mass Market

Persistence
Relentless
Innovation
Financial Commitment
Asset Leaverage

MARKETING
STRATEGIESGROWTH

Mens fairness creams

such
as
Fair
and
Handsome use well known
film and cricket stars and
offers
entertainment,
information, and advice in
a bid to capture customer
attention in a market that
is
getting
increasingly
crowded.

Market Modification
Expand Number of Users
Increase the Usage rate among Users

MARKETING
STRATEGIESMATURITY

Product Modification
Quality Improvement
Feature Improvement

Marketing Program Modification

Price, Distribution
Communication

MARKETING
STRATEGIESDECLINE

Declining Sales

Low Cost
per
Customer

Declining
Profits

Laggards

HOW SHOULD MARKETERS ADJUST

THEIR STRATEGIES AND TACTICS FOR
AN ECONOMIC DOWNTURN OR

MARKETING
IN
ECONOMIC
DOWNTURN

EXPLORE THE UPSIDE OF INCREASING INVESTMENT

MARKETING
IN
ECONOMIC
DOWNTURN

GET CLOSER TO CUSTOMERS

MARKETING
IN
ECONOMIC
DOWNTURN

REVIEW BUDGET ALLOCATIONS

MARKETING
IN
ECONOMIC
DOWNTURN

PUT FORTH THE MOST COMPELLING VALUE

PROPOSITION

MARKETING
IN
ECONOMIC
DOWNTURN

FINE TUNE BRAND AND PRODUCT OFFERING