Module V

Managing Competition

Analysing Competition
Reaction patterns of various
market players
 What to do with competition?

1.Ignore the competitors.

2.Copy the competitors.
3.Lead the competitors.
Royal Philips Electronics of the Netherlands is a
diversified Health and Well-being company.
World leader in healthcare, lifestyle and lighting,
“SENSE AND SIMPLICITY”
 
Headquartered in the Netherlands, Philips employs
approximately 133,000 employees in more than 60
countries worldwide.

It is a global leader in color television sets, lighting,

electric shavers, medical diagnostic imaging and patient
monitoring, and one-chip TV products.

“We realize that it’s not just about understanding technology

but having consumer insights and meeting the unfulfilled needs
of consumers. Once we get the insights, we try and find out
what kind of product we could offer and what kind of
technology is needed to fulfill those needs.” – Alexius Collette
CEO Phillips Innovation centre Banglore.
The strength of Philips' global operations is reflected in its
(value-based) leadership position in many of the markets
in which it is active.

World Europe
World Europe Lighting 1 1
Consumer Electronics (audio/video) 3 1
Monitors (units) 4 3
Shavers 1 1
Steam irons 2 2
Semiconductors 9 4
Color picture tubes 3 1
DVD recorders 1 1
Medical imaging equipment 2 1
Dental care (electric toothbrushes) 2 2
 INDUSTRY ANALYSIS
1. Basic facts of Industry
2. Industry environment
3. Industry Structure
4. Barriers in the Industry
5. Industry attractiveness (Potential, Growth, profitability,
Nature of Competition)
6. Industry Performance
7. Industry Practices
8. Emerging Trends / likely Future patterns
 Porter’s model of 5 forces of competition

POTENTIAL ENTERANTS
(Threat of mobility)

SUPPLIERS INDUSTRY BUYERS

(Supplier Power) COMPETITORS (Buyer Power)
(Segment Rivalry)

SUBSTITUTES
(Threat of Substitutes)
 COMPETITION
1. Development of New Intermediation process
2. Innovation
3. Market Development
4. Low cost & Low Barriers
5. Change in customer’s outlook
6. Technology
7. Demand & Supply Scenario
8. More economic Freedom
9. Govt. framing Investor friendly policies
10. Globalization
 COMPETITION
(Industry wise)
1. No. of sellers & Degree of Differentiation
Pure Monopoly Monopolistic
Oligopoly Pure Competition
2. Entry, Mobility & Exit Barriers
3. Cost Structure
4. Degree of vertical integration
5. Degree of globalization
 Analyzing Competitors
1. Strategies

2. Objectives

3. Strengths & Weaknesses Share of Market, Mind & Heart

4. Selecting Competitors Strong vs. Weak

Close vs. Distant Good vs. Bad

Designing the Competitive Intelligence (CI)

Setting up the system Collecting data

Evaluating & Analyzing the data

Disseminating information & responding

 Market and the competitive structure
1.Market Leader 40 % market share,
Colgate, Maruti, HUL, Dettol

2.Market challenger 30% mkt share, Savlon,

Hyundi

3.Market Followers 20% mkt share, Reva,

4.Market nichers 10 % mkt share

 DESIGNING COMPETITIVE STRATEGIES
{I}MARKET LEADER STATEGY : Defending & Expanding
Market Share.
1. Expanding the total market.
a) New market segment strategy b) Mkt penetration strategy
c) Geographical strategy
2. Protect its market share.
3. Increase the market share.

{II} MARKET CHALLENGER STRATEGY : Aggressive bid for

High MS.

1. Attack the market leader

2. Attack firms own size/sick units
3. Attack small local & regional firms
1. Choosing a General Strategy
FRONTAL Direct Attack .
FLANK Attacking on weaknesses.
ENCIRCLEMENT
BYPASS Develop new product, Diversify into
unrelated product, Diversify into
new geographical region.
Technological leapfrogging.
GUERILLA Selective price cuts, promotional blitz,
legal occasion.

2. Choosing a Specific attack Strategy

PRICE DISCOUNT LOWER PRICE GOODS
PRESTIGE Goods Value Priced Goods & Services
PRODUCT PROLIFERATION PRODUCT INNOVATION
IMPROVED SERVICES DISTRIBUTION INNOVATION
MANUFACTURING COST REDUCTION
INTENSIVE ADVERTISING PROMOTION
{III} MARKET FOLLOWER STRATEGY
(Play ball not rock the boat)

Counterfeiter Music CDs, Computer, watches.

Cloner Emulates the leader’s products, name &
packaging with slight variations.
Imitator Copies the leader product, but maintains
differentiation in terms of packaging,
advertising, pricing or location.
Adapter Improvement in leader’s product.

{IV} MARKET NICHER STRATEGY (Aiming High margin

Business)
1. Creating Niche 2. Expanding Niche
3. Protecting Niche
1. Specialist Niche:
2. Vertical Job specialist:
3. Customers specialists:
4. Product line specialist:
5. Service specialist:
6. Geographical specialist:
7. Product feature specialist:
8. Job shop specialist:
9. Quality-price specialist:Low or high quality ends of the
market.
10.Service specialist:
11.Channel specialist:
Tour & travel for safari.
Plastic molded cabinet for
TV production.
Customer care, BPO.
Gears, glass material, lens for
microscope.
Diagnostic centers, Health &
fitness club.
Certain locality.
Easy Cab, Radio taxi.
Boutique, Parlour.
Internet, mobile banking.