Competitive Strategy

Study competitors as well as actual and potential

customers. Companies need to identify competitors
strategies, objectives, strengths, and weaknesses
A companys closest competitors are those seeking to
satisfy customers and needs and making similar offers. A
company should also pay attention to latent competitors,
who may offer new or other ways to satisfy the same
needs.

Competitive Strategy-Components
Steps in designing Competitive Strategy

Identifying the companys competitors

Identifying the competitor Strategies

Determining the competitor Objectives

Assessing the competitors strengths and weaknesses

Estimating the competitors Reaction Patterns

Designing the Competitive Intelligence System

Selecting Competitors to attack and avoid

Balancing Customer and Competitor Orientations

Designing a suitable competitive strategy

Strategic Competitive AnalysisCOMPETITIVE STRATEGIES

Classify firms by the roles they play
Leader.
Challenger.
Follower.
Nicher

Hypothetical Market Structure

40% Market Leader

30% Market Challenger

20% Market Follower

10% Market Nichers
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Strategic Competitive AnalysisCompetitive Strategies for Market Leader

To remain Market Leader or No. 1 firms
have to device 3 pronged strategy
Expand the Total Market
Maintain or Defend Market Share
Try to increase the Market Share even if
Market size remains constant
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Strategic Competitive Analysis

Expanding the Total Market
New Customers
More Usage

New Customers

A company can search for new users among three groups:

Those who might use it, but do not (market-penetration
strategy)
Those who have never used it (new-market segment strategy)
Those who live elsewhere (geographical-expansion strategy)
Mobile , MacD home delivery & drive-throughs, Tanishq
Mia, rural

Strategic Competitive Analysis

More Usage
Increasing the level of quantity of consumption
packaging or product design(colgate,biscuit)

Increasing the frequency of consumption.

identifying additional opportunities to use the brand in the same
basic way or identifying completely new and different ways to use the
brand. (kurkure)
increase frequency of use when consumers perceptions of their
usage differ from the reality of their usage.(shampoo,mouthwash)

The second approach is to identify completely new and

different applications(milkmaid,Boroplus)

Product development can spur new uses(colgate plax)

Strategic Competitive Analysis

Defending Market Share
A) What can the market leader do to defend its terrain?
1) By continuous innovationdeveloping new product and
customer services, distribution effectiveness, and cost cutting
it keeps its competitive strength and value to
customers(Dettol,Smart TV,Smart phone)

B) In satisfying customer needs, a distinction can be drawn

between responsive marketing, anticipative marketing,
and creative marketing.
A responsive marketer finds stated need and fills it.
An anticipative marketer looks ahead into what needs customers may
have in the near future.
A creative marketer discovers and produces solutions customers did
not ask for but to which they enthusiastically respond

C) Even when it does not launch offensives, the market

leader must not leave any major flanks exposed.
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Strategic Competitive Analysis

A dominant firm can use the six defense

strategies
1. Position defense (NLT,Thumbs up,Coke,Pepsi,Parle
G))

2. Flank defense.(Jetlite)
3. Preemptive defense.(Ad camp,price) (Pureit
Swach),Nokia - rural

4. Counteroffensive defense.(Tanishq,Merc c class),

(Pureit Swach)

5. Mobile defense.
a. Market broadening.(new models gillete)
b. Market diversification.(Cinema prod,ITC)
6. Contraction Defense.(Surf vs Nirma)
(a) Strategic withdrawal(divest,focus on core)

Strategic Competitive Analysis

Position Defense- involves occupying the
most desirable market space in the minds
of the consumers making the brand
almost impregnable
Flank Defense- The market leader should
also erect outposts to protect a weak front
or possibly serve as a invasion base for
counterattack
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Strategic Competitive Analysis

Preemptive Defense-A more aggressive
strategy is to attack before the enemy
starts its offence
Counteroffensive Defense- when attacked
most Market Leaders will fight
back/counterattack.

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Strategic Competitive Analysis

Mobile Defense- The Leader stretches its
domain over new territories that can serve as
future centers for defense & offense through
Market Broadening & Market Diversification
Market Broadening- involves shifting focus from the
current product to the underlying Generic need
Market diversification- involves shifting into unrelated
industries.
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Strategic Competitive Analysis

Contraction Defense- also called strategic
withdrawal- giving up weaker territories &
assigning resources to stronger Territories.

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MARKET CHALLENGER STRATEGIES

Firms that occupy second, third, and lower ranks in an

industry are often called runner-up, or trailing firms.

These firms can adopt one of two postures:Each can attack the leader and others in an aggressive bid
for further market share (market challengers), or they can
play ball and not rock the boat (market followers).
After defining its Strategic Objectives & opponents the firm
can choose a General Attack Strategy or A specific Attack
Strategy.

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Strategic Competitive Analysis

Defining the Strategic Objective and Opponents(s)
The challenger must decide whom to attack:
It can attack the market leader
It can attack firms of its own size that are not doing
the job and are underfinanced
It can attack small local and regional firms

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Strategic Competitive Analysis

Choosing a General Attack Strategy
Five attack strategies:
Frontal(Polo,Mint o)(Saffola,Sundrop),(Moov,Iodex), (Bajaj Boxer)
Flank
Geographic (japanese cars in US)
Segmental(Kwality), Sprite

Encirclement(Dominos)
Bypass
Diversifying into unrelated products.(Soft drink,fruit juice)
Diversifying into new geographical markets.(MNC)
Technological leapfrogging into new technologies .(Apple)

Guerrilla Warfare (Sales promo airlines/tours,Ad campaigns)

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Choosing a Specific Attack Strategy

The challenger must go beyond the five broad strategies
and develop more specific strategies:

Price discount.
Lower price goods.
Value priced goods and services.
Prestige goods.
Product proliferation.
Product innovation.
Improved services.
Distribution innovation.
Manufacturing-cost reduction.
Intensive advertising promotion.

A challengers success depends on combining several

strategies to improve its position over time.
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Market-Follower Strategies

Many companies prefer to follow rather than

challenge the market leader.
Four broad strategies can be distinguished:

Counterfeiter
Cloner
Imitator
Adapter

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Market-Nicher Strategies
An alternative to being a follower in a large market is to be
a leader in a small market, or niche
(Dettol,Croma,CCD,Hallmark,Axe,Red Bull,Hidesign)

Firms with low shares of the total market can be highly

profitable through smart niching
Such companies tend to offer high value, charge a
premium price, achieve lower manufacturing costs, and
shape a strong corporate culture and vision.
Why is niching so profitable?
The main reason is that the market nicher ends up knowing
the target customers so well that it meets their needs better
than other firms selling to this niche. The nicher achieves high
margin, whereas, the mass marketer achieves higher volume.
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Nichers have three tasks:

Creating niches
Expanding niches
Protecting niches

Niching carries a major risk in that the market

niche might dry up or be attacked
Because niches can weaken, the firm must
continually create new ones
Multiple niching is preferable to single
niching
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