Strategic Marketing

Marketing Strategies
Growth Strategies – Use of
Ansoff Matrix
 Existing PRODUCTS New

Existing INCREASING RISK

MARKET
PRODUCT
PENETRATION
DEVELOPMENT

INCREASING RISK
Sell more in existing
Sell new products in
Markets
existing markets
MARKETS

MARKET
Development DIVERSIFICATION

New Achieve higher Sell new products in new

sales/market share markets
of existing products
in new markets
 MARKET PENETRATION
• This is the objective of higher market share in
existing markets

– E.g. in 2000, Mitsubishi announced a 10%

reduction in prices in the UK in order to encourage
purchases
 MARKET Development
• This is the strategy of selling an existing product to
new markets. This could involve selling to an
overseas market, or a new market segment

– Nintendo are making hand held games consoles (e.g. DS)

appeal to the adult/grey market by introducing games such
as Brain Train
 PRODUCT DEVELOPMENT
• This involves taking an existing product and
developing it in existing markets
– E.g. Coca-Cola. This has been developed to have
vanilla, lime, cherry and diet varieties (amongst
others) in the SOFT DRINKS market
 DIVERSIFICATION
• This is the process of selling different,
unrelated goods or services in unrelated
markets
• This is the most risky of all four strategies

– E.g. the Virgin group

 Vertical and Horizontal Integrations

Textile producer Textile producer

Shirt manufacturer Shirt manufacturer

Clothing store Clothing store

Acquisitions or mergers of suppliers or customer businesses are vertical integration

Acquisitions or mergers of competing businesses are horizontal integrations
 Related Diversification

Exhibit 6.3
Portfolio Management

Pls see the previous note

Competitive Strategies
 Bases of Competitive Advantage
• Competitive strategy
– The bases for achieving competitive advantage

• Porter’s Thee Generic strategies

– Cost leadership
– Differentiation
– Focus
 The Framework of Generic Strategies
Competitive Advantage

Aim on lower costs Aim on differentiation

Broad
target
Industry-w Cost Leadership Hybrid Differentiation
ide
strategies
Competitive Scope

Potential
‘Stuck in strategic
the middle’ positions in an
industry
Focus
Narrow
target Cost Focus Hybrid Differentiation Focus
Niche
strategies

Low Price High

Adapted from Porter (1985)

Examples of Companies along the Dimensions of the Generic Strategies in
Different Industries

Marks and Spencer

Mercedes
Differentiation Vodafone
BMW
Sturbuks XBOX

Ferrari
Diamond car
Narrow insurance for Broad
Rolls Royce
Competitive women ASDA Tesco Competitive
Scope Differentiation Firms with apparent Scope
Focus Hybrid positioning
Magnet Kitchens
British
Argos
Tammy Girl Airways

3 Mobile
Focus Cost leadership
Matalan
Ryanair Cost Focus Various digital Nissan
Dell Computers
interactive TV Liddle
Easy Jet SAGA shops Kwick Save

18-30s Holidays

Narrow Competitive
Scope

© Dr George Panagiotou 2009

New Strategies – Value
Disciplines
 New Strategies

•OPERATIONAL EXCELLENCE

•CUSTOMER INTIMACY

•PRODUCT LEADERSHIP

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 Competitive Strategies – Value
Disciplines
• More recently, a new classification of
competitive marketing strategies has been
offered. It suggested companies gain
leadership positions by delivering superior
value to their customers.

• Companies can pursue any of three

strategies—called value disciplines—for
delivering superior customer value
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 Value Disciplines and Market
Leadership (Treacy & Wiersama)
• Product leadership - innovation and the best
quality goods and services are offered by the
company. E.g. J & J, Nike and Apple
• Operational excellence – low cost and process
efficiency are delivered by the company. E.g.
Dell, Southwest Airlines and Target Stores
• Customer intimacy - The best total solution
(service/relationship building) is provided by
the company
 Examples of Value Propositions

• FedEx: When it absolutely, positively has to

get there overnight
• IBM: Global solutions for a small planet
• Intel: Intel inside
• Lexus: Passionate pursuit of perfection
• Publix Super Markets: Where shopping is a
pleasure
• Visa: It is everywhere you want to be
Competitive Strategies based on
Competitive Positions

Warfare Strategies
 Competitive Positions

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 Strategies for Market Leaders,
Challengers, Followers, and Nichers
Market Market
Market Leader Market Nicher
Challenger Follower
Strategies Strategies
Strategies Strategies
Specialize by
customer,
Expand total Full frontal
Follow closely market,
market attack
quality, price,
service
Protect market Follow at a Multiple
Indirect attack
share distance niching
Expand market
share
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 Strategies: LEADER

•Expand total demand

•Protect current market
•Expand market share

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 Market Leader Strategies:
Expanding Total Demand
• The leading firm normally gains the most when
the total market expands.

• Market leaders can expand the market by

developing new users, new uses, and more
usage of its products.

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Protecting Market Share -
Defensive Strategies
 Defensive warfare
1. Position defence – static defence of a current position, retaining current
product markets by consolidating resources within existing areas. Exclusive
reliance on a position defence effectively means that a business is a sitting target
for competition.
2. Mobile defence – A high degree of mobility prevents the attackers chances of
localizing the defence and accumulating its forces for a decisive battle. A business
should seek market development, product development and diversification to
create a stronger base.
3. Pre-emptive defence – Attack is the best form of defence. Pre-emptive defence
is launched in a segment where an attack is anticipated instead of moving into
related or new segments.
4. Flank position defence – This is used to occupy a position of potential future
importance in order to deny that position to an opponent. Leaders need to
develop and hold secondary markets to prevent competitors from using them as a
spring board into the primary market.
5. Counter offensive defence – This is attacking where the company is being
attacked. This requires immediate response to any competitor entering a segment
or initiating new moves.
6. Strategic withdrawal.
Strategies: Challenger
 Strategies: Challenger
• Challenge the leader
• Play along
• 2nd Mover advantage

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 Strategies: Challenger
• Firms that are second, third, or lower in an
industry are sometimes quite large.
• These runner-up firms can adopt one of two
competitive strategies:
1. They can challenge the leader and other competitors in an
aggressive bid for more market share (market challengers).
2. They can play along with competitors and not rock the boat
(market followers).
• A market challenger must first define which
competitors to challenge and its strategic
objective.
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 Market Challenger Strategies

A market challenger can attack the

market leader with the goal of taking
over market leadership. Canon took a
large chunk of Xerox’s market by
launching desk copiers developed with its
original technologies.

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 Second-Mover Advantage
• The challenger observes what has made the
leader successful and then improves upon it. This
is known as the “second-mover advantage.”
• Asian companies have typically followed this path
to competitive success. Japanese car makers like
Toyota and Honda studied and improved on the
designs of their American rivals to wrest market
share away from them.
• In turn, Korean automakers such as Kia and
Hyundai made big gains in the market with better
designs than their Japanese, American, and
German rivals.
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 Second-Mover Advantage

Kia and its award-winning Optima model.

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Offensive Strategies
 Offensive Warfare
1. Frontal attack – This is the direct, head on attack meeting competitors with the
same product line, price, promotion, etc. Because attack is on the enemy’s
strengths rather than weakness it is considered the most risky and least advised
strategy.
2. Flanking attack – The aim here is to engage competitors in those products
markets where they are weak or have no presence at all. Its overreaching goal is to
build a position from which to launch, an attack on the battlefield later.
3. Encirclement attack – Multi pronged attack aimed at diluting the defenders
ability to retaliate in strength. The attacker stands ready to block the competitor no
matter which way he turns the product market. Product proliferation supplying
different types of the same product to the market. Market encirclement consists of
expanding the products into all segments and distribution channels.
4. Bypass attack – This is the most indirect form of competitive strategy as it avoids
confrontation by moving into new and as yet uncontested fields. Three type of
bypass are possible; develop new products, diversify into unrelated products or
diversify into new geographical markets.
5. Guerilla warfare – Less ambitious in scope, this involves making small attacks in
different locations whilst remaining mobile. Such attacks take several forms. The
aim is to destabilize the competitor by small attacks.
Strategies: Follower
 Market Follower Strategies

•Learn from leader

•Avoid development costs

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 Market Follower Strategies
• Not all runner-up companies want to challenge
the market leader. Challenges are never taken
lightly by the leader.
• A follower can gain many advantages.
– The market leader often bears the huge expenses of developing
new products and markets, expanding distribution, and
educating the market.
– By contrast, the market follower can learn from the leader’s
experience. It can copy or improve on the leader’s products and
programs, usually with much less investment. Although the
follower will probably not overtake the leader, it often can be as
profitable.
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 Market Follower Strategies
Acer tried to compete directly with
top-tier PC makers like IBM and
Dell on American soil for years but
suffered significant losses. While its
products were generally praised for
quality, price, and innovation, it was
hampered by marketing and
distribution. It had a limited advertising
budget and its sales on the corporate
market were spread out across a
number of segments, without being a
leader in any. Eventually, Acer
concentrated more on Asia and Europe.
It felt that it had an advantage over
mainland Chinese PC makers as it was
perceived as being more international
than them. Acer felt it could compete
with international PC makers in China
because it was perceived to be more
“local” than them.
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 Market Follower Strategies
• Following is not the same as being passive or a
carbon copy of the leader.
• Each follower tries to bring distinctive advantages
to its target market.
• The follower is often a major target of attack by
challengers. Therefore, the market follower must
keep its manufacturing costs low and its product
quality and services high. It must also enter new
markets as they open up.

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Strategies: Nicher
 Strategies: Nicher

• Specialization is key
• Focus on: markets, customers, products, mixes

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 Market Nicher Strategies

• Almost every industry includes firms that

specialize in serving market niches. Instead of
pursuing the whole market, or even large
segments, these firms target subsegments.

• Nichers are often smaller firms with limited

resources. But smaller divisions of larger firms
also may pursue niching strategies.
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 Market Nicher Strategies

Jollibee is king of the

burger market in the
Philippines. The
Jollibee burger is
similar to “what a
Filipino mother would
cook at home.”
(www.jollibee.com.ph)

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 Specialization in Niching
• The niche marketing firm can specialize in serving one
type of end user, as when a law firm specializes in the
criminal, civil, or business law markets.
• The nicher can specialize in serving a given customer-size
group. Many nichers specialize in serving small- and
mid-size customers who are neglected by the major
companies.
• Some nichers focus on one or a few specific customers,
selling their entire output to a single company.
• Still other nichers specialize by geographic market, selling
only in a certain locality, region, or area of the world.
• Quality–price nichers operate at the low or high end of
the market.
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Balancing Customer and
Competitor Orientations
 Balancing Customer and
Competitor Orientations
Balance

•CUSTOMER ORIENTATION

•COMPETITOR ORIENTATION

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 Balancing Customer and
Competitor Orientations
•Whether a company is a market leader,
challenger, follower, or nicher, it must watch its
competitors closely and find the competitive
marketing strategy that positions it most
effectively.

•And it must continually adapt its strategies to

the fast-changing competitive environment.

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 Competitor-centered company
• A competitor-centered company is one that
spends most of its time tracking competitors’
moves and market shares and trying to find
strategies to counter them.

• This approach has pluses and minuses.

– On the positive side, the company develops a fighter
orientation.
– On the negative side, the company becomes too reactive.
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 Customer-centered company
• A customer-centered company focuses more
on customer developments in designing its
strategies.

• Clearly, the customer-centered company is in a

better position to identify new opportunities
and set long-run strategies that make sense

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 Balancing Customer and
Competitor Orientations

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 Market-centered company

• In practice, today’s companies must be

market-centered companies, watching both
their customers and their competitors.

• But they must not let competitor watching

blind them to customer focusing.

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 Evolving Company Orientations

• How companies might move through four orientations over the years.

i. In the first stage, they were product oriented, paying little

attention to either customers or competitors.
ii. In the second stage, they became customer oriented and
started to pay attention to customers.
iii. In the third stage, when they started to pay attention to
competitors, they became competitor oriented.
iv. Today, companies need to be market oriented, paying
balanced attention to both customers and competitors.
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 Evolving Company Orientations

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Questions and Discussions

Thank you.