Creating Competitive

Advantage and Competitive

Strategies
Induce your competitors not to invest in those products, markets and services
where you expect to invest the most … that is the fundamental rule of strategy.
Bruce Henderson, Founder of BCG
There is nothing more exhilarating than to be shot at without result.
Winston Churchill

Source: Kotler Philip, Armstrong Gary, Agnihotri Prafulla, 2018,Principles of Marketing, 17thEdition, Pearson India
Education Services; Ramaswamy V. S and Namkumari S, 2018, Marketing Management-Global Perspective Indian Context,
6th Revised edition, Sage Publications India Pvt Ltd; Baines P, Fill C et al., Marketing, 2013, Asian Edition, Oxford University
Press.
Only for class discussion purpose, DO NOT share, publish, print, or distribute

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 Chapter Questions

 How do marketers identify primary

competitors?
 How should we analyze competitors?
 What can be various Competitive Strategies ?
 Customer vs. Competitor Orientation

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 Competitive Forces
Potential Entrants
(Threat of
Mobility)

Suppliers Industry Buyers

(Supplier power) Competitors (Buyer power)
(Segment rivalry)

Substitutes
(Threats of
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 Barriers and Profitability

Exit barriers

Low High
Entry Barriers

Low Low, stable Low, risky

returns returns

High, stable High, risky

High returns returns

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 Creating Competitive Advantage

Competitive advantages require delivering more

_______ and _______ to target consumers than
competitors do.

Competitive marketing strategies involve how

companies analyze their competitors and develop
value-based strategies for profitable customer
relationships.

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Creating Competitive Advantage
Topic Outline

 Competitor Analysis
 Competitive Strategies
 Balancing Customer and Competitor
Orientations
 Competitor Analysis

Competitor analysis is the process of identifying,

assessing, and selecting key competitors

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 Identifying the competition

 It is necessary for firms to understand competition

before being able to deal with it.

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 Identifying Competition

Brand Competition Product (or Form)

Competition

Industry Competition Generic Competition

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 Assessing Competitors

Objectives

Strategies
Competitor
Actions

Reaction
Patterns Strengths &
Weaknesses

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 Competitor Analysis:
Strategies & Objectives
Assessing Competitors

Competitor’s Competitor’s
objectives strategies
• Profitability • Strategic group
• Market share offers the strongest
growth competition
• Cash flow
• Technological
leadership
• Service leadership
 Strategic Groups

High Group A
•Narrow line
•Lower mfg. cost
•Very high service Group C
Quality

•High price •Moderate line

•Medium mfg. cost
Group B •Medium service
•Full line •Medium price
•Low mfg. cost
•Good service
•Medium price Group D
•Broad line
Low •Medium mfg. cost
•Low service
•Low price

High Low
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Vertical Integration
 SWOT of competitors

 Done in two separate ways

 customers belief

 Gathering competitor’s data

 Why SWOT ?

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 Customer value analysis

Customer value analysis determines the

benefits that target customers’ value and how
customers rate the relative value of various
competitors’ offers
 Identification of major attributes that customers
value and the importance of these values
 Assessment of the company’s and competitors’
performance on the valued attributes
 Data from Customer Survey and other surveys

In general, a company should monitor three variables while

analyzing competitors:

1. Share of market

2. Share of mind

3. Share of heart

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 Steps in Benchmarking

 Determine which functions  Measure the company’s

or processes to benchmark performance
 Identify the key  Specify programs and
performance variables to actions to close the gap
measure  Implement and monitor
 Identify the best-in-class results
companies
 Measure the performance of
best-in-class companies
 Selecting competitors for attack

 Strong versus Weak

 Close versus distant
 Good versus Bad

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Selecting Competitors to Attack and Avoid

Finding uncontested market spaces-

Blue Ocean vs Red Ocean
 Selecting customers

 A firm also needs to select the customer’s which

serve its interests best
 It can divide customers into 4 types based on two
criteria
 Valuable/Not Valuable
 Vulnerable/Not Vulnerable

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 Selecting customers
Once the company has analyzed its customers the following enables
it to decide what to do with each category
Vulnerable Not Vulnerable

These are profitable

These customer are loyal and
Valuable customers but not fully
profitable.
happy.

Not These customers are likely to These unprofitable customers

Valuable defect to competition. are happy.

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Competitive Strategies
Competitive Positions

Market Market
leader challenger
strategies strategies

Market Market
follower nicher
strategies strategies
 Competitive Strategies
Competitive Positions

Market leader is the firm with the largest

market share and leads the market price
changes, product innovations, distribution
coverage, and promotion spending
Market challengers are firms fighting to
increase market share
Market followers are firms that want to hold
onto their market share
Market nichers are firms that serve small
market segments not being pursued by other
firms
 Competitive Strategies for Market Leader,
Challenger, Follower & Nicher

Hypothetical
Market Structure

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 Market-Leader Strategies

 Largest market share, leads in pricing changes, new prod.

introduction, distribution coverage, Promotion Intensity
 Must maintain constant vigil, guard against attack from every side,
 Lethargy, marketing myopia, conservatism, over-confidence may
prove to be lethal
 Expand total Market, Defend market share, Expand Market
Share

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 Market-Leader Strategies

 Expanding the Total Market

 New Users
 Converting potential customers (market penetration strategy)

 New-market segment strategy (E.g. Rural segments by banks)

 Geographical-expansion strategy (E.g., North-eastern markets,

B-class towns by Mercedes Benz)
 More Usage – Amount & Frequency of consumption
 Additional opportunities to use the brand

 New ways to use the brand (Monaco biscuits as the base for variety of toppings)

(More Cricket, More Pepsi, Sunday ke Sunday Medikar)

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 Market-Leader Strategies: Defensive

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 Market-Leader Strategies

 Defending Market Share

 Responsive marketer
 Anticipative marketer
 Creative marketer

 Defense Strategies
 Position Defense > occupy the most desirable market space,
make the brand unconquerable e.g. Surf excel for cleaning.
 Flank Defense > Guard the weak fronts by erecting outposts and
use them for invasion also. e.g. Nokia’s budget-oriented “Asha”
phones against Chinese and Indian budget phones.
 Preemptive Defense > attack before enemy’s offence,
preannounce and introduce new products, expand distribution
rapidly and widely. e.g. SBI expansion in over 1 lac villages.

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 Market-Leader Strategies

 Counteroffensive Defense > counterattack when attacked,

 Attack the front or the flank
 Pincer attack – from two sides
 Invade competitor’s main territory and force him to be defensive
 Subsidized product under attack by profits from other products
 Preannounce product upgrades to make customers wait than
switch over
 Lobby with legislatures

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 Market-Leader Strategies

 Mobile Defense > stretch domain to new territories

 Market broadening
 Market diversification
 Contraction Defense or Strategic withdrawal
 Give up weaker territories

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 Market-Leader Strategies

 Expanding Market Share

 Often 1% gain in market share translates into billions of rupees in
revenue
 May not apply to all markets and at all the times.
 Factors to consider:
 Anti-trust action
 Wrong marketing activities
 Exclusivity Lost
 Optimal Market Share concept

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 The Concept of Optimal Market Share

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 Market Challenger Strategies

 Define the strategic objective and opponents

 Choose a general attack strategy
 Choose a specific attack strategy

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 Challenger Attack Strategies

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 Market-Challenger Strategies

 Choosing a General Attack Strategy

 Frontal attack > matching every strategy of opponent, Risky
• PEPSI VS COCA COLA
 Flank attack > Weak spots, unserved geography or segments,
Success rate is higher
 Encirclement attack > Grand offensive on several fronts,
Resource and coordination requirements.
 Bypass attack > Indirect, diversify into unrelated products,
geographic markets or new technologies. E.g., Pepsi acquiring
orange juice brand Tropicana.
 Guerrilla Warfare > small intermittent attacks to harass and
demoralize

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 Market-Challenger Strategies

 Choosing a Specific Attack

Strategy
 Price-discount
 Lower price goods
 Prestige goods
 Product proliferation/ Larger product variety
 Product innovation
 Improved services
 Distribution innovation
 Manufacturing cost reduction
 Intensive advertising promotion

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 Market Follower Strategies

• Strategy of Conscious Parallelism

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 Market Follower Strategies

Adapter

Imitator

Cloner

Counterfeiter

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 Market-Nicher Strategies

 High margin versus High volume

 Nicher Specialist Roles

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Balancing Customer and
Competitor Orientations