Chapter 8

Dealing with the Competition

PowerPoint by Karen E. James Louisiana State University - Shreveport
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 0 in Chapter 8

Objectives
Understand how a company identifies its primary competitors and ascertains their strategies.
Review how companies design competitor intelligence systems.

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 1 in Chapter 8

Objectives
Learn how a company decides whether to position itself as a market leader, a challenger, a follower, or a nicher.
Identify how a company can balance a customer vs. competitor orientation.
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 8

Market share

40%

Market leader

30%

Challenger

20%

Follower

Nichers:

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 3 in Chapter 8

Competitor Myopia The Kodak story:

Presumed competitor.
FUJI

Real competition
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 8

The Customer Myopia the Levis story.

Perceived competition

2003 Prentice Hall, Inc.

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Slide 5 in Chapter 8

What LEVIS missed out!

Up-market fashion customers: Female segment

Current Elliot

Value- seekers.

2003 Prentice Hall, Inc.

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Slide 6 in Chapter 8

Competitive Markets
Porters Five Forces that Determine Market Attractiveness:
Threat of intense segment rivalry Threat of new entrants Threat of substitute products Threat of buyers growing bargaining power Threat of suppliers growing bargaining power
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 8

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 8 in Chapter 8

Competitive Markets
Failing to identify competitors can lead to extinction
Internet businesses have led to disintermediation of middlemen Competition can be identified using the industry or market approach
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 8

Competitive Markets
Industry Structures
Pure Monopoly

Pure Oligopoly
Differentiated Oligopoly

Only one firm offers an undifferentiated product or service in an area

Unregulated Regulated

Monopolistic Competition
Pure Competition
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Example: Most utility companies

Slide 10 in Chapter 8

To accompany A Framework for Marketing Management, 2nd Edition

Pure Monopoly.

2003 Prentice Hall, Inc.

Competitive Markets
Industry Structures
Pure Monopoly

Pure Oligopoly
Differentiated Oligopoly

A few firms produce essentially identical commodities and little differentiation exists
Lower costs are the key to higher profits Example: Petroleum products.
Slide 12 in Chapter 8

Monopolistic Competition
Pure Competition
2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Pure Oligopoly

2003 Prentice Hall, Inc.

Competitive Markets
Industry Structures
Pure Monopoly

A few firms produce partially differentiated items

Differentiation is by key attributes Premium price may be charged Example: Airline services,Luxury cars
Slide 14 in Chapter 8

Pure Oligopoly
Differentiated Oligopoly

Monopolistic Competition
Pure Competition
2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Differentiated Oligopoly.

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 15 in Chapter 8

Competitive Markets
Industry Structures
Pure Monopoly

Many firms differentiate items in whole or part Appropriate market segmentation is key to success Example:Cosmetics, Beverages, garments.
Slide 16 in Chapter 8

Pure Oligopoly
Differentiated Oligopoly

Monopolistic Competition
Pure Competition
2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

2003 Prentice Hall, Inc.

Competitive Markets
Industry Structures
Pure Monopoly

Many competitors offer the same product Price is the same due to lack of differentiation Example: farmers selling milk, crops, commodities.
Slide 18 in Chapter 8

Pure Oligopoly
Differentiated Oligopoly

Monopolistic Competition
Pure Competition
2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Market Approach.
A broader group of competitors will be identified using the market approach
Competitor maps plot buying steps in purchasing and using the product, as well as direct and indirect competitors
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 19 in Chapter 8

Designing Competitive Strategies

Major Strategies
Market-Leader MarketChallenger

Expanding the total market

Defending market share Expanding market share

Market-Follower
Market-Nicher
2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 20 in Chapter 8

Designing Competitive Strategies

Expanding the Total Market:
Targeting Product to New Users
Market-penetration

strategy New-market strategy Geographical-expansion strategy

Promoting New Uses of Product Encouraging Greater Product Use

2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 21 in Chapter 8

Targeting product to new users.

Creating novel coffee based products

Undertaking retail concentration

High ambience for lifestyle customers

2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 22 in Chapter 8

Promoting new uses of product:

Fat free food for dieters

Fortified high fiber food for

athletes

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 23 in Chapter 8

Encouraging greater product use.

Creating Jumbo packs.

2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 24 in Chapter 8

Designing Competitive Strategies

Defending Market Share
Position defense
Flank defense Counteroffensive defense Mobile defense

Preemptive defense
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Contraction defense
Slide 25 in Chapter 8

To accompany A Framework for Marketing Management, 2nd Edition

Position Defense
Always be top on:
Share of the market.

Share of mind.
Share of heart.

2003 Prentice Hall, Inc.

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Slide 26 in Chapter 8

Flank defense: Vodka Wars.

Smirnoff vs Wolfschmidt.

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 27 in Chapter 8

Pre-emptive Defense

vs

2003 Prentice Hall, Inc.

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Slide 28 in Chapter 8

Counteroffensive defense.

vs

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 29 in Chapter 8

Mobile defense:

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 30 in Chapter 8

Contraction Defense

Offloads

and
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 31 in Chapter 8

Designing Competitive Strategies Before Attempting to Expand Market Share, Consider:

Probability of invoking antitrust action Economic costs involved Likelihood that marketing mix decisions will increase profits
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 32 in Chapter 8

Designing Competitive Strategies

Major Strategies
Market-Leader MarketChallenger

First define the strategic goals and opponent(s)

Choose general attack strategy

Market-Follower
Market-Nicher
2003 Prentice Hall, Inc.

Choose specific attack strategy

Slide 33 in Chapter 8

To accompany A Framework for Marketing Management, 2nd Edition

Designing Competitive Strategies

General Attack Strategies:
Frontal attacks match competition Flank attacks serve unmet market needs or underserved areas Encirclement blitzes opponent Bypassing opponent and attacking easier markets is also an option
2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 34 in Chapter 8

Frontal attack: Airbus vs Boeing.

Vs

2003 Prentice Hall, Inc.

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Slide 35 in Chapter 8

Flank attack: Honda vs American car industry:

Vs

2003 Prentice Hall, Inc.

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Slide 36 in Chapter 8

Encirclement or Blitz attack:

Vs

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 37 in Chapter 8

By-pass attack: Pepsi Vs Coca Cola.

Vs

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To accompany A Framework for Marketing Management, 2nd Edition

Slide 38 in Chapter 8

Competitive Markets
Specific Attack Strategies Include:
Price-discount Lower-price goods Prestige goods Improved services Product innovation

Distribution innovation
Manufacturing cost reduction

Product proliferation

Intensive advertising promotion

2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 39 in Chapter 8

Designing Competitive Strategies

Major Strategies
Market-Leader MarketChallenger
Imitation may be more profitable than innovation
Four broad strategies:
Counterfeiter Cloner Imitator Adapter
Slide 40 in Chapter 8

Market-Follower
Market-Nicher
2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Chinese Clone of Nokia

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 41 in Chapter 8

Imitator

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Slide 42 in Chapter 8

Adapters

Samsung Galaxy tab

I-Pad

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 43 in Chapter 8

Designing Competitive Strategies

Major Strategies
Market-Leader MarketChallenger
Niche specialties:
End-user Vertical-level Customer-size Specific customer Geographic Product/product line Product feature Job-shop Quality-price Service Channel
Slide 44 in Chapter 8

Market-Follower
Market-Nicher
2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 45 in Chapter 8