DEALING WITH COMPETITION

Presented by:
Feroz Khan
Shilpa Sharma
Shiva Suresh Sonti
Sunil Singh
In this chapter, we will address the following
questions:
• How do marketers identify primary competitors?
• How should we analyze competitors’ strategies,
objectives, strengths and weaknesses?
• How can market leaders expand the total market
and defend market share?
• How should market challengers attack market
leaders?
• How can market followers or nichers compete
effectively?
What is competition?
Open market rivalry in which every seller tries to get
what other sellers are seeking at the same time-
sales, profit, and market share by offering the best
practicable combination of price, quality, and service.
Where the market information flows freely,
competition plays a regulatory function in balancing
demand and supply.
Competitive forces
Identifying competitors
 Analyzing competitors
• Strategic group: A group of firms following the same
strategy in a given target market.
 Objectives
• To know what competitors are seeking in the
market place.
• To know each competitors behavior.
• To know whether the parent company is
running its division for growth or profit.
• To know the expansion plans of the
competitors.
Competitor’s expansion plans
Porters 5 forces model
SWOT ANALYSIS
 SWOT ANALYSIS
• Tool for Auditing an organization and its
environment
• Help to focus on key issues
• Strength could be-
 Any aspect of business which adds value to
product and service
 New product
 Innovative product
 Continued…….
 Location of business
 Quality processes
• Weaknesses could be-
 Lack of marketing expertise.
 Undifferentiated products or services (i.e. in
relation to your competitors).
 Location of your business.
 Poor quality goods or services.
• An opportunity could be-
 A developing market such as the Internet.
 Mergers, joint ventures or strategic alliances.
 Moving into new market segments that offer
improved profits.
 A new international market.
 A market vacated by an ineffective competitor.
• A threat could be-
 A new competitor in your home market.
 Price wars with competitors.
 A competitor has a new, innovative product or
service.
 Competitors have superior access to channels of
distribution.
 Taxation is introduced on your product or service.
Strengths and Weaknesses
 SWOT HELPS TO KNOW:-
• Company position
• Market value
• Method of sales distribution
• Product
• Brand
• Business idea
• Opportunity to make an acquisitions
 Contd..
• Monitor 3 variables when analyzing competitors:
1. Share of market
2. Share of mind
3. Share of heart
SWOT Analysis
 Selecting competitors
• Strong versus Weak
• Close versus Distant
• Good versus Bad
Selecting customer
 Strategies for Market Leaders
Market Leader’s objectives:
• Expand the total market by
– Finding new users
– Creating new uses

• Protect its current market share by

– Adopting defense strategies (see following slides)
 Defending Market Share
• A market leader should generally adopt a
defense strategy
. Six types of defense strategies:
Defensive Strategies of Market Leaders

1. Position Defense Strategy: allocating

important efforts to support the firm’s brands
(without developing new ones).
ex: Nescafe
Nescafe
2. Flank Defense Strategy: rapid response to
competitors’ moves as a result of Competitive
Intelligence.
ex: Smironoff vodka.
3. Preemptive Defense Strategy: the best
defense is (pre) attack.
Ex: SBI.
4. Counter Offensive Strategy: entering the core
business activities of the competition as a
defensive mean.
Ex: Hero Honda Pleasure.
5. Mobile Defense Strategy: penetrating new
(niche) markets or diversifying inorder to
better prepare upcoming defense strategies.
Ex: Bharath petroleum and ITC.
6. Contraction Defense Strategy: reducing
products and concentrating on remaining
products.
Ex: TVS
 Other Competitive Strategies
• Market challenger strategies:
The market challengers’ strategic objective is to
gain market share and to become the leader
eventually
How?
• By attacking the market leader
• By attacking smaller & regional firms
Tapal Danedar Tea
 Contd..
• Choosing a general attack strategy
– Frontal attack
– Flank attack
– Bypass attack
– Guerrilla attack
• Choosing a specific attack strategy
Amul Masti Dahi
Amul Kool
Woodland Shoe
Nintnendo’s Video game
 Market-Follower Strategies
• Theodore Levitt in his article, “Innovative Imitation”
argued that a product imitation strategy might be just as
profitable as a product innovation strategy
e.g. Product innovation--Sony
Product-imitation—Panasonic

• Counterfeiter
• Cloner
• Imitator
• Adapter
 Market-Nicher Strategies
• Smaller firms can avoid larger firms by targeting
smaller markets or niches that are of little or no
interest to the larger firms
e.g. Logitech—mice, Reva electrical cars
Microbrewers--special beers
• Nichers must create niches, expand the
niches and protect them
– E.g. Digicel Group
• What is the major risk faced by nichers?
– Market niche may be attacked by larger firms once
they notice the niches are successful
Nutralite
 Balancing Customer and Competitor
Orientations

Customer-
Competitor-
Centered companies
Centered companies
(Amazon.com)

• E.g. Wal-Mart
THANK YOU