Kotler on Marketing

Poor

firms

ignore

their

competitors; average firms copy their competitors; winning firms lead their competitors.

August 9, 2011

Dr. HG

Designing Competitive Strategies Market Leader Strategies An industry may have one market leader. This firm has the largest market share in the relevant product market, and usually leads the other firms in price changes, new product introductions, distribution coverage, and promotional intensity.

August 9, 2011

Dr. HG

Being the leader calls for action on three fronts : 1. The firm must find ways to expand total market demand. 2. The firm must protect its current market share through good defensive and offensive actions and 3. The firm can try to increase its market share, even if market size remains constant.

August 9, 2011

Dr. HG

Expand the total market. a. New users b. New uses c. More usage Defending Market Share Defense Strategies Position defense involves building superior brand power, making the brand almost impregnable. Flank Defense The market leader should erect outposts to protect a weak front or possibly serve as an invasion base for counter attack.
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Preemptive Defense :
 A more aggressive maneuver is to attack before the

enemy starts its offense. A company can launch a preemptive defense in several ways.
 It can wage a guerrilla action across the market hitting

one competitor here, and another there and keep everyone off balance or it can try to achieve a grand market envelopment.

August 9, 2011

Dr. HG

Counter Offensive Defense.

 Here, the leader can meet the attacker frontally or hit

its flank or launch a pincer movement.

 An effective counter attack is to invade the attackers

main territory so that it will have to pull back some troops to defend the territory.

August 9, 2011

Dr. HG

Mobile Defense
 The leader stretches its domain over new territories that

can serve as future centers for defense offense. It spreads through market broadening and market diversification. Contraction Defense
 Large companies recognize that they no longer defend all

of their territory.
 The best course of action then is planned contraction (also

called strategic withdrawal) It means giving up weaker territories and reassigning resources to stronger territories.
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August 9, 2011

Expanding Market Share

 Market leaders can improve their profitability by

increasing their market share. Market challenger strategies

 Firms that occupy second, third & lower ranks in

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

August 9, 2011

Dr. HG

Frontal Attack
 The

attacker

matches

its

opponents

product,

advertising,

price and distribution. The principle of

force says that the side with greater manpower (resources) will win.
 A modified frontal attack such as cutting price vis--vis

opponents can work if the market leader does not retaliate and if the competitor convinces the market that its product is equal to the leaders.

August 9, 2011

Dr. HG

Flank Attack
 The enemys weak spots are natural targets. A flank

attack

can

be

directed

along

two

strategic

dimensions geographical and segmental.

 In a geographical attack, the challenger spots areas

where the opponent is under performing

 The other strategy is to serve uncovered market needs.  Flank attacks are particularly attractive to a challenger

with fewer resources than its opponent and are much more likely to be successful than frontal attacks.
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Encirclement Attack
 It involves launching a grand offensive on several fronts.

Encirclement

makes

sense

when

the

challenger

commands superior resources and believes a swift encirclement will break the opponents will. Bypass Attack
 Most indirect attack. It means bypassing the enemy and

attacking easier markets to broaden ones reserve base.

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Dr. HG

This strategy offers three lines of approach : a. Diversifying into unrelated products b. Diversifying into new geographical markets, and c. Leapfrogging into new technologies to supplant existing products.

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Dr. HG

Guerrilla Warfare
 Guerrilla

warfare

consists

of

waging

small,

intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds.
 These

include

selective

price

cuts,

intense

promotional blitzes, and occasional legal actions.

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Dr. HG

Market follower strategies

 The follower has to define a growth path, but one

that does not invite competition retaliation. Four broad strategies can be distinguished : 1. Counterfeiter
 The counterfeiter duplicate the leaders product and

package and sells it on the black market or through disreputable dealers.

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Dr. HG

2. Cloner
 The cloner emulates the leaders products, name, and

packaging, with slight variations. 3. Imitator

 The imitator copies some things from the leader but

maintains differentiation in terms of packaging, pricing, etc.

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Dr. HG

4. Adapter
 The adapter takes the leaders products and adapts or

improves them. The adapter may choose to sell to different markets, but often the adapter grows into the future challenger, as many Japanese firms have done after adapting and improving the products developed elsewhere.

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Dr. HG

Market Nicher Strategies

 An alternative to being a follower in a large market is

to be a leader in small market or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms.

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Dr. HG