Competitive Strategies

• To examine the nature and significance of Competitive strategies;

• To Identify and examine various competitive strategies; and
• To the application of competitive strategies in different marketing
situations.

1-1
Potential Market Positions

Market Position Description

Leader An institution provides lead to the industry not only
because it has largest market share but also by
setting the trends in different elements that
constitute the firms’ market offering. Such an
institution takes care of both his interest and of the
industry.
Challenger An institution that is capable of providing almost a
matching response to the competitive moves of the
leader. Such an institution is capable of managing its
growth by taking customers from the leaders as well
as followers.
Follower An institution that follows the trends set by the leader. In
fact, such an institution capitalizes such
opportunities that are not addressed by the leader.

Niche The organization, generally a smaller one that chooses a

small portion of the market in which it is specialized
as its target market.

1-2
 COMPETITIVE STRATEGIES

Market Leader Market Challenger Market Follower Niche Marketer

•Expand total market •Full frontal attack •Follow closely •Single niche
•Protect market share •Indirect attack •Follow at a distance •Multiple niche
•Expand market share

1-3
Strategy for Market Leader

• Expand the total market;

• Protect its current market share; and
• Expand its market share.

1-4
 Strategies for Market Leadership

Expand the Protect its Expand its market share

total market by current market share by

• Note the relationship between

•Encouraging more usage • Adopting defense strategies market share and profitability
•Finding new users
•Creating new uses, and

1-5
Strategies to Protect a Firm’s Current Market
Share
• Position Defense
• Flanking Defense
• Preemptive Defense
• Counteroffensive Defense
• Mobile Defense
• Contraction Defense

1-6
Strategy of Position Defense

• In this strategy a leader attempts to protect its existing market

share through fortification wherein the leader erects barriers around
him to stop competitors.
• The barriers can be in the form of a firm’s the distinctive skills,
capabilities and marketing assets that not have only greater
significance for the customers but also are difficult for the competitors
to copy.

1-7
Strategy of Flanking Defense

• Flanking defense strategy advocates to erect outposts that can protect

the flanks from attack. Flanks are the weaker areas of a firm that are
prone to being attacked. A competitor may attack the outpost, forcing
the leader to protect the flank by using his entire marketing resources.
Therefore, such a strategy calls for the strengthening the flanks, without
offering any chance to the competitors to attack a weaker target
elsewhere.

1-8
Strategy of Preemptive Defense
• A pre-emptive defense strategy demands to attack potential
aggressor before he starts his offense. By pursuing pre-emptive
defense strategy a firm intends to convey ‘let it be known how
it will retaliate’.
• Such a strategy aims to create a threat which will prevent any
potential challenger from attacking in the first place. In
business the pre-emptive defensive can involve an actual attack
on the competition or merely signaling an intention to fight on
a particular front and a willingness to commit the necessary
resources to defend against aggression. Product or brand
proliferation is a form of pre-emptive defense.

1-9
 Strategy of defense
• Counteroffensive Counteroffensive Defense
refers to the response of a market
leader to a real attack by a competitor. In fact this defensive
calls for a leader to respond to a competitor’s head-on
attack by identifying the attacker’s weakness and then
launch a counter attack. Generally a leader actively
responds to any move of his competitors. An effective
counterattack is to invade the attacker’s main territory so
that it will have to pull back some troops to defend the
territory. Generally counteroffensive defense works when
the attacker has become vulnerable as a result of the
overstretching of resources.

1-10
Strategy of Mobile Defense
• Mobile defense requires the expansion of a leaders’ market
territory by broadening and diversifying his business. Such an
attempt is made not only to enhance marketing opportunities
for a leader but also to use expanded territory for both
defense and offensive strategies. Thus a mobile defense
involves redefining of the business, and focusing a firm’s
efforts on the competition. Consequently mobile defense can
meet the growing demands of dynamic market. Although this
defense will help a leader to enhance his profitability yet it
can pose lot of challenges to him.

1-11
Strategy of Contraction Defense

• A contraction defense, or strategic withdrawal, requires giving up

untenable ground to reduce overstretching on the core business
which can be defended against attack. In fact, such a strategy calls for
a withdraw from the most vulnerable segments and redirect
resources to those that are more defendable.

1-12
Market Challenger Strategies

• Frontal attack
• Flank attack
• Encirclement attack
• Bypass attack
• Guerrilla attack

1-13
Frontal Attack

• In launching a frontal attack, a market challenger can opt for either

the pure frontal attack by matching the leader product for product,
price for price, and so on, or a rather more limited frontal attack by
attracting away selected customers.
• The challenger has to be rich both in resources and marketing skills
to launch a frontal attack against the leader.

1-14
Flank Attack

• Flank attack involves the aggression of challengers on a leader at his

weak points or blind spots i.e. its flanks.
• A challenger can launch this attack along two strategic dimensions---
geographical and segmental.

1-15
Encirclement Attack

• Encirclement attack also known as siege involves surrounding a

defender and launching an attack on him at several points.
• The underlying purpose of the attack is to cut the defender off from
routes of supply in order to overwhelm his defense.
• In fact, such an attempt helps a challenger not only in reducing the
defending ability of a defender but also in preventing him from
reinforcing his competitive position.

1-16
Bypass Attack

• This is an indirect assault strategy in which a challenger

diversifies into unrelated products or markets neglected by
the leader.
• Such a strategy recommends the change of battlefield from
the competitor’s strongholds to easier market in order to
avoid direct confrontation with the market leader.
• This strategy offers three lines of approach:
• Diversifying into unrelated products;
• Diversifying into new geographical markets; and
• Leapfrogging into new technologies to supplant existing
products.
•

1-17
Guerilla Attack

• Guerilla attack is made up of series of small, intermittent hit-

and-run attacks by a challenger to harass and destabilize the
market defenders.
• In practice, this strategy advocates measures like drastic
short-term price cuts especially during a competitor’s new
product testing or launch, sudden and intensive bursts of
advertising, product comparisons, damaging public relations
activity, poaching a competitor’s key staff, legislative moves,
and geographically concentrated campaigns.

1-18
Market Follower

• Follow the market leader

• Focus is on improving profit instead of market share
• Many advantages:
• Learn from the market leader’s experience
• Copy or improve on the leader’s offerings
• Strong profitability

1-19
Market Follower Strategies

• Counterfeiter: A follower that produces a product by copying a leader’s

product and package and then attempts to sell the same either through
the black markets or through disreputable dealers.
• Cloner: The cloner as a follower emulates a leader’s products, name and
packaging with slightly modification.
• Imitator: Here the follower imitates some features and elements of a
leader’s product but strives to maintain differentiation in terms of any
element of marketing mix. Generally a leader does not respond to such
kind of imitation as it dos not attack the leader aggressively.
• Adapter: The adapter takes a leader’s product and brings some
necessary changes and modifications in it with an aim to improve its
utility. Generally the followers prefer to sell such products in different
markets. The growth of the adapters in different marketer generally
makes them future challengers.

1-20
Market Nicher
A market-nicher serves small segments that are
of little or no interest to the larger firms.
• Serving market niches means targeting subsegments
• Good strategy for small firms with limited resources
• Offers high margins
• Specialization is key
• By market, customer, product, or marketing mix lines

1-21
Bases for Niche

• Nature of the product;

• Product line;
• Product features;
• Type of end user;
• Size of customer;
• Customer service; and
• Quality/Price spectrum

1-22
Criteria for Selection of Target Market
by Market Nicher

• sufficiently large to be profitable

• Growth Potential
• Little interest to major competitors
• Availability of resources and skills
• Capability to defend any aggression

1-23
Organizational Requirement for Niche Strategy

• Ability to segment the market creatively

• Efficient use of R&D resources
• Think small

1-24
Strategies for Niche

• Multiple Niching
• Single-sector Niching

1-25
Generic Competitive Strategies

1-26
1-27
Developing Additional Competitive
Marketing Strategies

Value Disciplines

Operational Customer
Excellence Intimacy

Product
Leadership 1-28
Balancing Customer and Competitor Orientations

• Companies can become so competitor

centered that they lose their customer focus.
Types of companies:
• Competitor-centered companies
• Customer-centered companies
• Market-centered companies

1-29