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Marketing Management

LECTURE7

Dr. Mohamed Hesham Mansour


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MARKETING MANAGEMENT12th edition

11

Dealing with

Competition

Kotler Keller


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11-3

Chapter Questions

How do marketers identify primary competitors?

How should we analyze competitors strategies,

objectives, strengths, and weaknesses?

How can market leaders expand the total marketand defend market share?

How should market challengers attack market

leaders? How can market followers or nichers compete

effectively?


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11-4

Competition in the Jeans Market


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11-5

Five Forces Determining Segment

Structural Attractiveness


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Identifying Competitors
http://www.walmart.com/http://www.amazon.com/exec/obidos/tg/browse/-/171280/ref=ms_tab_merch/002-0208643-2067251


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Industry Concept of Competition

Number of sellers and degree ofdifferentiation

Entry, mobility, and exit barriers

Cost structure

Degree of vertical integration

Degree of globalization


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11-8

Industry Concept of Competition

Pure Monopoly

Oligopoly (pure& differentiated)

Monopolistic Competition

Pure Competition
http://www.microsoft.com/


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11-9

Market concept of competition

Competitor Map


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11-10

A Competitors Expansion Plans


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11-11

Analyzing Competitors

Share of market

Share of mind

Share of heart


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11-12

Analyzing Competitors


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Hypothetical Market Structure

10%

Market

Nichers

20%

Market

Follower

30%

Market

Challenger

40%

MarketLeader


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Market Leaders StrategiesI. Expanding The Total Market

New users New uses

More usage


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Expanding the Total Market

New uses

More usage

New users
http://www.armhammer.com/


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11-16

Market Leaders StrategiesII. Defending The Market Share


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Market Leaders Defense Strategy

II. Defending Market Share (1of 6)

1. Position Defense Fortification around ones territory. (e.g.)

Maginot Line

It is static and it is a form of marketingmyopia


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Market Leaders Defense StrategyII. Defending Market Share (2 of 6)

2. Flanking Defense To protect weak fronts against possible

invasion

Of little value if lightly defended


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3. Preemptive Defense

Launch an attack on the enemy before it start

its offense

An Ounce of Prevention is Worth More than aPound of Cure

Could be a guerilla action across the market to

keep every one off-balance

Using market signals to demoralize

competitors

It could extend to a real punishment for

competitors


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4. Counteroffensive Defense When attacked respond with a counter

attack

Counterattacks could be frontal or flankattacks


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5. Mobile Defense Stretch domain over new territories that

can serve as future centers for defense

and offense (strategic depth) Market broadening and market

diversification


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6. Contraction Defense Useful when forces are spread too thin

and competitors are attacking several

fronts. Strategic withdrawal by giving up the

weaker territories and reassigning forces

to stronger territories.

M k L d S i


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Market Leaders Strategies

III. Expanding Market Share

Profitability rises with relative increase inmarket share , but three facts should be

considered:

1. Competitors retaliation2. Economic cost

3. Select the right market mix


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Market challenger strategies

Defining the strategic objective andopponents

Attack Market leader

Attack firms of the same size ( notdoing the job or underfinanced)

Attack small firms (not doing the job or

underfinanced)


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Market Challenger


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Market Challenger StrategiesAttack Strategies (1 of 5)

1. Frontal attack ( Head

on) Attacking strengths rather than its

weaknesses

Matching opponents product,advertising, price, and so on

Attacking forces to be at least 3:1

advantage in combat fire power. Modified frontal attack.

M k t Ch ll St t i


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2. Flank attack Concentration of strength against weakness

Attack weak spots blind sides.

Particularly attractive to the aggressorpossessing fewer recourses.

Along two strategic dimensions

geographical and segmental

It is all about discovering gaps and filling

them.

More likely to be successful than frontal

attacks.

Market Challenger Strategies

Attack Strategies (2 of 5)

M k t Ch ll St t i


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3. Encirclement attack Launching a grand offensive on several

fronts.

Offering the market everything theopponent offers and more so that the

offer is unrefusable

Makes sense where the aggressorcommands superior resources.



M k t Ch ll St t i


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4. Bypass AttackBypassing the enemy and attacking easier

markets to broaden ones resource base :

a. Diversifying into unrelated products.

b. Diversifying into new geographical markets

for existing products .c. Leap frogging into new technologies to

supplement existing products



M k t h ll t t


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Market challenger strategy


5. Guerrilla attack Especially for smaller undercapitalized

ones.

Could be expensive Launching small, intermittent attacks ondifferent narrow territories of the opponent

The aim is to harass and demoralize theopponent.

Losses on the aggressor side must be lessthan the losses on the opponent side

Price cuts , intense promotional bursts andoccasional legal actions



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Attack Strategies (5 of 5) cont.

5. Guerrilla attack?Few major attacks or continual

stream of minor attacks

?Attack small, isolated, weaklydefended markets or major stronghold markets


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Optimal Market Share

P i b G t d i B


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Pepsi buys Gatorade in a Bypass

Strategy


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Specific Attack Strategies

Price discounts

Lower-priced goods

Value-priced goods

Prestige goods

Product proliferation

Product innovation

Improved services

Distribution innovation

Manufacturing-cost

reduction

Intensive advertising

promotion

Samsung Attacks Using


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Samsung Attacks Using

Innovation
http://www.samsung.com/


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Market Follower Strategies

Counterfeiter

Cloner

Imitator

Adapter


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Market Nicher Strategies


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Balancing Orientations

Competitor-

Centered

Customer-

Centered


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Marketing Debate

How do you attack a Category

Leader?

Take a position:

1. The best way to challenge a leader is to

attack its strengths.

2. The best way to attack a leader isto avoid a head-on assault and to adopt

a flanking strategy.


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Marketing Discussion

Pick an industry. Classify firms

according to the four different

roles they might play. How would

you characterize the nature of

competition? Do the firms follow

the principles described in thischapter?


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THANK YOU

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