1. Competitive Position Tactics
Chapter 4
Competitive Position Tactics

2. Competitive position tactics

3. Strategies for Market Leaders
Market Leader’s objectives:
Expand the total market by
Finding new users
Creating new uses, and
Encouraging more usage (quantity and frequency)
Protect its current market share by
Adopting defense strategies (see defense stategies)
Increase its market share
Market share = Company sales / Industry sales
Factors considered for the expansion of market share includes price, new product, service, quality/strength of marketing, advertising and sales promotion etc.

4. Which strategy to use? Depends on your answer to the following:
Is it worth fighting?
Are you strong enough to fight?
How strong is your defense?
Do you have any choice but to fight?

5. Which strategy to use?
“Move only if there is a real advantage to be gained …”
“If our force is ten times the enemy’s, then surround him; five times his, attack him, if double his, divide our force into two and use as ‘alternative strategy’; if only equal his, we must concentrate our force to fight him…if our force is so much weaker than the enemy’s, we should totally avoid him.”
“If I know my soldiers are capable of attacking the enemy but unaware that he is invulnerable to attack, my chance of victory is but half…If I know he can be attacked and my soldiers are capable of doing it but are unaware that the terrain is unsuited for fighting, I should hold back for my chance of victory is but half.”
“Do not fight unless you are in danger”
“One who has few must prepare for defense; one who has many shall make the enemy prepare for defense.”

6. Defense Strategy
A market leader should generally adopt a defense strategy
Six commonly used defense strategies
Position Defense
Mobile Defense
Flanking Defense
Contraction Defense
Pre-emptive Defense
Counter-Offensive Defense

7. Position Defense
Occupying the most desirable position in consumers’ mind and building fortifications around that position
Simply defending current position rarely works
Example – P & G ‘owns’ the key functional benefit in many product categories
Tide Detergent for cleaning
Crest toothpaste for cavity prevention
Pamper diapers for dryness

8. Flanking Defense
an area where the company has yet to establish a strong position (flanks) are the weaker regions and prone to being attacked
Example :
Nokia made budget-oriented ‘Asha phone’ to compete with the Chinese and Indian brands.
Offering new menu to regional branches to bit the native brands

9. Pre-emptive Defense
Company decides to attack competitors before it is attacked by them
Typical option includes
attacking competitors here and there simultaneously (the shotgun attack) instead of attacking only one at a time (the rifle attack).
Attacking covering a huge market thru extensive distribution
Attacking with significant price reduction
Creating psychological pressure on competitors (Psychological warfare)
Product or brand proliferation is a form of pre-emptive defense
Example - Seiko has over 2,000 models

10. Counter-Offensive Defense
Responding to competitors’ head-on attack by identifying the attacker’s weakness and then launch a counter attack
Common forms include
straight invasion into the leader’s territory.
exercise of economic or political clout ( Tech leaders like Intel, MS, Apple defended their brands in court),
Stabilize lower price for the vulnerable products etc.
Example - Toyota launched the Lexus to respond to Mercedes attack

11. Mobile Defense
the leader in addition to defending his existing territories, expands into areas which are prospective.
Occurs market broadening and diversification
For market broadening, there is a need to
Redefine the business (principle of objective)
Focus on efforts of the competition
Example- When Philip Morris and Reynolds acknowledged growing curbs on cigarette smoking, they moved into industries like beer, liquor, soft drinks and frozen foods

12. Contraction Defense
The leader decides to give up weaker territories and reassigning resources to stronger ones
By ‘planned contraction’ or ‘strategic withdrawal
Example:
India’s TATA Group sold its soaps and detergents business units to Unilever in 1993
Ford retires T-birds and Probe and Focuses on Contour & Taurus

13. Market Challenger Strategies
The market challengers’ strategic objective is to gain market share and to become the leader eventually
By attacking the market leader
By attacking other firms of the same size
By attacking smaller firms

14. Market Challenger Strategies
Types of Attack Strategies
Frontal attack
Flank attack
Encirclement attack
Bypass attack
Guerrilla attack

15. Frontal Attack
The firm launches direct attack against the opponent on its strength
by offering similar products (in terms of features or performance),
by matching the price with the defender,
by following the same promotion and distribution policies followed by the defender
Seldom work unless
The challenger has sufficient fire-power (a 3:1 advantage) and staying power, and
The challenger has clear distinctive advantage(s)
Example Pepsi Vs Coke – Diet Pepsi – Diet coke

16. Flank/ Peripheral attack
Attack the enemy at its weak points or blind spots or flanks (depicts sides)
Ideal for challenger who does not have sufficient resources
LG outflanked the other colored TV producers in India, by launching a rural-specific color TV “Sampoorna”, thereby becoming the first one to tap the rural areas.

17. Encirclement attack Attack the enemy at many fronts at the same time
Competitor attacks another on the basis of strength as well as weaknesses
The fronts, rears, and sides are attacked at a time, and all on a sudden and the opponents become puzzled and start protecting all fronts
Ideal for challenger having superior resources
Example - Seiko attacked on fashion, features, user preferences and anything that might interest the consumer

18. Bypass attack
An indirect attack by a challenger that avoids opponents on direct fronts
Seek new business through major technological development or going for new markets with new products Could overtake the leader by using new technologies
Example - What did Ipod do to the Sony walkman?

19. Guerrilla attack
Consists of waging small, intermittent hit-and-run attacks to harass and demoralize the opponent and eventually seek permanent footholds.
Includes price cuts, promotion offering special inducements, coupons, or premiums, product improvements or modification, wider distribution, legal attacks and so on.
Best suited to smaller companies with limited resources
e.g. airlines use short promotions to attack the national carriers especially when passenger loads in certain routes are low

21. Which Attack Strategy should a Challenger Choose?
Use a combination of several strategies to improve market share over time
Strategies will change depending on the competitor whom one targets

22. 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

23. Four broad follower strategies
Adapter
takes the leader’s products and adapts and improves them
Many Japanese firms are excellent adapters initially before developing into challengers and eventually leaders
Imitator
copies some product features of competitors’, but maintains differentiation in terms of packaging, advertising, pricing or location
car manufacturers imitate the style of one another
Tata Sky -Videocon, Airtel, Reliance

24. Four broad follower strategies
Cloner
involves manufacturing of slightly altered products
Emulates the leader’s produts, name and packaging with slight variations
Example: Gucci – GUCCA, Rado – RADA
Counterfeiter
A black market follower strategy that involves thieving by duplicating the leader’s products
Example: Pirated DVDs and CDs of movies and music

25. Market-Nicher Strategies
Goal is to be a large fish in a small pond rather than the other way around
Smaller firms can avoid larger firms by targeting smaller markets or niches that are of little or no interest to the larger firms
Intimately know their customers and better meet their needs
Example: software firms supplying law firm related software

26. Market-Nicher Strategies (cont’d)
Nichers must
create niches,
expand the niches and
protect the niches
In a study of hundreds of business units, the Strategic Planning Institute found that return on investment averaged 27% in small markets, but only 11% in larger markets
What is the major risk faced by nichers?
Market niche may be attacked by larger firms once they notice the niches are successful

27. Multiple Niching
“[A] firm should `stick to its niching’ but not necessarily to its niche. That is why multiple niching is preferable to single niching. By developing strength in two or more niches the company increases its chances for survival.”
Philip Kotler