1. Chapter 8 Dealing with the Competition Marketing Managment
Tenth Edition
Philip Kotler

2. Objectives Identifying Competitors Evaluating Competitors
Competitive Intelligence Systems
Competitive Strategies
Customer vs. Competitor Orientation

3. Induce your competitors not to invest in those products, markets and services where you expect to invest the most … that is the fundamental rule of strategy.
Bruce Henderson, Founder of BCG
There is nothing more exhilarating than to be shot at without result.
Winston Churchill

4. Five Forces Determining Segment Structural Attractiveness
Potential Entrants
(Threat of
Mobility)
Suppliers
(Supplier power)
Industry
Competitors
(Segment rivalry)
Buyers
(Buyer power)
Substitutes
(Threats of
substitutes)

5. Barriers and Profitability
Entry Barriers
Exit barriers
High, stable
returns
High
Low
High, risky
returns
High
Low, stable
returns
Low
Low, risky
returns

6. Industry Competition Number of Sellers - Degree of Differentiation
Entry, Mobility, Exit barriers
Cost Structure
Degree of Vertical Integration
Degree of Globalization

7. Strategic Groups in the Major Appliance Industry
High
Low
Quality
Vertical Integration
Group A
Narrow line
Lower mfg. cost
Very high service
High price
Group C
Moderate line
Medium mfg. cost
Medium service
Medium price
Group B
Full line
Low mfg. cost
Good service
Medium price
Group D
Broad line
Medium mfg. cost
Low service
Low price

8. Analyzing Competitors
Objectives
Competitor
Actions
Strategies
Strengths &
Weaknesses
Reaction
Patterns

9. Competitor’s Expansion Plans
Markets
Products
Individual
Users
Commercial
& Industrial
Educational
Personal
Computers
Hardware
Accessories
Software
Dell

10. Hypothetical Market Structure & Strategies
10%
Market
nicher
40%
Market
leader
30%
Market
challenger
20%
Market
follower
Expand Market
Attack leader
Special-
ize
Imitate
Defend Market Share
Status quo
Expand Market Share

11. Defense Strategies (2) Flank defense Attacker Defender (3) Preemptive
(4) Counter-
offensive
(1)
Position
defense
(6) Contraction
defense
(5)
Mobile
defense

12. Optimal Market Share Profitability Market share Optimal market share0%
25%
50%
75%
100%

13. Attack Strategies (4) Bypass attack (2) Flank attack
Attacker
Defender
(1) Frontal attack
(5) Guerilla attack
(3) Encirclement attack

14. Specific Attack Strategies
Price-discount
Cheaper goods
Prestige goods
Product proliferation
Product innovation
Improved services
Distribution innovation
Manufacturing cost reduction
Intensive advertising promotion

15. “Nichemanship” End-user specialist Vertical-level specialist
Customer-size specialist
Specific-customer specialist
Geographic specialist
Product or product-line specialist
Product-feature specialist
Job-shop specialist
Quality-price specialist
Service specialist
Channel specialist

16. Balance Customer Competition + ID opportunities + Fighter orientation
+ Long-run profit
+ Alert
+ Emerging needs & groups
+ Exploit weaknesses
- Reactive

17. Review Identifying Competitors Evaluating Competitors
Competitive Intelligence Systems
Competitive Strategies
Customer vs. Competitor Orientation