1. Dealing with Competition11
Dealing with Competition
Marketing Management, 13th ed

2. 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 market and defend market share?
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3. Chapter Questions (cont.)
How should market challengers attack market leaders?
How can market followers or nichers compete effectively?
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4. Figure 1.1 Five Forces Determining Segment Structural Attractiveness
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5. Industry Concept of Competition
Number of sellers and degree of differentiation
Entry, mobility, and exit barriers
Cost structure
Degree of vertical integration
Degree of globalization
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6. Figure 11.2 Strategic Groups
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7. Industries Can Be Classified By:
Competitive Markets
Industries Can Be Classified By:
Number of sellers and degree of differentiation
Cost structure
Entry, mobility and exit barriers
Degree of vertical integration
Degree of globalization
To accompany A Framework for Marketing Management, 2nd Edition

8. Competitive Markets Industry Structures
Pure Monopoly
Pure Oligopoly
Differentiated Oligopoly
Monopolistic Competition
Pure Competition
Only one firm offers an undifferentiated product or service in an area
Unregulated
Regulated
Example: Most utility companies
To accompany A Framework for Marketing Management, 2nd Edition

9. Competitive Markets Industry Structures
Pure Monopoly
Pure Oligopoly
Differentiated Oligopoly
Monopolistic Competition
Pure Competition
A few firms produce essentially identical commodities and little differentiation exists
Lower costs are the key to higher profits
Example: oil
To accompany A Framework for Marketing Management, 2nd Edition

10. Competitive Markets Industry Structures
Pure Monopoly
Pure Oligopoly
Differentiated Oligopoly
Monopolistic Competition
Pure Competition
A few firms produce partially differentiated items
Differentiation is by key attributes
Premium price may be charged
Example: Luxury autos
To accompany A Framework for Marketing Management, 2nd Edition

11. Competitive Markets Industry Structures
Pure Monopoly
Pure Oligopoly
Differentiated Oligopoly
Monopolistic Competition
Pure Competition
Many firms differentiate items in whole or part
Appropriate market segmentation is key to success
Example: beer, restaurants
To accompany A Framework for Marketing Management, 2nd Edition

12. Competitive Markets Industry Structures
Pure Monopoly
Pure Oligopoly
Differentiated Oligopoly
Monopolistic Competition
Pure Competition
Many competitors offer the same product
Price is the same due to lack of differentiation
Example: farmers selling milk, crops
To accompany A Framework for Marketing Management, 2nd Edition

13. Competitive Markets
A broader group of competitors will be identified using the market approach
Competitor maps plot buying steps in purchasing and using the product, as well as direct and indirect competitors
To accompany A Framework for Marketing Management, 2nd Edition

14. Competitor Analysis
Key characteristics of the competition must be identified:
Strategies
Objectives
Strengths and Weaknesses
Effect a firm’s competitive position in the target market
Reaction Patterns
To accompany A Framework for Marketing Management, 2nd Edition

15. Competitive Positions in the Target Market
Competitor Analysis
Competitive Positions in the Target Market
Dominant
Strong
Favorable
Tenable :defendable
Weak
Nonviable: not correct
To accompany A Framework for Marketing Management, 2nd Edition

16. Table 11.1 Customer Ratings of Competitors on Key Success Factors
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17. Strengths and Weaknesses
Share of market; competitor market share
Share of mind; first company in industry
Share of heart; preferring to by from
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18. Table 11.2 Market Share, Mind Share, and Heart Share
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19. Figure 11.5 Hypothetical Market Structure
10%
Market
Nichers
20%
Market
Follower
30%
Market
Challenger
40%
Market
Leader
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20. Other Competitive Strategies
Market
Challengers
Market
Nichers
Market
Followers
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21. Designing Competitive Strategies
Expanding the total market
Defending market share
Expanding market share
Major Strategies
Market-Leader
Market-Challenger
Market-Follower
Market-Nicher
To accompany A Framework for Marketing Management, 2nd Edition

22. Designing Competitive Strategies
Expanding the Total Market:
Targeting Product to New Users
Market-penetration strategy
New-market strategy
Geographical-expansion strategy
Promoting New Uses of Product
Encouraging Greater Product Use
To accompany A Framework for Marketing Management, 2nd Edition

23. Figure 11.4 A Competitor’s Expansion Plans
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24. Figure 11.6 Six Types of Defense Strategies
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25. Designing Competitive Strategies
Defending Market Share
Counteroffensive defense
Mobile defense
Contraction defense
Position defense
Flank defense
Preemptive defense
To accompany A Framework for Marketing Management, 2nd Edition

26. Designing Competitive Strategies
Before Attempting to Expand Market Share, Consider:
Probability of invoking antitrust action
Economic costs involved
Likelihood that marketing mix decisions will increase profits
To accompany A Framework for Marketing Management, 2nd Edition

27. Figure 11.7 Optimal Market Share
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28. Designing Competitive Strategies
First define the strategic goals and opponent(s)
Choose general attack strategy
Choose specific attack strategy
Major Strategies
Market-Leader
Market-Challenger
Market-Follower
Market-Nicher
To accompany A Framework for Marketing Management, 2nd Edition

29. General Attack Strategies
Frontal Attack
Flank Attack
Encirclement
Attack
Bypass Attack
Guerrilla Warfare
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

30. Designing Competitive Strategies
General Attack Strategies:
Frontal attacks match competition
Flank attacks serve unmet market needs or underserved areas
Encirclement “blitzes” opponent
Bypassing opponent and attacking easier markets is also an option
To accompany A Framework for Marketing Management, 2nd Edition

31. Specific Attack Strategies Include:
Competitive Markets
Specific Attack Strategies Include:
Product innovation
Distribution innovation
Manufacturing cost reduction
Price-discount
Lower-price goods
Prestige goods
Improved services
Product proliferation
Intensive advertising promotion
To accompany A Framework for Marketing Management, 2nd Edition

32. Designing Competitive Strategies
Imitation may be more profitable than innovation
Four broad strategies:
Counterfeiter
Cloner
Imitator
Adapter
Major Strategies
Market-Leader
Market-Challenger
Market-Follower
Market-Nicher
To accompany A Framework for Marketing Management, 2nd Edition

33. Market Follower Strategies
Counterfeiter
Cloner
Imitator
Adapter
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34. Designing Competitive Strategies
Niche specialties:
End-user
Vertical-level
Customer-size
Specific customer
Geographic
Product/product line
Product feature
Job-shop
Quality-price
Service
Channel
Major Strategies
Market-Leader
Market-Challenger
Market-Follower
Market-Nicher
To accompany A Framework for Marketing Management, 2nd Edition

35. Niche Specialist Roles
End-User Specialist
Vertical-Level Specialist
Customer-Size Specialist
Specific-Customer Specialist
Geographic Specialist
Product-Line Specialist
Job-Shop Specialist
Quality-Price Specialist
Service-Specialist
Channel Specialist
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

36. Balancing Customer and Competitor Orientations
Competitor-centered companies evaluate what competitors are doing, then formulate competitive reactions
Customer-centered companies focus on customer developments when formulating strategy
To accompany A Framework for Marketing Management, 2nd Edition