2. Competitive Reaction Team members: Jenny Cheung 97475650 Grace Zhang 97472174 Liz Yeung 97490192 Elisa Woo 97480961

3. OutlineOutline n Introduction n Case study n Case1. Price War of Newspaper n Case2. How Yahoo! won the search war n Case3. Nike v.s. Reebok n Conclusion

4. IntroductionIntroduction n What is competitor? n Offer similar product/services to same group of customers n Using marketing strategies to gain competitive advantage

5. Marketing strategy n Competitors analysis n Competitive marketing strategies

6. Steps in analyzing competitors Identifying Company’s competitors Determining competitors’ objectives Identifying competitors’ strategies Assessing their strengths and weaknesses Estimating competitors’ reactions Selecting competitors to attack and avoid

7. Basic competitive strategies n Overall cost-leadership n Differentiation n Focus n Value disciplines

8. Case 1: Newspaper The newspaper price war which erupted in December 1995 The newspaper price war which erupted in December 1995 The successful launch in June 1995 of the Apple Daily, owned by Jimmy Lai The successful launch in June 1995 of the Apple Daily, owned by Jimmy Lai The newspaper’s initial success in building circulation was its one-month promotional price of HK$ 2 The newspaper’s initial success in building circulation was its one-month promotional price of HK$ 2

9. The Apple Daily vs The Oriental Daily Strategy Cost advantageLower Price Lower Price Result 200,000600,000 circulationcirculation Market 23%Drop from Share 31% to 26% Position MarketMarket ChallengerLeader

10. Market Followers’ Strategy Sing Pao, Tin Tin Daily as the market followers also dropped their price to HK$ 2 Sing Pao, Tin Tin Daily as the market followers also dropped their price to HK$ 2 The Hong Kong Daily News preserve and increase its relatively small market share dropped to HK$ 1 The Hong Kong Daily News preserve and increase its relatively small market share dropped to HK$ 1

11. Market followers’ Strategy 1. Must keep its manufacturing cost low 1. Must keep its manufacturing cost low 2. Its product quality and service high 2. Its product quality and service high 3. Enter new markets as they open up 3. Enter new markets as they open up

12. Market Nicher’s Strategy Hong Kong Economic Journal, Hong Kong Economic Times, Ming Pao Daily, Sing Tao Daily hold their prices steady at HK$ 5 Hong Kong Economic Journal, Hong Kong Economic Times, Ming Pao Daily, Sing Tao Daily hold their prices steady at HK$ 5 Those newspapers adopt the market- nicher strategies Those newspapers adopt the market- nicher strategies

13. Market Nicher’s Strategy Ming Pao can build the good image and customer goodwill to defend itself Ming Pao can build the good image and customer goodwill to defend itself Hong Kong Economic Times specialize in financial market and their main target are business group Hong Kong Economic Times specialize in financial market and their main target are business group As a result, the readers are more loyal to them because of functional needs and ideological identification As a result, the readers are more loyal to them because of functional needs and ideological identification

14. Case 2: Yahoo! Yahoo! is now the market leader in the internet search market Yahoo! is now the market leader in the internet search market Its technology is not as good as its competitors like Infoseek, excite and Lycos. Its technology is not as good as its competitors like Infoseek, excite and Lycos.

15. Advantage of other Search Engines n Lycos Can search more web pages Can search more web pages n Infoseek Good Engineering Support Good Engineering Support n Excite Advanced Search Technology Advanced Search Technology Why people still stick with Yahoo!? Why people still stick with Yahoo!?

16. How Yahoo! WON the search war Human-created directory was all that distinguished Yahoo! from its competitors Human-created directory was all that distinguished Yahoo! from its competitors It helps web users to find out what they wanted exactly It helps web users to find out what they wanted exactly

17. Yahoo! became Market Leader It choose the frontal attack to attack Infoseek, Excite and Lycos It choose the frontal attack to attack Infoseek, Excite and Lycos In early 1996, Yahoo! spent $5 million to be one of five search engines from Netscape’s site. In early 1996, Yahoo! spent $5 million to be one of five search engines from Netscape’s site.  After the first month, Infoseek’s traffic dropped in half

18. Yahoo! became Market Leader At the end of 1997, Yahoo! visitors with more than the other three search engines combined At the end of 1997, Yahoo! visitors with more than the other three search engines combined It still improves its services by giving free E-mail It still improves its services by giving free E-mail Conclusion : The freebies, the branding and the human touch combined to make it more attractive than others Conclusion : The freebies, the branding and the human touch combined to make it more attractive than others

19. Case 3: Nike v.s. Reebok n Nike: Market Leader n Published in 1980 n Revenue: US$270 million US$270 million (1980) (1980) n Reebok: Market Challenger n Published in 1985 n Revenue: US$ 13 million (1983) US$1.4 billion (1987)

20. Revenue of Nike and Reebok (in billion US$)

21. Strategies of Nike n Use very powerful marketing slogan “ Just Do It ” --demonstrate a passion for sports --demonstrate a passion for sports n A sports company rather than a shoe company n Stars effect: sign up with athletic stars n Control cost by setting manufacturing base at low-cost countries

22. Strategies of Reebok n Control cost by setting manufacturing base at low-cost countries n Star’s effect: sign up with athletic stars n Differentiation: concentrate on women’s fitness n Change product line: Athletic shoes to Non-athletic shoes Athletic shoes to Non-athletic shoes n Customer intimacy: tailor-made products for customers by investigate high-tech shoes

23. Nike vs. Reebok NikeReebok BasketballMichael JordanO’Neal & Kemp TennisAgassi &Michael Chang Pete Sampras Football Ronaldo BaseballKen GriffeyFrank Thomas AthleteTroy AikmanEmmitt Smith

24. Threats to Nike & Reebok n People have wide range of style to choose now n Rapid growth sales of competitors n New entrance to share the market n Economic problem of Asia n More ads. use sports heroes to create emotional effect

25. Revenue of Nike and Reebok

26. ConclusionConclusion n No one strategy best for all companies n Some fight with main competitors n Some may combine with other similar firms to fight n Determine by their industry position, objectives, opportunities and resources n Balancing customer and competitor orientation