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

2. Chapter Questions (cont.)
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. Five Forces Determining Segment Structural Attractiveness
Threat of intense segment rivalry—cellular phone market

5. Five Forces Determining Segment Structural Attractiveness
Threat of new entrants—Can come from anywhere

6. Five Forces Determining Segment Structural Attractiveness
Threat of substitute products—Greyhound and Amtrak profitability threatened by rise of air travel

7. Five Forces Determining Segment Structural Attractiveness
Threat of buyers’ growing bargaining power—Wal-Mart buying power

8. Five Forces Determining Segment Structural Attractiveness
Threat of Suppliers’ growing bargaining power—ExxonMobil, Shell, BP, and Chevron-Texaco are at the mercy of oil-supplying cartels such as OPEC.

9. Five Forces Determining Segment Structural Attractiveness
Threat of intense segment rivalry—cellular phone market
Threat of new entrants—Can come from anywhere
Threat of substitute products—Greyhound and Amtrak profitability threatened by rise of air travel
Threat of buyers’ growing bargaining power—Wal-Mart buying power
Threat of Suppliers’ growing bargaining power—ExxonMobil, Shell, BP, and Chevron-Texaco are at the mercy of oil-supplying cartels such as OPEC.

10. Five Forces Determining Segment Structural Attractiveness

11. Identifying Competitors

12. 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

13. Industry Concept of Competition
Pure Monopoly
Oligopoly
Monopolistic Competition
Pure Competition

14. A Competitor’s Expansion Plans

15. Analyzing Competitors
Share of market—target market
Share of mind--% of customers who names companies
Share of heart--% of customers who prefer a company

16. Determine which functions or processes to benchmark
Steps in Benchmarking—art of learning from companies that perform certain tasks better than other companies
Determine which functions or processes to benchmark
Identify the key performance variables to measure
Identify the best-in-class companies
Measure the performance of best-in-class companies
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17. Steps in Benchmarking (cont.)
Measure the company’s performance
Specify programs and actions to close the gap
Implement and monitor results
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18. Expanding the Total Market
New customers
More usage

19. Six Types of Defense Strategies
Position Defense—occupying the most desirable market spaces in the consumers’ minds (e.g., Procter & Gamble—Tide detergent; Crest Toothpaste—cavity prevention; Pampers diapers—dryness)
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20. Six Types of Defense Strategies
Flank—erect outpost to protect a weak front (e.g., Smirnoff attacked by low-priced competitor Wolfschmidt, Smirnoff introduce Relska to compete with Wolfschmidt and Popov to sell less than Wolfschmidt)
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21. Six Types of Defense Strategies
Preemptive—attack before the enemy starts its offense (e.g., Bank of America has 17M ATMs and 5,700 retail branches)
Israel hints at pre-emptive strike on Iran
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22. Six Types of Defense Strategies
Counteroffensive—meet the attacker frontally or hit its flank (i.e., invade the attacker’s main territory so that it will pull back to defend it) (e.g., FedEx watched UPS successfully invade its airborne delivery system, FedEx invested heavily in ground delivery service to challenge UPS on its home turf)
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23. Six Types of Defense Strategies
Mobile—leader stretches its domain over new territories that can serve future centers for defense and offense; Market broadening (e.g., BP recast itself from oil to energy); Diversification (e.g., Reynolds and Philip Morris moved into new industries—beer, liquor, soft drinks and frozen foods).
SPYDER Mobile Firing Unit
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24. Six Types of Defense Strategies
Contraction—giving up weaker territories and reassigning resources to stronger territories (e.g., Sara Lee spun off products that accounted for 40% of its profits, such as Hanes hosiery brand, to concentrate on food brand)
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25. Six Types of Defense Strategies
Position—most desirable market space in the minds of the consumers, making the brand almost impregnable. Tide laundry detergent with cleaning; crest toothpaste with cavity prevention; and Pampers diapers with dryness.
Flank defense—must protect against weak front or possibly serve as a weak invasion base for counterattacked.
Preemptive defense—attack before the enemy starts its offense.
Counteroffensive defense—invade the attacker's main territory so that it will have to pull back to defend the territory.
Mobile defensive—shifting focus from the current product to the underlying generic need—petroleum recast themselves into energy companies.
Contraction defensive—strategic withdraw to give up weaker territories and reassigning resources to stronger territories.

26. Factors Relevant to Pursuing Increased Market Share
Possibility of provoking antitrust action--monopoly
Economic cost—market share might exceed value
Pursuing the wrong marketing-mix strategy—may be irrelevant to target customers
The effect of increased market share on actual and perceived quality—dilute brand equity by putting a strain on resources.

27. Other Competitive Strategies
Market challengers
Attack the market leader (e.g., Miller Lite attacked Bud Lite on product quality)
Attack firms of its own size and are not doing the job and are underfinanced
Attack small local and regional firms
Market followers
Market niches
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28. Market Challenger Strategies
Define the strategic objective and opponents
Choose a general attack strategy
Choose a specific attack strategy
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29. General Attack Strategies
Frontal attack—Matching (e.g., Helene Curtis is good at convincing the market that “Suave” and “Finese” are equal in quality but a better value than higher-priced brands)
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30. General Attack Strategies
Flank attack—Geographic (e.g., Internet has siphoned newspaper readers and advertisers in many markets, Independent News & Media sells a majority of its 175 newspaper and magazine titles in cities where the economy is strong but the Internet is still relatively weak—Ireland, South Africa, Australia, New Zealand, and India
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31. General Attack Strategies
Encirclement attack--Blitz the territory (e.g., Sun Microsystems licensed its java software to hundreds of companies and many software developers to make a stand against Microsoft)
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32. General Attack Strategies
Bypass attack--Unrelated product (e.g. Pepsi rolled out Aquafina Bottled water before Coke introduced Dasani brand), new geographically and new technology (e.g., Google search overtook Yahoo)
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33. General Attack Strategies
Guerilla warfare--Small, intermittent attacks (e.g., Princeton Review successfully challenged Kaplan Educational Centers for test preparation)
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34. Pepsi buys Gatorade in a Bypass Strategy

35. Specific Attack Strategies
Price discounts
Lower-priced goods-lower quality
Value-priced goods—low price and high quality—Southwestern Airlines
Prestige goods—high quality and high price--Mercedes
Product proliferation—large product variety—Baskin-Robbins
Product innovation—improvement or breakthrough—3M
Improved services—new or better services--Avis
Distribution innovation—developing a new channel--Avon
Manufacturing-cost reduction—Lower production costs
Intensive advertising promotion—increased spending

36. Market Follower Strategies
Counterfeiter
(Duplication) Rolex
Cloner
(Emulates) Corn Flakes
Imitator
(Copy/Differentiation)
Adapter
(Modifies or improves)

37. Balancing Orientations
Competitor-centered--Reactive fighter
Customer-centered--focused on Customer Developments
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38. Study Question 1 A segment is unattractive when there are
actual or potential ________ for the
product.
contenders
Competitors
Substitutes
unclear demand
profit fluctuation
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39. Study Question 2
A segment is unattractive if the company’s suppliers are able to
raise prices or reduce quantity supplied. Which of the following is
the best illustration of the threat of suppliers’ growing bargaining
power?
Wal-Mart has almost no competitors in its marketspace.
Oil companies must purchase a significant amount of their product from OPEC.
McDonald’s is the largest fast-food franchise and is still growing.
The U.S. Post Office has merged package operations with FedEx.
Sears unsuccessfully attempted to compete with Wal-Mart and Kmart.
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40. Study Question 3 In general, a company should monitor the
following variables when analyzing competitors:
________, share of heart, and share of market.
share of demand
share of profits
share of promotion
share of universe
share of mind
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41. Study Question 4 The ________ in a given marketplace has the largest
market share in the relevant product market and
usually leads other firms in price changes, new-product
introductions, distribution coverage, and promotional
intensity.
market challenger
market leader
market follower
market nicher
market entrant
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42. Study Question 5 A firm that is willing to maintain its market
share and not rock the boat is known as a
________.
market challenger
market leader
market follower
market nicher
market entrant
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