1. Marketing Management Competitive Threats
Paul Dishman, Ph.D.
Department of Business Management
Marriott School of Management
Brigham Young University
Lecture 20

2. Western Approach to Strategy
Find Strengths to Match Opportunities
“The most profitable match of company strengths with opportunities presented by the marketplace which would provide long-term advantage.”

3. Porter’s Model
Competitive Advantage: Creating and Sustaining Superior Performance, Michael E. Porter, Free Press, 1985

4. Porter’s Model Competitive Advantage Competitive Scope Lower Cost
Differentiation
1. Cost Leadership
2. Differentiation
Broad
Target
                     
Competitive
Scope
3A. Cost Focus
3B. Differentiation
Focus
Narrow
Target

5. Kotler Model Market Leader Market Challenger Market Follower
Market Nicher
Kotler, 1996

6. Market Leader Strategies
Expanding the Total Market
New Users
New Uses
More Usage
Protecting Market Share
       

7. Protecting Market Share
Position Defense
Flanking Defense
Preemptive Defense
Counteroffensive Defense
Contraction Defense

8. Position Defense
O O O O O O O
X X X X X X X
X X

9. Flanking Defense
O O O O O O O
X X X X X X X
X X

10. Preemptive Defense O O O O O O O X X X X X X X <- Distributors X X$

11. Counteroffensive Defense
O O O O O O O
X X X X X X X
X X

12. Contraction Defense

13. Market Challenger Strategies
Frontal Attack
Flanking Attack
Encirclement Attack
Bypass
Guerrilla Attack
Unilever (2x as big as P&G): Wisk was leading, deter., added Sunlight dishwash, Snuggle fabric softener, Surf laundry deter. Gained market share from P&G and others.
Pepsi: slice real fruit to compete with Sprite, Fanta Coke responded with Minute-Maid acq.
Seiko attacked watch market with channels of dist., every major outlet, constantly changing models, US: 400 models, but 2,300 world-wide
Minolta: auto-focusing MAxxum, Canon dropped 20%, Minolta gained 31%
409:P&G was to intro Cinch. Test market, 409 reduced distribution, bought up all Cinch, on Cinch rollout: 409 dropped price $1 and Cinch sales never took off
KZBQ

14. Frontal Attack (Pepsi to Coke)
O O O O O O O
X X X X X X X
X X

15. Flanking Attack
O O O
O O O O O O O
X X X X X X X
X X

16. Encirclement Attack
O O O
O O O O O O O
X X X X X X X
X X

17. Bypass (Canon)
                                                                                                    
O O O O
O O O O O O O
X X X X X X X
Xerox X O

18. Guerrilla Attack (Formula 409)

19. Market Follower Strategies
Cloner- Imitator- Adapter
Cloner: exact copy of everything leader does: product, channels, adv, , promo matching, lives off leader’s pioneering efforts
Imitator: copies some things, but diffs on a few characteristics May help leaders avoid monopoly charges
Adapter: builds and improves leaders products, avoid confrontation with leader usually these grow into future challengers.

20. Market Nicher Strategies
Low Volume, High Margin
Specialization
End-Use
Vertical-Level
Customer-size
Specific-customer
Geographic
Product or feature
Quality-price
Service
End-Use: common, law, medicine
Vertical-Level: spec in OEM, one level on value added chain
Customer-size: IBM micro $1M orders, nothing under
Specific-customer: avoid unless diversified
Geographic
Product or feature: technology, benefit
Quality-price: low or high end
Service: more, better, unavailable (Domino’s)

21. Treacy & Wiersema Model
The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market, Michael Treacy & Fred Wiersema, Addison-Wesley, 1995

22. Treacy & Wiersema Model
Operational Excellence
Product Leadership
Customer Intimacy