1. Offense versus Defense
Prof. Markus Christen
INSEAD France May/June 2011

2. Market Driving Strategies - May/June 2007
Market Leadership
Even a smaller firm can leverage a minor product advantage into a competitive advantage and attain (and defend) a market leadership position
Attack competitor’s “blind spots”
Product weaknesses
Customer changes
Bundling / unbundling
Deploy strategy to drive market
Create the right customer perceptions
Find underdefended markets
Focus resources
Market Driving Strategies - May/June 2007
© Prof. Markus Christen

3. Market Driving Strategies - May/June 2007
Market Leadership
Even with patent protection, product advantages are not sustainable forever. To maintain product advantages, continuous innovation and speed are essential:
“Build a moat” before the enemy is in the city
Understand perceived gaps between customer needs and existing products and close them faster than competitors
Develop new market segments
Develop new customer access points
But: Preemption leads to higher average cost
Market Driving Strategies - May/June 2007
© Prof. Markus Christen

4. Market Driving Strategies - May/June 2007
Market Leadership
Creating the right customer perceptions
Clear and consistent positioning related to customer needs and differential advantage
Zantac: fast, simple, specific
Align all Ps with intended positioning
E.g., price was consistent with customers’ interpretation (quality) and economic incentives
Relentless marketing effort
Glaxo increased access to GPs by targeting same GP with multiple salespeople
Use of partners for fast market penetration
Market Driving Strategies - May/June 2007
© Prof. Markus Christen

5. Customers: Learning Product Quality
Products
Services
Easy
Diamond
China
Cosmetic Surgery
Automobiles
Restaurant Meals
Haircut
IT Services
Cancer Treatment
Business Education
Chair
Difficult
Search Qualities
Experience Qualities
Credence Qualities
Market Driving Strategies - May/June 2007
© Prof. Markus Christen

6. Offensive and Defensive Strategies
Key Attributes Are …
Attack
Defend
Search
Offer superior attribute performance
Change attribute importance
Limit ability and/or motivation to search for new products
Change attributes from ‘search’ to ‘experience’
Experience
Offer lower price or better availability to induce trial and adoption
Find underserved customer segment
Change attribute to search
Limit trial of new products
Expand to block gateways
Change attributes from ‘experience’ to ‘credence’
Credence
Use ‘trusted’ people to create superior reputation
Undermine reputation of incumbent firms
Change attributes to experience or search
Stress long-standing reputation
Undermine reputation of new entrant
Threaten to retaliate (denying allegations will not be sufficient)
Take extreme measures to restore reputation
Market Driving Strategies - May/June 2007
© Prof. Markus Christen

7. Competitor Analysis: Key Elements
Past & Current Strategy
Objectives
Strengths and Weaknesses
People, Culture, Assumptions
Action/ Reaction Profile
Reactions
Likelihood and timing of reaction
Strength of reaction
Target market and/or marketing mix element used to react
Market Driving Strategies - May/June 2007
© Prof. Markus Christen

8. Rule 6: Anticipate (Re)Actions
You need to understand a player’s ability and motivation to anticipate its (re)action.
Market Driving Strategies - May/June 2007
© Prof. Markus Christen

9. Prof. Markus Christen INSEAD Singapore May/June 2011
Case Study: Zantac
Prof. Markus Christen
INSEAD Singapore May/June 2011

11. What is the value today of £1400 invested in 1949?
Invested in Today’s value
Cash £ 84
Gold £ 10,200
A “typical” house (in the U.K.) £ 49,000
The Gartmore Practical Investment Fund £ 127,219 (a unit trust that invests in a range of British and international shares)
Shares in Shell £ 375,000
Comprehensive basket of British shares £ 433,900
Glaxo shares £ 6,300,000
Not bad!

16. Italy UK
France
Germany
Tagamet
USA
Initial UK

19. Losec Market Share Total Antiulcerant Market Non-Ulcer Peptic Ulcer
Acute Treatment
Maintenance and NSAID Prevention
Reflux
54%
16%
30%
65%
35%
Share of Segment in Total Market
35%
19%
10% 6%
30%
Losec Share - in total market - in segment
3% 9%
not approved
9% 90%

20. Glaxo’s Moves 1989-1991 Strategic Objective
“There is a two- or three-year period in which the company cannot lose sight of the absolute importance of protecting and expanding market share with Zantac. Unless we keep our wits about us, we face the risk of someone taking away our lunch the way we did to Tagamet.” (Dr. Ernest Mario, CEO, Glaxo, 1989)
Market Expansion Priorities
NSAID co-prescription Maintenance Reflux
Protection of Market Share
Position Losec as a ‘Second-Line Treatment’, specialist product Challenge Losec’s promotion Increase doctor awareness of potential safety risks with Losec Match Losec’s healing performance and tie up opinion leaders Broad range of line extensions Heavy promotional investments