competition & competitors
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Kotler on Marketing
Poor firms ignore their
competitors; average firms copy
their competitors; winning firms
lead their competitors.
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Designing Competitive Strategies
Market Leader Strategies An industry may have one
market leader. This firm has the largest market share in
the relevant product market, and usually leads the
other firms in price changes, new product
introductions, distribution coverage, and promotional
intensity.
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Being the leader calls for action on three fronts :
1. The firm must find ways to expand total market
demand.
2. The firm must protect its current market share
through good defensive and offensive actions and
3. The firm can try to increase its market share,
even if market size remains constant.
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Expand the total market.
a. New usersb. New usesc. More usage
Defending Market Share
Defense Strategies
Position defense involves building superior brand power,
making the brand almost impregnable.
Flank Defense The market leader should erect outposts to
protect a weak front or possibly serve as an invasion base for
counter attack.
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Preemptive Defense :
A more aggressive maneuver is to attack before the
enemy starts its offense. A company can launch a
preemptive defense in several ways.
It can wage a guerrilla action across the market hitting
one competitor here, and another there and keep
everyone off balance or it can try to achieve a grand
market envelopment.
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Counter Offensive Defense.
Here, the leader can meet the attacker frontally or hit
its flank or launch a pincer movement.
An effective counter attack is to invade the attackers
main territory so that it will have to pull back some
troops to defend the territory.
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Mobile Defense
The leader stretches its domain over new territories that
can serve as future centers for defense offense. It spreads
through market broadening and market diversification.
Contraction Defense
Large companies recognize that they no longer defend all
of their territory.
The best course of action then is planned contraction (alsocalled strategic withdrawal) It means giving up weaker
territories and reassigning resources to stronger territories.
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Expanding Market Share
Market leaders can improve their profitability by
increasing their market share.
Market challenger strategies
Firms that occupy second, third & lower ranks in
the industry are often called runner-up or trailing
firms.
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Frontal Attack
The attacker matches its opponents product,
advertising, price and distribution. The principle of
force says that the side with greater manpower
(resources) will win.
A modified frontal attack such as cutting price vis--vis
opponents can work if the market leader does not
retaliate and if the competitor convinces the market that
its product is equal to the leaders.
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Flank Attack
The enemys weak spots are natural targets. A flank
attack can be directed along two strategic
dimensions geographical and segmental.
In a geographical attack, the challenger spots areas
where the opponent is under performing
The other strategy is to serve uncovered market needs.
Flank attacks are particularly attractive to a challenger
with fewer resources than its opponent and are much
more likely to be successful than frontal attacks.
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EncirclementAttack
It involves launching a grand offensive on several fronts.
Encirclement makes sense when the challenger
commands superior resources and believes a swift
encirclement will break the opponents will.
Bypass Attack
Most indirect attack. It means bypassing the enemy and
attacking easier markets to broaden ones reserve base.
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This strategy offers three lines of approach :
a. Diversifying into unrelated products
b. Diversifying into new geographical markets, and
c. Leapfrogging into new technologies to supplant
existing products.
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Guerrilla Warfare
Guerrilla warfare consists of waging small,
intermittent attacks to harass and demoralize theopponent and eventually secure permanent footholds.
These include selective price cuts, intense
promotional blitzes, and occasional legal actions.
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Market follower strategies
The follower has to define a growth path, but one
that does not invite competition retaliation. Four
broad strategies can be distinguished :
1. Counterfeiter
The counterfeiter duplicate the leaders product and
package and sells it on the black market or through
disreputable dealers.
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2. Cloner
The cloner emulates the leaders products, name, and
packaging, with slight variations.
3. Imitator
The imitator copies some things from the leader but
maintains differentiation in terms of packaging,
pricing, etc.
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4. Adapter
The adapter takes the leaders products and adapts or
improves them. The adapter may choose to sell todifferent markets, but often the adapter grows into the
future challenger, as many Japanese firms have done
after adapting and improving the products developed
elsewhere.
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Market Nicher Strategies
An alternative to being a follower in a large market is
to be a leader in small market or niche. Smaller firms
normally avoid competing with larger firms by
targeting small markets of little or no interest to the
larger firms.
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