competition & competitors

8/6/2019 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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