DEALING WITH COMPETITION

Presented by:Feroz Khan

Shilpa SharmaShiva Suresh Sonti

Sunil Singh

In this chapter, we will address the following questions:

• 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?• How should market challengers attack market

leaders?• How can market followers or nichers compete

effectively?

What is competition?

Open market rivalry in which every seller tries to get what other sellers are seeking at the same time-sales, profit, and market share by offering the best practicable combination of price, quality, and service. Where the market information flows freely, competition plays a regulatory function in balancing demand and supply.

Competitive forces

Identifying competitors

Analyzing competitors• Strategic group: A group of firms following the same

strategy in a given target market.

Objectives

• To know what competitors are seeking in the market place.

• To know each competitors behavior.• To know whether the parent company is

running its division for growth or profit.• To know the expansion plans of the

competitors.

Competitor’s expansion plans

Porters 5 forces model

SWOT ANALYSIS

SWOT ANALYSIS

• Tool for Auditing an organization and its environment

• Help to focus on key issues• Strength could be-Any aspect of business which adds value to

product and serviceNew productInnovative product

Continued…….

Location of businessQuality processes • Weaknesses could be-Lack of marketing expertise.Undifferentiated products or services (i.e. in

relation to your competitors).Location of your business.Poor quality goods or services.

• An opportunity could be-A developing market such as the Internet.Mergers, joint ventures or strategic alliances.Moving into new market segments that offer

improved profits.A new international market.A market vacated by an ineffective competitor.

• A threat could be-A new competitor in your home market.Price wars with competitors.A competitor has a new, innovative product or

service.Competitors have superior access to channels of

distribution.Taxation is introduced on your product or service.

Strengths and Weaknesses

SWOT HELPS TO KNOW:-

• Company position• Market value• Method of sales distribution• Product • Brand• Business idea• Opportunity to make an acquisitions

Contd..

• Monitor 3 variables when analyzing competitors:1. Share of market2. Share of mind3. Share of heart

SWOT Analysis

Selecting competitors

• Strong versus Weak• Close versus Distant• Good versus Bad

Selecting customer

Strategies for Market LeadersMarket Leader’s objectives:• Expand the total market by– Finding new users– Creating new uses

• Protect its current market share by– Adopting defense strategies (see following slides)

Defending Market Share

• A market leader should generally adopt a defense strategy

. Six types of defense strategies:

Defensive Strategies of Market Leaders

1. Position Defense Strategy: allocating important efforts to support the firm’s brands (without developing new ones).

ex: Nescafe

Nescafe

2. Flank Defense Strategy: rapid response to competitors’ moves as a result of Competitive Intelligence.

ex: Smironoff vodka.

3. Preemptive Defense Strategy: the best defense is (pre) attack.

Ex: SBI.

4. Counter Offensive Strategy: entering the core business activities of the competition as a defensive mean.

Ex: Hero Honda Pleasure.

5. Mobile Defense Strategy: penetrating new (niche) markets or diversifying inorder to better prepare upcoming defense strategies.

Ex: Bharath petroleum and ITC.

6. Contraction Defense Strategy: reducing products and concentrating on remaining products.

Ex: TVS

Other Competitive Strategies

• Market challenger strategies:The market challengers’ strategic objective is to

gain market share and to become the leader eventually

How?• By attacking the market leader• By attacking smaller & regional firms

Tapal Danedar Tea

Contd..

• Choosing a general attack strategy– Frontal attack– Flank attack– Bypass attack– Guerrilla attack

• Choosing a specific attack strategy

Amul Masti Dahi

Amul Kool

Woodland Shoe

Nintnendo’s Video game

Market-Follower Strategies• Theodore Levitt in his article, “Innovative Imitation”

argued that a product imitation strategy might be just as profitable as a product innovation strategye.g. Product innovation--SonyProduct-imitation—Panasonic

• Counterfeiter• Cloner• Imitator• Adapter

Market-Nicher Strategies• Smaller firms can avoid larger firms by targeting

smaller markets or niches that are of little or no interest to the larger firmse.g. Logitech—mice, Reva electrical cars

Microbrewers--special beers• Nichers must create niches, expand the

niches and protect them– E.g. Digicel Group

• What is the major risk faced by nichers?– Market niche may be attacked by larger firms once

they notice the niches are successful

Nutralite

Balancing Customer and Competitor Orientations

• E.g. Wal-Mart

Competitor-Centered companies

Customer-Centered companies

(Amazon.com)

THANK YOU