competitive strategies for market leaders.pptx

8/18/2019 competitive strategies for market leaders.pptx

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Diferentiation strategies


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Competitive advantage

• It is a company’s ability to perorm inone or more ways that competitorscannot or will not match

• For a brand to be efectivelypositioned, customers must see anycompetitive advantage as a

customer advantage


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Dimensions oDiferentiation

• Employee diferentiation – Companies canhave bettertrained employees whoprovide superior customer service!

"ingapore #irlines is well regarded in largepart because o its $ight attendants

• Channel diferentiation – Companies candesign their channels’ coverage,e%pertise, and perormance to ma&ebuying easier, more en'oyable, and morerewarding or customers


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• Image diferentiation – Companiescan crat powerul, compellingimages that appeal to consumers’social and psychological needs

• "ervices diferentiation – # service(rm can diferentiate itsel by

delivering more efective ande)cient solutions to consumers


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Competitive strategies


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Competitive strategies or mar&etleaders

Hypothetical

market structure

*+

-+

.+

/+

0ar&et leader

0ar&et challenger

0ar&et ollower

0ar&et nichers


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Competitive strategies or mar&etleaders

• 0any industries have one (rm that is ac&nowledged as themar&et leader

• 1hese (rms have the largest mar&et share in the relevant productmar&et and leads other (rms in price changes, newproductintroductions, distribution coverage 2 promotion intensity

• E!g! 0icrosot 3computer sotware4, Intel 3microprocessors4,5illette 3ra6or blades4

• 7ut a leader might spend conservatively whereas a challengermight spend liberally!

• 8ence the dominant (rm should be constantly vigilant else it will

be overrun!• E!g! 5odre' 9s! :hirlpool, 801 9s! 1itan

• 1o retain no! / position, (rm must (nd ways to e%pand the totalmar&et demand, (rm must protect its current mar&et sharethrough good deensive 2 ofensive actions and (rm can try to

increase its mar&et share though its constant!


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E%panding the total mar&et

• 1he dominant (rm gains the most when mar&ete%pands

• ;ew customers – every product has the potential oattracting buyers who are unaware o the product,

or who are resisting it because o price or lac& ocertain eatures

• # company can search or new users in - groups – – 1hose who might use it and but not 3mar&etpenetration

strategy4 – 1hose who have never used it 3newmar&et segment

strategy4

– 1hose who live elsewhere 3geographicale%pansionstrategy4


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E%panding the total mar&et•

0ore usage – usage can be increased by increasing the levelor


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Deending the mar&et share

• :hen trying to e%pand, the dominant (rm must try todeend its current position and can be done onlythrough continuous innovation to increasecompetitive strength 2 value to customers

• In satisying the customers’ needs there are - types – ?esponsive mar&eter@ (nds a stated need and (lls it

– #nticipative mar&eter@ loo&s ahead what might customersneed in the near uture

– Creative mar&eter@ discovers and produces solutions

customers did not as& or but to which they enthusiasticallyrespond e!g! the :al&mans by "ony in the late /AB+’swhich revolutioni6ed the way people listened to music


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types o deensivestrategies

3/4

ositionDeender

3.4Flan&

34

Contraction

3-4 reemptive

3*4Counterofensive

#11#CE?

34 0obile


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Deensive strategies

•

osition deense@ involves building superior brand power,ma&ing the brand almost impregnable! E!g! ;escae

• Flan& deense@ the mar&et leader should erect outpoststo protect a wea& ront or which possibly might serve asan invasion base or a counter attac&

• reemptive deense@ a more aggressive deense, attac&sthe enemy beore the enemy starts its ofense, hittingone competitor here and there, and throwing everyoneof balance, introduce a new stream o products andpreceding them with preannouncements – which signal

mar&ets that they have to (ght or mar&et share!E!g! i 0icrosot announces a new product, then smaller(rms may choose to concentrate their developmenteforts in other directions in order to avoid headtoheadcompetition!


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Deensive strategies• Counterofensive deense@ when attac&ed, most mar&et

leaders respond with a counter attac&! In a counterofensive, the leader can meet the attac&er rontally or hitits $an&! #n efective counter attac& is to invade theattac&er’s main territory so that it will have to pull bac&some o its troops to deend itsel!

E!g!G" companies invaded the Hapanese mar&et, when thelatter tried to e%pand in G"

• 0obile deense@ the leader stretches its domain over newterritories which might serve as uture centers ordeense! /4 0ar&et broadening involves in shiting the

ocus rom the current product to the underlying genericneed! E!g! petroleum companies involving in ?2D andemerging as energy’ companies and .4 0ar&etdiversi(cation involves shiting into unrelated industries!E!g! I1C when aced with growing concerns in the

cigarette industry went into cosmetics, garments, ooditems etc!


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Deensive strategies

• Contraction deense@ Jargecompanies sometimes recogni6e thatthey cant deend all o their

territories! 1hen the best course oaction is plannedcontractionKstrategic withdrawal –

giving up wea&er territories andreassigning resources to strongerterritories


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E%panding mar&et share• 0ar&et leaders can improve their pro(tability by

increasing their mar&et share but the underlyingcosts may ar e%ceed the revenue! "o thecompany should consider the ollowing * actors@

/! 1he possibility o provo&ing an antitrust actionL

'ealous companies are li&ely to cry =monopoly> ia dominant (rm ma&es urther inroads!

.! Economic cost@ pro(tability might all withurther increase in mar&et share ater some

level! Customers may disli&e the company andmay preer smaller suppliers! #lso the cost olegal wor&, public relations and lobbying riseswith mar&et share!


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E%panding mar&et share

-4 ursuing the wrong mar&etingmi% strategy

*4 1he efect o increased mar&et share onactual and perceived and assume growth will lead

to a deterioration o is a &ey brand bene(t, e%isting customersmay resent additional new customers!


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Mther competitive strategies –0ar&et challenger strategy

• 1he (rms which occupy the .nd, -rd or lower positions arecalled as runnerup or trailing (rms! 1hese (rms can adoptone among the ollowing posturesL

• #ttac& the leader in an aggressive bid or urther mar&et

share 3mar&et challengers4• Mr can opt or peaceul coe%istence 3mar&et ollowers4

• # mar&et challenger should de(ne its strategic ob'ectiveand opponents!

• It can attac& the mar&et leader – high ris& but high payof

strategy! Gseul only i the leader is not perorming well orotherwise should outinnovate the leader across the wholesegment

• It can attac& (rms o its own si6e that are not doing their 'obs and are under(nanced

• It can attac& small local and regional (rms

Ch i l tt &


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Choosing a general attac&strategy

• Frontal attac&@ ure rontal attac& – attac&er matches

its opponent’s product, advertising, price 2distribution! 0odi(ed rontal attac& – cutting price visNvis the opponent’s, can wor& i the mar&et leaderdoes not retaliate and i the competitor can convincethat the product is e


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strategy

• Encirclement attac&@ is an attempt to catch a wide slice othe enemy’s territory through a blit6L launching a grand

ofensive on several ronts! E!g! "un 0icrosystems licensedits Hava sotware to hundreds o companies against0icrosot

• 7ypass attac&@ indirect assault strategy, bypassing theenemy altogether and attac&ing easier mar&ets to broaden

the (rm’s resource base! 8as - lines o approach –diversiying into unrelated products 3e!g! epsi used abypass strategy against Co&e by aggressively rolling out#


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0ar&et Followers• 1he innovator bears the e%pense o developing the new

product, getting it into distribution and inorming 2

educating the mar&et! 1he reward or all this wor& ismar&et leadership

• 8owever another (rm can come and copy or improve onthe new product! 1hese are mar&et ollowers! 1hese canalso achieve high pro(ts because they did not bear any

innovation e%pense• atterns o =conscious parallelism> are common in capital

intensive, homogenousproduct industries such asertili6ers, steel and chemicals! 8ere service


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1ypes o mar&et ollowers and theirstrategies

•

Countereiter – duplicates the leader’s product, pac&agesand sells it in the blac& mar&et or through disreputableleaders! 0usic (rms, #pple 2 ?ole% have been plagued bythis problem

• Cloner – emulates the leader’s products, name and

pac&aging with slight variations• Imitator – copies some things rom the leader but maintains

diferentiation in terms o pac&aging, advertising, pricing orlocation! 1he leader doesn’t mind the imitator unless thelatter attac&s the ormer aggressively

•

#dapter – ta&es the leader’s products and adapts orimproves them! 1he adapter may chose to sell to diferentmar&ets but it oten grows into uture challenger!

Followership is often not a rewarding path.


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0ar&et;icher strategies

• #n alternative to be a ollower in a large mar&et is to bea leader in a small mar&et!

• Firms with lower share o the mar&et can become highlypro(table through smart niching

• 1hey ofer high value, charge a premium price, achievelower manuacturing costs and shape a strong corporateculture and vision

• 1he ?MI averaged .B in smaller mar&ets but only //in larger mar&ets! ;iching is highly pro(table because

the nicher ends up in &nowing the target customer sowell and hence it meets their needs in a better way!;icher achieves high margin whereas mass mar&eterachieves high volume


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0ar&et;icher strategies

• ;ichers have - tas&s creating niches,e%panding them and protecting them!

• ;ichers ace the ris& o mar&et drying up

or being attac&ed and overspeciali6edresources may not have alternate uses

• 8ence the (rms should continually createnew niches! 0ultiple niching is alwayspreerable to single niching and thecompany increases its chances o survival!

competitive strategies for market leaders.pptx

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