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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 0 in Chapter 8

Chapter 8

Deal ing w ith the

Compet i t ionPowerPoint by Karen E. James

Louisiana State University - Shreveport

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 1 in Chapter 8

Objectives

Understand how a company

identifies its primary competitors

and ascertains their strategies.

Review how companies design

competitor intelligence systems.

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 2 in Chapter 8

Objectives

Learn how a company decides

whether to position itself as a

market leader, a challenger, a

follower, or a nicher.

Identify how a company canbalance a customer vs. competitor

orientation.

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 3 in Chapter 8

Market share

40%

30%

20%

Market leader

Challenger

Follower

Nichers:

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2003 Prentice Hall, Inc.

Competitor MyopiaThe Kodak story:

To accompanyA Framework for Marketing Management, 2ndEdition Slide 4 in Chapter 8

Presumed competitor.

Realcompetition

FUJI

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2003 Prentice Hall, Inc.

The Customer Myopia theLevis story.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 5 in Chapter 8

Perceivedcompetition

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2003 Prentice Hall, Inc.

What LEVIS missed out!

To accompanyA Framework for Marketing Management, 2ndEdition Slide 6 in Chapter 8

Up-market fashion customers: Femalesegment.

Value- seekers.

Current Elliot

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 7 in Chapter 8

Competitive Markets

Porters Five Forces that Determine

Market Attractiveness:

Threat of intense segment r ivalry

Threat of new entrants

Threat of subst i tute products

Threat of buyers growing bargainingpower

Threat of suppliers growing bargainingpower

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 8 in Chapter 8

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 9 in Chapter 8

Competitive Markets

Failing to identify competitorscan lead to extinction

Internet businesses have led todis intermediat ionof middlemen

Competition can be identifiedusing the indust ryor marketapproach

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2003 Prentice Hall, Inc.

Pure Monopoly.

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 12 in Chapter 8

Competitive Markets

Industry Structures

Pure Monopo ly

Pure Ol igopo ly

Differentiated

Ol igopoly

Monopol is t ic

Compet i t ion

Pure Compet it ion

A few firms produce

essentially identical

commodities andlittle differentiation

exists

Lower costs are the

key to higher profits

Example:Petroleum

products .

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2003 Prentice Hall, Inc.

Pure Oligopoly

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 14 in Chapter 8

Competitive Markets

Industry Structures

Pure Monopo ly

Pure Ol igopo ly

Differentiated

Ol igopoly

Monopol is t ic

Compet i t ion

Pure Compet it ion

A few firms producepartiallydifferentiated items

Differentiation is bykey attributes

Premium price may

be charged

Example:Air l ineserv ices,Luxu ry cars

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2003 Prentice Hall, Inc.

Differentiated Oligopoly.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 15 in Chapter 8

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 16 in Chapter 8

Competitive Markets

Industry Structures

Pure Monopoly

Pure Ol igopo ly

Differentiated

Ol igopoly

Monopol is t ic

Compet i t ion

Pure Compet it ion

Many firms

differentiate items in

whole or part Appropriate market

segmentation is key

to success

Example:Cosmet ics,

Beverages,

garments.

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2003 Prentice Hall, Inc.

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 18 in Chapter 8

Competitive Markets

Industry Structures

Pure Monopo ly

Pure Ol igopo ly

Differentiated

Ol igopoly

Monopol is t ic

Compet i t ion

Pure Compet it ion

Many competitors

offer the same

product Price is the same

due to lack of

differentiation

Example:farmers

selling milk, crops,

commodities.

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 19 in Chapter 8

Market Approach.

A broader group of competitors

will be identified using the

market app roach

Competi tor mapsplot buying

steps in purchasing and usingthe product, as well as direct and

indirect competitors

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 20 in Chapter 8

Designing Competitive Strategies

Major Strategies

Market-Leader

Market-

Chal lenger

Market-Fol lower

Market-Nicher

Expanding the

total market

Defending

market share

Expanding

market share

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 21 in Chapter 8

Designing Competitive Strategies

Expanding the Total Market:

Target ing Produ ct to New UsersMarket-penetration strategy

New-market strategy

Geographical-expansion strategyPromot ing New Uses o f Product

Encouraging Greater Produc t Use

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2003 Prentice Hall, Inc.

Creating novel coffee

based products

Targeting product to new users.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 22 in Chapter 8

Undertaking retail

concentration

Highambience forlifestyle customers

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2003 Prentice Hall, Inc.

Promoting new uses of product:

To accompanyA Framework for Marketing Management, 2ndEdition Slide 23 in Chapter 8

Fat free food

for dieters

Fortified high

fiber food for

athletes.

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2003 Prentice Hall, Inc.

Encouraging greater product use.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 24 in Chapter 8

Creating Jumbo

packs.

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 25 in Chapter 8

Designing Competitive Strategies

Positiondefense

Flank defense

Preemptivedefense

Counteroffensive

defense

Mobile defense

Contraction

defense

Defending Market Share

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2003 Prentice Hall, Inc.

Position Defense

Always be top on:

Share of the market.

Share of mind.

Share of heart.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 26 in Chapter 8

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2003 Prentice Hall, Inc.

Flank defense:Vodka Wars.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 27 in Chapter 8

Smirnoff vs

Wolfschmidt.

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2003 Prentice Hall, Inc.

Pre-emptive Defense

To accompanyA Framework for Marketing Management, 2ndEdition Slide 28 in Chapter 8

vs

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2003 Prentice Hall, Inc.

Counteroffensive defense.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 29 in Chapter 8

vs

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2003 Prentice Hall, Inc.

Mobile defense:

To accompanyA Framework for Marketing Management, 2ndEdition Slide 30 in Chapter 8

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2003 Prentice Hall, Inc.

Contraction Defense

To accompanyA Framework for Marketing Management, 2ndEdition Slide 31 in Chapter 8

Offloads

and

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 32 in Chapter 8

Designing Competitive Strategies

Before Attempting to Expand

Market Share, Consider:

Probabi l ity o f invoking ant i t rust

act ion

Econom ic costs invo lved

Likelihood that market ing m ix

decis ion s w i l l inc rease pro f i ts

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 33 in Chapter 8

Designing Competitive Strategies

Major Strategies

Market-Leader

Market-

Chal lenger

Market-Fol lower

Market-Nicher

First define the

strategic goals

and opponent(s)

Choose general

attack strategy

Choose specific

attack strategy

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 34 in Chapter 8

Designing Competitive Strategies

General Attack Strategies:

Fron tal at tacks match competi t ion

Flank attacks serve unmet market

needs or underserved areas

Encirclement blitzes opponentBypassing opponent and attack ing

easier markets is also an op t ion

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2003 Prentice Hall, Inc.

Frontal attack:Airbus vs Boeing.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 35 in Chapter 8

Vs

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2003 Prentice Hall, Inc.

Encirclement or Blitzattack:

To accompanyA Framework for Marketing Management, 2ndEdition Slide 37 in Chapter 8

Vs

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2003 Prentice Hall, Inc.

By-pass attack:Pepsi Vs Coca Cola.

To accompanyA Framework for Marketing Management, 2ndEdition Slide 38 in Chapter 8

Vs

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 39 in Chapter 8

Competitive Markets

Price-discount

Lower-price goods

Prestige goods

Improved services Product proliferation

Product

innovation

Distribution

innovation

Manufacturingcost reduction

Intensive advertising promotion

Specific Attack Strategies Include:

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 40 in Chapter 8

Designing Competitive Strategies

Major Strategies

Market-Leader

Market-

Chal lenger

Market-Fol lower

Market-Nicher

Imitation may bemore profitablethan innovation

Four broadstrategies:

Counterfei ter

Cloner

Imitator

Adapter

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2003 Prentice Hall, Inc.

Imitator

To accompanyA Framework for Marketing Management, 2ndEdition Slide 42 in Chapter 8

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2003 Prentice Hall, Inc.

Adapters

To accompanyA Framework for Marketing Management, 2ndEdition Slide 43 in Chapter 8

Samsung Galaxy tab I-Pad

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2003 Prentice Hall, Inc. To accompanyA Framework for Marketing Management, 2ndEdition Slide 44 in Chapter 8

Designing Competitive Strategies

Major Strategies

Market-Leader

Market-

Chal lenger

Market-Fol lower

Market-Nicher

Niche specialties:

End-user

Vertical-level

Customer-size

Speci f ic custom er

Geographic

Produc t /prod uct l ine

Produc t feature

Job-shop

Quali ty-price

Service

Channel

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