Chapter

12
Addressing
Competition and
Driving Growth

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Learning Objectives
1. Why is it important for companies to grow the core of
their business?
2. How can market leaders expand the total market and
defend market share?
3. How should market challengers attack market
leaders?
4. How can market followers or nichers compete
effectively?
5. What marketing strategies are appropriate at each
stage of the product life cycle?
6. How should marketers adjust their strategies and
tactics during slow economic growth?
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 Growth strategies
• Building your market • International expansion
share • Acquisitions, mergers,
• Developing committed and alliances
customers and • Building an outstanding
stakeholders reputation for social
• Building a powerful brand responsibility
• Innovating new products, • Partnering with
services, and government and NGOs
experiences

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 Growing the Core
David Taylor

Make the core of the brand as

distinctive as possible

Drive distribution through both

existing and new channels

Offer the core product in new formats

or versions

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 Competitive Strategies
for Market Leaders
• Expanding total market
demand

• Protecting market share

• Increasing market share

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Expanding total market demand
• New customers
• More usage

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 Protecting market share

• Proactive
marketing
– Responsive
anticipation
– Creative
anticipation

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A company needs two proactive skills:
(1)responsive anticipation to see the writing
on the wall, as when IBM changed from a
hardware producer to a service business,
and
(2)creative anticipation to devise innovative
solutions.
responsive anticipation is performed before
a given change, while reactive response
happens after the change takes place.
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 Protecting market share
• Defensive marketing

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 Increasing market share
• The cost of buying higher market share
through acquisition may far exceed its
revenue value
Possibility of provoking
Economic cost
antitrust action

Pursuing wrong Increased market share

marketing activities effect on quality

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 Figure 12.3
Optimal Market Share

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 MARKET-CHALLENGER
STRATEGIES
• Defining the strategic objective and
opponent(s)

A market challenger can attack:

 The market leader
 Underfunded firms its own size
 Small local and regional firms
 The status quo

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 MARKET-CHALLENGER
STRATEGIES
• Choosing a general attack strategy

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• pure frontal attack,
– the attacker matches its opponent’s product,
advertising, price, and distribution.
– the greater resources will win.
• A flanking strategy
– identifying shifts that cause gaps to develop in
the market, then rushing to fill the gaps.
– attractive to a challenger with fewer resources
and can be more likely to succeed than frontal
attacks.

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• Encirclement
– attempts to capture a wide slice of territory by
launching a grand offensive on several fronts.
It makes sense when the challenger
commands superior resources.
• Bypassing the enemy altogether to attack
easier markets instead offers three lines of
approach:
– diversifying into unrelated products,
– diversifying into new geographical markets,
– leapfrogging into new technologies.
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• Guerrilla attacks
– consist of small, intermittent attacks,
conventional and unconventional, including
selective price cuts, intense promotional
blitzes, and occasional legal action, to harass
the opponent and eventually secure
permanent footholds.
– can be expensive, though less so than a
frontal, encirclement, or flank attack, but it
typically must be backed by a stronger attack
to beat the opponent.

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Market-Follower Strategies

Cloner

Imitator

Adapter

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1. Cloner
– The cloner emulates the leader’s products, name, and
packaging with slight variations.
2. Imitator
– copies some things from the leader but differentiates
on packaging, advertising, pricing, or location.
– The leader doesn’t mind as long as the imitator
doesn’t attack aggressively.
3. Adapter
– takes the leader’s products and adapts or improves
them.
– may choose to sell to different markets, but often it
grows into a future challenger, as many Japanese
firms have done after improving products developed
elsewhere.
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 MARKET-NICHER
STRATEGIES
• To be a leader in a
small market
– Firms with low shares
of the total market
can become highly
profitable through
smart niching

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 Niche Specialist Roles

Vertical-
End-user
level
specialist
specialist

Customer-
Channel size
specialist specialist

Job-shop Geographic
specialist specialist

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 PRODUCT LIFE-CYCLE
MARKETING STRATEGIES
• A company’s
positioning and
differentiation
strategy must change
as its product,
market, and
competitors change
over the PLC

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 Figure 12.6
Common Product Life-Cycle
Patterns

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 Figure 12.7
Style, Fashion, And Fad Life Cycles

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 Marketing Strategies: Introduction
Stage
• Pioneering advantages
– Recall of brand name
– Establishes product class attributes
– Captures more uses in middle of market
• Pioneering drawbacks
– Imitators can surpass innovators
– Once leadership is lost, it’s rarely regained

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 Figure 12.8
Long-Range Product Market
Expansion Strategy

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 Marketing Strategies: Growth
Stage
• To sustain rapid market share growth now:
– Improve product quality and add new features
– Add new models and flanker products
– Enter new market segments
– Increase distribution coverage and enter new
distribution channels
– Shift from awareness and trial communications to
preference and loyalty communications
– Lower prices to attract the next layer of price-sensitive
buyers

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Marketing Strategies: Maturity
Stage

Market modification

Product modification

Marketing program
modification

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Market Modification

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 Marketing Strategies: Decline
Stage
• Eliminating Weak Products

• Harvesting and Divesting

– Harvesting calls for gradually reducing a
product or business’s costs while trying to
maintain sales.
– Divesting a product with strong distribution
and residual goodwill, it can probably sell it
to another firm.
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Marketing in a Slow-Growth
Economy
 Explore upside of increasing investment
 Get closer to customers
 Review budget allocations
 Put forth compelling value proposition
 Fine-tune brand and product offerings

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