MARKETING MANAGEMENT

Dealing with
Competition

Rakesh Kumar Vijay Mohan Rao Kumarraja

Daniel Joseph Ginu P Mathew Sreejith
CHAPTER 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?
FIVE FORCES DETERMINING SEGMENT STRUCTURAL
ATTRACTIVENESS
IDENTIFYING COMPETITORS
INDUSTRY CONCEPT OF COMPETITION

 Number of sellers and degree of differentiation

 Entry, mobility, and exit barriers
 Cost structure
 Degree of vertical integration
 Degree of globalization
INDUSTRY CONCEPT OF COMPETITION

Pure
Pure Monopoly
Monopoly

Oligopoly
Oligopoly

Monopolistic
Monopolistic Competition
Competition

Pure
Pure Competition
Competition
COMPETITOR MAP
A COMPETITOR’S EXPANSION PLANS

• 11-
10
ANALYZING COMPETITORS

Share of market

Share of mind

Share of heart
HYPOTHETICAL MARKET STRUCTURE

10% 20% 30% 40%

Market Market Market Market
Nichers Follower Challenger Leader

• 11-
12
EXPANDING THE TOTAL MARKET

New customers

• Market Penetration Strategy

• New Market Segment Strategy
• Geographical-expansion Strategy

More usage
SIX TYPES OF
DEFENSE STRATEGIES
POSITION DEFENSE
FLANK DEFENSE
COUNTEROFFENSIVE DEFENSE
OPTIMAL MARKET SHARE
FACTORS RELEVANT TO PURSUING INCREASED MARKET SHARE

 Possibility of provoking antitrust action

 Economic cost
 Pursuing the wrong marketing-mix strategy
 The effect of increased market share on actual
and perceived quality
OTHER COMPETITIVE STRATEGIES
• LG, Toyota challenged the market leaders and
Market
overtook leaders in color TV and car markets, respectively.
Challengers

• Theodore Levitt in an article titled “Innovative Imitation” argues

Marketthat a strategy of product imitation might be as profitable as
Followers
a strategy of product innovation.

• A. T. Cross: high-price writing instruments market. Nicher

Market achieves a high margin whereas mass marketer achieves
Nichershigh volume.
MARKET CHALLENGERS-TOYOTA
MARKET CHALLENGER STRATEGIES

 Define the strategic objective and opponents

 Choose a general attack strategy
 Choose a specific attack strategy
GENERAL ATTACK STRATEGIES

Frontal Attack Flank Attack

Encirclement
Bypass Attack
Attack

Guerrilla Warfare
PEPSI BUYS GATORADE IN A BYPASS STRATEGY
GUERILLA MARKETING
SPECIFIC ATTACK STRATEGIES

 Price discounts  Product innovation

 Lower-priced goods  Improved services
 Value-priced goods  Distribution innovation
 Prestige goods  Manufacturing-cost
 Product proliferation reduction
 Intensive advertising
promotion
MARKET FOLLOWER STRATEGIES

Counterfeiter

Cloner

Imitator

Adapter
MARKET NICHER STRATEGIES
BALANCING ORIENTATIONS

Competitor- Customer-
Centered Centered
COMPETITOR ANALYSIS

Why Competition?
It indicates
 the health of the industry
 spurs new product development.

 induces market leaders to enhance efficiency of their existing

products.
 introduce their new variants & even enter new product markets.
 always induces firms to revise their product portfolios as also to

revisit their product markets.

 understand changing needs, expectations and perceptions of

different market segments.

 motivates firms to make their products feature rich and versatile.
INNOVATION

 Competition shortens product life cycles.

 Forecasting products or brand death and
preempting competition through new products is
extremely critical.
 Equally critical are innovations in other elements
of marketing mix and processes.
SAMSUNG ATTACKS USING INNOVATION
MARKET DEVELOPMENT

•Opportunities in new
markets.
•Development of rural
markets.
•Customer benefits.
FACTORS FOR INTER-FIRM RIVALRY

 Motivation to reduce costs.

 Low barriers.
Motivation to reduce costs:
 Competition motivates firms to reexamine their cost
structures.
 Competition is a great leveler so far as product prices
are concerned.
 Competitors create a disequilibrium in the market
through the price route.
 Competition forces market leader to revisit his cost
structure.
Low barriers:
 Low entry and exit barriers in a market, is one of the key
factors driving competition.
 Barriers to entry and exit in any market are:
 Government Policy.
 Costs.
 Presence of strong brands.
 Customers.
 Technology.
 Lack of credible competition.
STAGES OF COMPETITION

Competition Competition
for Resources & for existing
opportu Competen
markets
nity cies

Supplier Regulation
Customer Technology
FORMS OF COMPETITION

 Competition to any product or firm can be in any form.

At the general level, this could be either direct or
indirect, i.e. substitutes.
 New age competition levels.
 Innovative solutions to customer solutions.
 Launch a price war by offering identical product at a lower
price than the industry leader.
 Switch channels of distribution.
 Service based competition.
 Experience based competition.
COMPONENTS OF COMPETITOR ANALYSIS

FUTURE CURRENT
GOALS STRATEGY

COMPETITORS RESPONSE
PROFILE

ASSUMPTION
CAPABILITIES
S
CUSTOMERS PERCEPTION OF COMPETITORS

•Reliabilit •Responsi
y veness
•Assuranc
•Empathy
e
TWO DIMENSIONAL PERCEPTUAL MAPPING

Opportunity
for a new
entrant
 A
High Price Competitive
 B price

 C
Obsolete
technology
COMPETITORS PROFILE ANALYSIS

 Background / History.
 Business / Product Mix.
 Major Corporate Objectives / Strategies.
 Recent Trends / Business Developments.
 Financial Analysis:
 Sales growth.
 Profit growth.
 Operating margin.
 Net margin.
 Return on asset.
 Return on equity.
 Strategic Assessment:
 Strengths / Weaknesses.
 Strategic directions / management assumptions.
 Expected performance / responsive capability.
 Implication to company X and company Y.
ALFA ROMEO
DU PONT PROFITABILITY MATRIX
 States that operating margin times asset turnover
equals return on assets (ROA).

 Du Pont Matrix does not provide solutions to the

questions, nor does it describe the strategies
employed by the competitors.

 Provides directions to analysis which may lead to an

understanding of these strategies.
OTHER APPROACHES TO WAR PREPARATION

 Competitive Arena Mapping.

 Segmentation Matrix Map.
• Future • Market
Growth Value Value Matrix
Thank
U