Topic 3 - Part 2

Wednesday, November 27, 13
CAPTURING MARKETING INSIGHTS

dealing with competition
There are five forces that determine the intrinsic long-run attractiveness of a market or market segment: industry competitors, potential entrants, substitutes, buyers, and suppliers. Michael Porter
IDENTIFYING COMPETITION
INDUSTRY
a group of firms that offer a product or class of products that are close substitutes for one another.
INDUSTRY
a group of firms that offer a product or class of products that are close substitutes for one another. CLASSIFICATION . . . number of sellers . . . degree of product differentiation . . . exit barriers . . . cost structure . . . degree of integration . . . degree of globalization
COMPETITION
COMPETITION
. . . satisfy the same need
COMPETITION
. . . satisfy the same need . . . not just product category
COMPETITION
. . . satisfy the same need . . . not just product category . . . me vs. the world
COMPETITION
COMPETITION
analyze their strategies, objectives, strengths and weaknesses
COMPETITION
STRATEGIES
COMPETITION
STRATEGIC GROUP
STRATEGIES
COMPETITION
STRATEGIC GROUP
A group of firms following the same strategy in a given target market
STRATEGIES
COMPETITION
STRATEGIC GROUP
A group of firms following the same strategy in a given target market
STRATEGIES
COMPETITION
OBJECTIVES
COMPETITION
OBJECTIVES
What is each competitor seeking in the marketplace?
COMPETITION
OBJECTIVES
What is each competitor seeking in the marketplace? What drives each competitors behavior?
COMPETITION
OBJECTIVES
What is each competitor seeking in the marketplace? What drives each competitors behavior? One useful initial assumption is that competitors strive to maximize profits.
COMPETITION
OBJECTIVES
A company must monitor competitors expansion plans
COMPETITION
OBJECTIVES
A company must monitor competitors expansion plans
COMPETITION
STRENGTHS AND WEAKNESSES
COMPETITION
gather information on each competitors
COMPETITION
gather information on each competitors
YOU SHOULD ALSO CHECK:
share of Market
share of Market share of
share of Market share of share of

preference to buy
SELECTING COMPETITORS
focus its attack on one of the following classes of competitors
Strong vs. Weak
Most fight weak but must compete with strong to keep up with the best
Strong vs. Weak
Coke vs. Pepsi, Coke vs. Beverages Toyota vs. Honda, Toyota vs. Ferrari
Close vs. Distant
Strong vs. Weak
Coke vs. Pepsi, Coke vs. Beverages Toyota vs. Honda, Toyota vs. Ferrari Good - play by the rules, reasonable prices Bad - buy share than earn it, overcapacity
Close vs. Distant
Good vs. Bad
SELECTING CUSTOMERS
evaluate its customer base and think about which customers it is willing to lose and which it wants to retain.
COMPETITIVE STRATEGIES FOR
LEADER CHALLENGER FOLLOWER NICHER

MARKET LEADER
MARKET LEADER
. . . largest market share
MARKET LEADER
. . . largest market share . . . leads in price changes, new product introduction, distribution coverage, promotional intensity
MARKET LEADER
. . . largest market share . . . leads in price changes, new product introduction, distribution coverage, promotional intensity . . . must be vigilant
EXPANDING TOTAL MARKET

LOOK FOR NEW CUSTOMERS

buyers who are unaware of the product or who are resisting it because of price or lack of certain features

buyers who are unaware of the product or who are resisting it because of price or lack of certain features
Those who might use it but do not (market-penetration). Those who have never used it (new-market segment). Those who live elsewhere (geographical-expansion).

MORE USAGE

MORE USAGE
Increase amount of consumption - larger packaging

MORE USAGE
Increase amount of consumption - larger packaging Increase frequency of use

MORE USAGE
Increase amount of consumption - larger packaging Increase frequency of use . . . Identifying additional opportunities to use the brand in the same basic way

MORE USAGE
Increase amount of consumption - larger packaging Increase frequency of use . . . Identifying additional opportunities to use the brand in the same basic way . . . Identifying completely new and different ways to use the brand

MORE USAGE
Increase amount of consumption - larger packaging Increase frequency of use . . . Identifying additional opportunities to use the brand in the same basic way . . . Identifying completely new and different ways to use the brand . . . consumers perceptions of their usage differ from the reality of their usage.

MORE USAGE
Increase amount of consumption - larger packaging Increase frequency of use . . . Identifying additional opportunities to use the brand in the same basic way . . . Identifying completely new and different ways to use the brand . . . consumers perceptions of their usage differ from the reality of their usage.
DEFENDING MARKET SHARE

What can a market leader do to defend its terrain?

What can a market leader do to defend its terrain? continuous innovationdeveloping new product and customer services, distribution effectiveness, and cost cuttingit keeps its competitive strength and value to customers

What can a market leader do to defend its terrain? continuous innovationdeveloping new product and customer services, distribution effectiveness, and cost cuttingit keeps its competitive strength and value to customers
Find need it and fill it (responsive marketer) Look at what customers need in the future (anticipative marketer) Discover and produce solutions customers did not ask for but they will enthusiastically respond (creative marketer)
most desirable market space in consumers mind brand invincibility

erect outposts in order to 1. protect weak front or 2. counterattack
To attack before enemy starts offense 1. Guerilla 2. Market Envelopment
attack frontal, hit flank, pincer movement, exercise political or economic clout
stretches domain over new territories - future centers for defense & offense through:
stretches domain over new territories - future centers for defense & offense through:
Market broadening - shift focus from current product to generic need Market diversification - shift into unrelated industries
Planned contraction - strategic withdrawal: give up weak, reassign to strong
EXPANDING MARKET SHARE
EXPANDING MARKET SHARE

FOUR FACTORS TO CONSIDER . . . possibility of provoking antitrust action . . . economic cost . . . pursuing wrong marketing mix strategy . . . The effect of increased market share on actual and perceived quality
Each can attack the leader and others in an aggressive bid for further market share
Each can attack the leader and others in an aggressive bid for further market share they can play ball and not rock the boat
MARKET CHALLENGER STRATEGIES

Market challenger needs to define strategic objective - increase market share

Market challenger needs to define strategic objective - increase market share
But, WHO should they attack?

. . . market leader . . . firms of their own size . . . small local or regional firms

How to Attack
1. Frontal Attack attacker matches opponents product, advertising, price & distribution

How to Attack
1. Frontal Attack attacker matches opponents product, advertising, price & distribution 2. Flank Attack Enemys weak spots - natural target Segmental attack - serve uncovered market needs Geographic attack - area opponent underperforms

How to Attack
3. Bypass Attack
. . . Most indirect assault strategy . . . Bypass enemy & attack easier markets to broaden resource base Diversify - unrelated products Diversify - new geographical markets Leapfrog - new technologies - supplant current products

How to Attack
3. Bypass Attack
. . . Most indirect assault strategy . . . Bypass enemy & attack easier markets to broaden resource base Diversify - unrelated products Diversify - new geographical markets Leapfrog - new technologies - supplant current products

How to Attack

How to Attack
4. Guerrilla Warfare Wage small, intermittent attacks to harass & demoralize opponent & before securing permanent footholds

How to Choose an Attack
. . . Any aspect of the marketing program can serve as the basis for attack price, service, distribution, product . . . . . . Combine several strategies
MARKET FOLLOWER STRATEGIES
. . . imitation profitable as innovation
. . . imitation profitable as innovation . . . follow but not challenge
. . . imitation profitable as innovation . . . follow but not challenge . . . provide distinctive advantage

Broad Strategies

Broad Strategies Counterfeiter . . . duplicate product

Broad Strategies Counterfeiter . . . duplicate product Cloner . . . slight variations (mostly name)

Broad Strategies Counterfeiter . . . duplicate product Cloner Imitator . . . slight variations (mostly name) . . . differentiation in packaging, advertising, pricing, location

Broad Strategies Counterfeiter . . . duplicate product Cloner Imitator Adapter . . . slight variations (mostly name) . . . differentiation in packaging, advertising, pricing, location . . . adapts or improves product
MARKET NICHER STRATEGIES

. . . Target small markets that are of little/no interest to large firms

. . . Target small markets that are of little/no interest to large firms . . . Offer high value, premium price, low production costs

. . . Target small markets that are of little/no interest to large firms . . . Offer high value, premium price, low production costs . . . Multiple niches increases chance of survival

. . . Target small markets that are of little/no interest to large firms . . . Offer high value, premium price, low production costs . . . Multiple niches increases chance of survival How niching becomes profitable? . . . understanding the target market better . . . high margin rather than high volume (mass)
COMPETITOR CENTERED
CUSTOMER CENTERED
COMPETITOR CENTERED
PLUS: Develop into a fighter . . . Constant alert- weakness competitors & its own
CUSTOMER CENTERED
COMPETITOR CENTERED
PLUS: Develop into a fighter . . . Constant alert- weakness competitors & its own MINUS: Become to reactive . . . No consistent customer oriented strategy . . . Moves based on competitors moves
CUSTOMER CENTERED
COMPETITOR CENTERED
PLUS: Develop into a fighter . . . Constant alert- weakness competitors & its own MINUS: Become to reactive . . . No consistent customer oriented strategy . . . Moves based on competitors moves
. . . Better position to identify new opportunities . . . Set a course - deliver longrun profits . . . Monitor customer needs
CUSTOMER CENTERED
COMPETITOR CENTERED
COMPETITOR CENTERED
SITUATION 1: Competition has cut price and we lost market share
COMPETITOR CENTERED
SITUATION 1: Competition has cut price and we lost market share REACTION: Competition has cut price and we lost market share
COMPETITOR CENTERED
COMPETITOR CENTERED
SITUATION 2: Competition has Introduced new service and we are losing sales
COMPETITOR CENTERED
SITUATION 2: Competition has Introduced new service and we are losing sales
REACTION: Increase sales promotion budget
CUSTOMER CENTERED
REACTION: Reach and satisfy quality segment
SITUATION 1: Quality segment is growing by 8%
CUSTOMER CENTERED
CUSTOMER CENTERED

Topic 3 - Part 2

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Topic 3 - Part 2

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Wednesday, November 27, 13

CAPTURING MARKETING INSIGHTS

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

What is each competitor seeking in the marketplace?

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

A company must monitor competitors expansion plans

Wednesday, November 27, 13

A company must monitor competitors expansion plans

Wednesday, November 27, 13

Wednesday, November 27, 13

STRENGTHS AND WEAKNESSES

Wednesday, November 27, 13

STRENGTHS AND WEAKNESSES

Wednesday, November 27, 13

STRENGTHS AND WEAKNESSES

Wednesday, November 27, 13

Wednesday, November 27, 13

YOU SHOULD ALSO CHECK:

Wednesday, November 27, 13

YOU SHOULD ALSO CHECK:

Wednesday, November 27, 13

YOU SHOULD ALSO CHECK:

share of Market share of

Wednesday, November 27, 13

YOU SHOULD ALSO CHECK:

share of Market share of share of

YOU SHOULD ALSO CHECK:

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

Strong vs. Weak

Wednesday, November 27, 13

Strong vs. Weak

Close vs. Distant

Wednesday, November 27, 13

Strong vs. Weak

Close vs. Distant

Good vs. Bad

Wednesday, November 27, 13

Wednesday, November 27, 13

Wednesday, November 27, 13

COMPETITIVE STRATEGIES FOR

LEADER CHALLENGER FOLLOWER NICHER

Wednesday, November 27, 13

Wednesday, November 27, 13