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Numerous, strong, or aggressive competitors, Stability or declination, Plant capacity additions done in large increments, Fixed costs high

& exit barriers high, High stakes in staying in the segment.

Price war, Advertising battles, New product introductions, Expensive to compete.

To prepare an effective marketing strategy , a company must study competitors as well as actual and potential customers. Companies need to identify competitors strategies, objectives, strengths and weakness. We can examine competition from both an industry and a marketing point of view.

An industry is a group of firms that offer a product or class of product that are close substitutes for one another. It can be classified according to 1. Number of sales and degree of differentiation: Pure monopoly: Only one firm provides a certain product or service in a certain country or area Oligopoly: A small number of large firm produce products that range from highly differentiated to standardized. Monopolistic Competition: Many competitors are able to differentiate their offers in whole or in part. Pure competition: Many competitors offer the same product and service.

1. Entry Barriers: Entry barriers include high capital requirement, economies of scale, patents and licensing requirements. 2. Mobility Barriers: It tries to enter more attractive market segments. 3. Exit Barriers: Legal or moral obligations to customers, creditors and employees, government restrictions, low assets salvage value.

1. Cost Structure: Each industry has a certain cost burden that shapes much of its strategic conduct.
2. Degree of Vertical Integration: Companies find its advantageous to integrate backward or forward.

3. Degree of Globalization: Companies can be differentiated on the basis of Degree of globalization, Some industries are highly local, others are global.

The market concept of competition reveals a broader set of actual and potential competitors.
HP
Olympus Purchase Camera Purchase Accessories
EASTMAN KODAK

Purchase Film Take Picture

Store Pictures on CD Store Pictures

Digitally Manufacture Picture Choose Picture to point

Print & receive Picture


Oloto

Example

Customer Product Awareness Quality Competitor A Competitor B Competitor C E G F E G P

Product Availability P E G

Technical Selling Assistance Staff P G F G E F

Expanding the total market,

Competitive Strategy for market leader

Expanding market share.

Defending the market share,

The dominant firm normally gain the most when the total market expands

Firm that occupy second, third and lower rank in an industry are often called runner up or trailing firms such as..

These firms can adopt one of two postures:1. They can attack the leader and other competitors in an aggressive bid for further market share, ( that is market challengers). 2. They can play ball and no Rock The Boat.

Lower Price good

Intensive advertising promotion

Prestige goods

Improved services

Four broad strategies can be distinguished

Situation
1.

Reaction
We will withdraw from that market because we can not afford to fight this battle. We will increase our advertising expenditure. We will meet competitors price cut. We will increase our sales promotion budget.

1.

When a competitor is going all out to crush us in a particular area.

2.

When a competitor is improving its distribution coverage.

2.

3.

If competitor cuts its price

3.

4.

If any competitor introduced a new service feature

4.

Situation
1. If the total market and quality sensitive segment are growing at a certain level. It the customers segment is growing fast but these customers do not stay with any supplier very long 1.

Reaction
We will focus more effort on reaching and satisfying the quality segments

2.

2.

We will avoid cutting prices.

3.

If the growing number of customer have expressed an interest in 24 hour hot line which no one in the industry offers.

3.

We will install a 24-hour hot line.