Strategic Marketing, 3rd edition

Chapter 4: Strategic marketing decisions, choices, and mistakes

C. Functional Level
 Step 1: Setting the Marketing Objectives
Some possible Objectives?

• Sales Growth
• Market Share
• Innovativeness
• Customer Satisfaction
• Reputation
• Brand Loyalty
Objectives should be

• Hierarchical: most to least

important objective
• Quantitative
• Realistic: research based
• Consistent : SR and LR approach
Step 2: Strategic Decision of Products to offer and
Markets to target

Competition dependent Cannibalization

 Market Penetration

Product dev
Market dev
Product dev for Gourmet Bazar

Horizontal Integration for Gemcon

Product development
 Diversification by Kazi under Gemcon

Product development
 Step 3: Strategic Decision for Competitive Tactics
Marketing Strategy: the manner in which company recourses are used
in the search for a differential advantage and should be formulated with
reference to external market environment in which that firm operated.

Tactic: an operating action specifying how, when and where a strategy is

to be implemented. Narrow in scope and is of SR.

Po s i tio n Ta c tics: Four Market Position

Competitive f CA
Depending o
n t h e G oa l s o
• Market Leader
Po s ition
and M a rket
)
• Market Challenger
(competition
• Offensive • Market Followers
• Defensive • Market Nicher
Step 3: Strategic Decision for Competitive Tactics

Raising entry barriers

Competitive Positions: Market Leader
1. Market Leader (firm with largest market share, can be country
specific): GP, NSU, Nike, Google, Microsoft, etc. other firms keep challenging
them…if the competition is very close, anytime they can loose their position. (new
tech/ trend/arrogance). To remain at one, these companies are:
a. Expanding the Total Demand (Offensive) : a small increase boosts up the
sale.
• Finding new users/customers: MovenPick at Uttara, Maggi noodles for villages.
• Discovering and promoting new product uses: Cadbury: Celebration, coke: open
happiness,
• Encouraging greater product usage: Campbell Soup, M&M Easter dessert
Recipe, Mobile as interactive platform, etc
b. Expanding Market Share (Offensive)
• Profitability rises with market share: intro of a better marketing mix

Protecting Market Share (Defensive)

• Prevent or Fix Weaknesses: now newer better service, etc
• Fulfill Value Promised
• Keep Prices consistent with Value
• Build Relationships: banks
• Continuous Innovation: Apple, Honda, Sony, etc
New/greater product uses
New/greater product uses
new /greater product uses
Incentives
 Competitive Positions: Market Leader: Defensive
Tactics: Protect Market share

6 different types of defensive tactics

• Position Defense
• Flanking Defense
• Pre-emptive Defense
• Counter Offensive Defense
• Mobile Defense
• Contraction Defense

http://www.yourarticlelibrary.com/marketing/market-leadership-strategies-
explained/43538/
 Competitive Positions: Market Leader: Defensive
Tactics: Protect Market share
• Position Defense: The position defense is the
simplest defensive strategy. It simply involves
trying to hold your current position in the market.
To do this, you simply continue to invest in your
current markets and attempt to build your brand
name and customer loyalty.
• The problem with this strategy is that it can make
you a target for new entrants to the market.
• To overcome a position defense an attacker
therefore typically adopts an indirect approach
rather than the head-on attack that the defender
expects. For example, HUL increased its ad-spend
on Clinic Plus and Sun silk shampoos and gave
heavy promotions through price reduction.
https://tbsnews.net/companies/l
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https://www.thedailystar.net/business/news/electrical-product
 Competitive Positions: Market Leader: Defensive
Tactics: Protect Market share
• Flanking Defense: the fighter brand: In marketing, taking a flanking
position means that you establish a defensive presence in a weaker segment
which you anticipate your competitor will move into.

• Flanking compels the threatened competitor to either allocate resources to

the segments being attacked (and thus dilute the competitor's marketing
efforts) or to lose them to the attacker.
When a firm uses the flanking defense, it
defends its market share by diversifying into
new markets and niche segments.
 Competitive Positions: Market Leader: Defensive
Tactics: Protect Market share
• Pre-emptive Defense: the leading firm can be aggressive and strike
competitors before they can make any move against it.

• Maybe you’ve heard rumors that they’re working on a product to rival

yours. If this is the case then you could be in the position to launch a
pre-emptive defense to shut down your competitor’s attack before it
gets a chance to start!

• GP blocked all TV spots, billboards, newspapers to thwart Warid’s

launch plan

• Titan launched more brands and sub-brands to corner the market

http://www.thedailystar.net/supplements/25th-anniversary-special-part-2/comeback-the-
horizon-real-estate-210853
 Competitive Positions: Market Leader: Defensive
Tactics: Protect Market share
• Counter-offensive Defense: This involves that the market leader will
attack the attacker in its main territories so that the attacker will have
to put back some resources for the attacked territories and will have
to divert its attention from launching attack on the market leader. This
may involve significantly lowering the prices of the product or
aggressive marketing communications or flooding the market with the
products.
• RB’s Mortein, Harpic and Dettol. Square’s Xpel, Shakti and Sepnil. To
protect Mortein, RB can go attack the toilet cleaning segment, so that
Square diverts all resources to that segment and can’t do anything
with Xpel, so Mortein is safe
• When Ceat tyres attacked TVS Srichakra in Tamil Nadu markets, TVS
decided to expand its coverage to Ceat tyre’s hub in the north and
west of India through innovative campaigns like road rallies, road
shows and attractive public campaigns.
 Competitive Positions: Market Leader: Defensive
Tactics: Protect Market share
• Mobile Defense: By spreading your efforts out this way, you become a
much more difficult target to pin down. They’ll be reluctant to commit
to a large-scale attack on you as it will only affect one part of your
business, and may not deal the massive blow they want it to.
• the leader extends itself to new markets that can serve as future bases
for defense or offence.
 Competitive Positions: Market Leader: Defensive
Tactics: Protect Market share
• STRATEGIC WITHDRAWAL/ Contraction Defense: This isn’t the same as just giving
up, the word ‘strategic’ means that it’s different! It’s always better to live and fight
another day than to foolishly fight a losing battle until the inevitable grizzly end.
• This strategy is where you withdraw from your more vulnerable areas and redirect
your resources to the more defendable ones. So you might sell off some of your
smaller operations to focus more efforts on your more profitable ones
 Competitive Positions: Market Challenger:
2. Market Challenger
• Challenge the market leader
• High-risk but high-gain (2nd movers advantages)
• Sustainable competitive advantage over the
leader is key to success
• Neutralize other competencies of the Leader.
• Alternatively, Firms can challenge firms of the same size
or smaller regional and local firms
Competitive Positions: Market Challenger: Possible
attack Tactics
Frontal Attack : challenger opposes
competitor directly using its own
weapons and trying not to expose its
weak points

Full Frontal (matching competitors

product, advertising, price n
distribution vs. indirect attacks
(focusing on leader’s weaknesses).
Challenger opposes competitor
directly using its own competencies/
strengths and trying not to expose its
weak points. Syndicating distribution
channel/ buying out media space.
Competitive Positions: Market Challenger: Possible
attack Tactics
Flanking Attack: choose the weak spots and attack. Honda vs Harley in
US market.
Absolut performed a similar maneuver in the vodka market. Purposely
pricing themselves about 50 percent higher than leading
competitor Smirnoff, they flanked them on the nearly established
premium vodka market. A few years later, Grey Goose offered a
vodka priced 60 percent higher than Absolut, in turn flanking them
in the “ultra-premium” vodka market.

ACI went strong in areas like Mymensingh and Bogra where Mortein had
poor distribution. Cheap coils started cropping up in these areas as
well.
Competitive Positions: Market Challenger: Possible
attack Tactics
Encirclement Attack: Front+ Flank: challenger encircles competitor’s
position in terms of products or markets or both. It attacks rivals in as
many ways as possible by stretching product lines
Competitive Positions: Market Challenger: Possible
attack Tactics
Bypass Attacks: the challenger chooses to diversify into unrelated
products, moving into new markets, technologies to replace existing
products
Partex introduced the concept of Partex, to be used instead of wood.
Hatil Otobi started bringing these specific boards, which were made of
wood but not really wood
Also goes to new geography
Enters new sub-category – cocacola enters juice category
Competitive Positions: Market Challenger: Possible
attack Tactics
Guerrilla Attack: or ambush marketing, attack marketing is a
form of marketing that incorporates a series of creative and
strategic techniques used to build and maintain public
awareness surrounding a person, place, product, or event.

Making small but useful changes, which repeatedly puts the

brand in the forefront, and slowly but surely makes it a huge
name in the market, is the root of Guerrilla marketing.

Smaller companies with relatively limited resource base

employs this by using price cuts, promotional outburst etc
 Competitive Positions: Market Followers
3. Market Followers
• Follow the market leader (closely/distance/selectively)
• Many advantages:
• Less investment as the foot step is already set, market is ready, research
result is there, etc
• Learn from the market leader’s experience
• Copy or improve on the leader’s offerings
• Does not mean being a carbon copy of the leader, followers
must also find a way to win customers by offering low price
with high quality.
• Potential target of challengers. (low cost/Quality/Market
Development
 Competitive Positions: Market Followers
Market Followers 4 types
Adapter : has own PODs, Brand identities but follow the
leaders/challengers (some features/attributes) : Zen, Alto, Nano
etc
Imitators: has own brand identity , copy most of the
features/attributes of leaders/challengers/competitors but offer
the propositions at a lower price compromising the quality . Tata
Sky vs Reliance Tv top box set.
Cloner : keep brand elements very similar to the leaders and
challengers but offer poor quality products as lower price.
PraaDA, RaDA, Take Out 2.0, Mini Love, GK Men
Counterfeiter : grey market replica products
Cloner
 Competitive Positions: Market Nicher
4. Market Nicher
• Serving market niches means targeting sub-segments
• Good strategy for small firms with limited resources
• Earns high margins rather than high volume
• Specialization is key
• Customer size (key customers) , geographic, quality-price,
service