11

Dealing with Competition

Marketing Management, 13th ed

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?

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Chapter Questions (cont.)

How should market challengers attack market leaders? How can market followers or nichers compete effectively?

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Progressive Competes on Marketing Programs

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Figure 1.1 Five Forces Determining Segment Structural Attractiveness

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Identifying Competitors

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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

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Figure 11.2 Strategic Groups

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Figure 11.4 A Competitors Expansion Plans

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Table 11.1 Customer Ratings of Competitors on Key Success Factors

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Strengths and Weaknesses

Share of market

Share of mind

Share of heart

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Steps in Benchmarking
Determine which functions or processes to benchmark Identify the key performance variables to measure Identify the best-in-class companies Measure the performance of best-inclass companies

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Steps in Benchmarking (cont.)

Measure the companys performance Specify programs and actions to close the gap Implement and monitor results

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Table 11.2 Market Share, Mind Share, and Heart Share

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Figure 11.5 Hypothetical Market Structure

20% 10% Market Market Nichers Follower

30% Market Challenger

40% Market Leader

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Gap Tried to Appeal to Too Broad a Market

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Expanding the Total Market

New customers More usage

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Figure 11.6 Six Types of Defense Strategies

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Figure 11.7 Optimal Market Share

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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

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Other Competitive Strategies

Market Challengers Market Nichers

Market Followers
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Market Challenger Strategies

Define the strategic objective and opponents Choose a general attack strategy Choose a specific attack strategy

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General Attack Strategies

Frontal Attack Encirclement Attack

Flank Attack

Bypass Attack

Guerrilla Warfare
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Pepsi buys Gatorade in a Bypass Strategy

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Specific Attack Strategies

Price discounts Lower-priced goods Value-priced goods Prestige goods Product proliferation Product innovation Improved services Distribution innovation Manufacturing-cost reduction Intensive advertising promotion

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Market Follower Strategies

Counterfeiter Cloner Imitator Adapter
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Market Nicher Strategies

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Niche Specialist Roles

End-User Specialist Vertical-Level Specialist Customer-Size Specialist Specific-Customer Specialist Geographic Specialist Product-Line Specialist Job-Shop Specialist Quality-Price Specialist Service-Specialist Channel Specialist

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Balancing Orientations

CompetitorCentered

CustomerCentered

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Marketing Debate
 How do you attack a category leader? Take a position: 1. The best way to challenge a leader is to attack its strengths. or 2. The best way to attack a leader is to avoid a head-on assault and to adopt a flanking strategy.
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Marketing Discussion
 Pick an industry.  Classify firms according to the four different roles they might play.  How would you characterize the nature of competition?  Do the firms follow the principles described in this chapter?
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