Dealing with Competitors

Presented byAditya Singh Aniket Kothavale Ashutosh Juyal Jaya Nagarkoti Shruti Mishra

Contents
Competitive forces Five Forces model Threats Identifying Competitors Selecting Competitors & Customers Competitive Strategies for Business Leaders Market Challenger Strategies Market Follower Strategies Market Nicher Strategies

COMPETITIVE FORCES
Factors that influence the competitive position of a firm in an industry or market. These forces determine the intrinsic long-run attractiveness of a market or market segment. Competitive forces include (1) industry competitors (2) potential entrants (3)substitutes (4)buyers (5)sellers

Five Forces Determining Segment Structural Attractiveness

Threats
Threat of intense segment rivalry

 Threat of new entrants

High barrier to entry and high exit barrier

High barrier to entry and low exit barrier

 Contd..

Low barrier to entry and high exit barrier

Low barrier to entry and low exit barrier

Threat of substitute products

 Threat of buyers growing bargaining power Threat of suppliers growing bargaining power

Identifying Competitors
Competitors are companies that satisfy the same customer need. Marketers must overcome marketing myopia and stop defining competition in traditional category and industry terms.

Analyzing Competitors
Objectives
Strategies

Competitor Actions

Reaction Patterns

Strengths & Weaknesses

Principles of Blue-Ocean Strategy

a) Reconstruct market boundaries Look across alternative industries Look across strategic groups within industries Look across complimentary product and service offerings Look across functional or emotional appeal to buyers Look across time

b) Focus on the big picture not the numbers c) Reach beyond existing demand d) Get the strategic sequence right Is there buyer utility? Is the price acceptable? Can we attain target cost? What are the adoption challenges?

Execution Principlesa. Overcome key organizational hurdles Cognitive hurdle Resource hurdle Motivational hurdle Political hurdle b. Build execution into strategy

A Competitors Expansion Plans

Strengths and weaknesses

Variables to analyse competitors

Share of Market Share of Mind
Share of Heart

Selecting Competitors
Strong Vs Weak

Close Vs Distant Good Vs Bad

Selecting Customer
Vulnerable Valuable These customers are profitable but not completely happy with the company. These customers are likely to be deflect. Not vulnerable These customers are loyal and profitable

Non Valuable

These unprofitable customers are happy.

Competitive strategies for market leaders

Nichers 10%

Follower 20%

Challenger 30%

Leaders 40%

Expanding the total Market

New Customers

More Usage

Defending market share

A market leader should generally adopt a defense strategy Six commonly used defense strategies Position Defense Flanking Defense Pre-emptive Defense Counter-Offensive Defense Mobile Defense Contraction Defense

Defense Strategy (contd)

Position Defense

Least successful of the defense strategies. allocating important efforts to support the firms brands (without developing new ones) e.g. Mercedes was using a position defense strategy until Toyota launched a frontal attack with its Lexus.

Defense Strategy (contd)

Flanking Defense: Secondary markets (flanks) are the weaker areas and prone to being attacked Pay attention to the flanks e.g. P&G-Tide

Defense Strategy (contd)

Pre-emptive Defense Detect potential attacks and attack the enemies first Let it be known how it will retaliate Product or brand proliferation is a form of preemptive defense.

Defense Strategy (contd)

Counter-Offensive Defense Responding to competitors head-on attack by identifying the attackers weakness and then launch a counter attack e.g. Toyota launched the Lexus to respond to Mercedes attack

Defense Strategy (contd)

Mobile Defense

By market broadening and diversification For marketing broadening, there is a need to Redefine the business (principle of objective), and Focus efforts on the competition (the principle of mass) e.g. Broadening of Reliance Group from petrochemicals to petrol, LPG.

Defense Strategy (contd)

Contraction Defense
Withdraw from the most vulnerable segments and redirect resources to those that are more defendable By planned contraction or strategic withdrawal

Expanding Market Share

1. 2. 3. 4. Should consider four factors before pursuing increased Share: Possibility of provoking anti-trust action Economic cost Pursuing the wrong marketing activities Effect of increased market share on actual and perceived value

Market Challenger Strategies

Decide whom to attack

Attack the market leader

Attack firms of its own size that are not doing the job & are underfinanced

Attack small local and regional firms

Attack strategies
Frontal Attack Flank Attack Encirclement Atttack Bypass Attack Guerilla Attack

Frontal Attack
Attacker matches opponents product, advertising, price & distribution. Both the opponent and the attacker have equal resources

Flank attack
Attack the enemy at its weak points or blind spots i.e. its flanks It is of two types Geographical Segmental

Encirclement attack
Attack the enemy at many fronts at the same time Ideal for challenger having superior resources Targeted more at breaking the opponents will

Bypass attack
By diversifying into unrelated products or markets neglected by the leader Could overtake the leader by using new technologies

Guerrilla attack
By launching small, intermittent hit-and-run attacks to harass and destabilize the leader May include selective price cuts & intentional promotional blitzes

Market follower strategy

1. Counterfeiter
2. Cloner

3. Imitator
4. Adapter

Counterfeiting

Cloner

Imitator

Adapter

BAJAJ pulsar

TVS Flame

Market-Nicher strategy
1. Avoid competing 2. Low market Share but Highly Profitable 3. Performs three main tasks: a) creating Niches b) Expanding Niches c) protecting nitches

Balanced customer and competitors Orientation

Two types of companies 1) Competitor-centered company 2) Customer-centered company