Marketing Management

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Marketing Management

Chapter-11

Dealing with Competition

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Identifying CompetitorsMarket Concept of Competition

Using the market approach, competitors are companies that satisfy the same customer need.

This concept reveals a broader set of actual and potential competitors.

Example : A customer who buys a word-processing package really wants ‘writing ability’ which can be satisfied by pencils, pens, or typewriters.

Note : Marketers must overcome ‘marketing myopia’ and stop defining competition in traditional category terms; like, Coca-Cola focused on its soft-drink business, missed seeing the market for coffee bars and fresh fruit juice bars that eventually impinged on its soft-drink business.

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Classification of Firms On the basis of Market Share

The companies can play the following roles in the target market on the basis of market share they possess.

1. Market Leader (Many industries contain one firm that is the acknowledged market leader. This firm has the largest market share in the relevant product market; e.g. 40% share)

2. Market Challenger (The firm with the second highest market share holder after the market leader, e.g. 30% share)

3. Market Follower (The firm with the third highest market share, e.g. 20% share)

4. Market Nicher (Firms that serve small market segments not being served by the larger firms; they possess small market share, e.g. 10% share)

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Classification of Firms On the basis of Market Share

Microsoft Market Leader-Computer Software

Airbus Market Challenger-Aircrafts

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Balancing Customer and Competitor Orientations

a. Competitor-Centred Companies (which formulate their marketing strategies mainly focusing on competitors)

b. Customer-Centred Companies (which focus more on customer developments in formulating its strategies)

Note : A company must not spend all its time focusing on competitors. Customer-Centred Companies are in a better position to identify new opportunities and set a course that promises to deliver long-run profits. By monitoring customer needs, it can decide which customer groups and emerging needs are the most important to serve, given its resources and objectives.

Practically, a company should maintain a good balance of consumer and competitor monitoring.

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Assignment