ch 8 competitive dynamics u

8/11/2019 Ch 8 Competitive Dynamics u

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8Competitive Dynamics


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Competitive Positions

Market leaderis the firm with the largest marketshare and leads the market price changes,product innovations, distribution coverage, and

promotion spending

Market challengersare firms fighting to increasemarket share

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 11-2


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Competitive Positions

Market followersare firms that want to hold ontotheir market share

Market nichersare firms that serve small marketsegments not being pursued by other firms



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Figure 8.1

HypotheticalMarket Structure



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Market Leader Strategies

Expand total demand

o New users (market penetration, new-marketsegment strategy, geographical expansion)

o More usage (identify additional opportunitiesto use the brand, identify new ways to use thebrand).



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Market Leader Strategies

Protect market share

o

Continuous innovationo Effective distribution

o Cost cutting

Expand market share



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PROACTIVE MARKETING

Responsive marketing: A responsive marketer

finds a stated need and fills it.

Anticipative marketing: An anticipative

marketer looks ahead to needs, customersmay have in the near future.

Creative marketing: A creative marketerdiscovers solutions customers did not ask for

but to which they enthusiastically respond.

o Market-driving firms, not just market driven.



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DEFENSIVE MARKETING

The aim of defensive strategy is to reduce the

probability of attack,

Divert attacks to less-threatened areas

Lessen their intensity



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Defense Strategies

Position Defense

Position defense means occupying the most

desirable market space in consumers minds.

Maintain its position of market leader by

reminding customers about the status of the

brand, setting up entry barriers, coming upwith exclusive distribution contracts, getting

patents, or establishing monopoly like

situation.



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Defense Strategies

Preemptive Defense

o Attack competitors here and there

o Broad market envelopment that signals

competitors not to attack

o Pre-announcements



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Defense Strategies

Counteroffensive Defense

o Meet the attacker frontally and hit its flank,

Pincer movement so that it will have to pull

back to defend itself



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Defense Strategies

Mobile Defense

o Leader stretches its domain over new

territories through market broadening

o Market diversification

Contraction Defense

o Give up weaker markets and reassignresources to stronger ones



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Figure 8.3 The Concept of Optimal

Market Share



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Market Challenger Strategies

Define the strategic objective and opponents

It can attack the market leader

It can attack firms its own size that are not

doing the job and are underfinanced

It can attack small local and regional firms


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Market Challenger Strategies

Choose a general attack strategy

Frontal attack (full frontal, modified frontal

attack)

Flank Attack

Encirclement attack

Bypass attack (diversifying in unrelated

products, diversify in new locations,leapfrogging in new technology)

Guerilla attacks



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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-costreduction

Intensive

advertisingpromotion



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Market Follower Strategies

1. The counterfeiterduplicates the leaders

product and packages and sells it on the

black market or through disreputable dealers.

2. cloneremulates the leaders products, name,and packaging, with slight variations.

3. The imitatorcopies some things from the

leader but differentiates on packaging,

advertising, pricing, or location.

4. The adaptertakes the leaders products and

adapts or improves them.



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Market Nicher Strategies

ROI is much higher

High margin vs high volume

Multiple niching vs single niching



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Niche Specialist Roles

End-User Specialist

Vertical-Level

Specialist

Customer-SizeSpecialist

Specific-Customer

Specialist Geographic

Specialist

Product-Line

Specialist

Job-Shop

Specialist Quality-Price

Specialist

Service-Specialist Channel Specialist



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Figure 11.4 Sales and

Profit Life Cycles



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Figure 11.5a

Common PLC Patterns:

Growth-Slump-Maturity



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Figure 11.5b


Cycle-Recycle



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Figure 11.5c


Scalloped



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Figure 11.6 Style, Fashion, and

Fad Life Cycles



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Strategies for Developing a

Pioneer Advantage



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Growth Stage Strategies



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Changing Brand Course


Market Modification

Product Modification

Marketing Program

Modification


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Decline

Declining sales

Low cost per customer

Declining profits

Laggards



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Marketing in an

Economic Downturn

Invest

Get close to

customers

Review budgets

Use a compelling

value proposition

Fine-tune offerings



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A Compelling Value Proposition


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