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8/8/2019 Presentation Tools Chapt8

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COMPETITIVE MARKETCOMPETITIVE MARKET

POSITIONS ANDPOSITIONS ANDRELATED STRATEGIESRELATED STRATEGIES

PREPARED BY:

IZFAR ASLAM RAMANAHMAD SYAHIR SAFIHI

NORHAFIZAH AZIZANNORDIYANA HISHAM

PREPARED FOR:

ASSOC. PROF. DR. FAIZAH ABD RAHIM

MKT 750


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MARKETING STRUCTURE ANDMARKETING STRUCTURE ANDCOMPETITIVE STRATEGYCOMPETITIVE STRATEGY

PURE

COMPETITION

MONOPOLY

MARKET STRUCTURES

AND COMPETITIVE STRATEGY

DIFFERENTIATED

OLIGOPOLY

HOMOGINEOUS

OLIGOPOLY

MONOPOLISTIC

COMPETITION


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1. PURE COMPETITION1. PURE COMPETITION

Number of sellers: many

Differentiation of offerings:

- very little

- Eg: commodity markets and some fresh food type markets

Indicated competitive directions:

-cost advantage-horizontal integration to gain power and dominance in the supply chain throughsize and gain cost advantages through economic scale.

-most seller today create differentiation based on providing value added service and

change the market structure to monopolistic competition.


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2. MONOPOLISTIC COMPETITION2. MONOPOLISTIC COMPETITION

Number of sellers: many


- differentiated on factors that are important to their specific target market

- most providers tend to be smaller businesses and serve a particular geographicmarket segment

-more likely to be service based rather than manufactured

product industries

- eg: take-away food, hairdressing, accounting


- differentiation based on specific needs of selected target market.

-some sellers will also try to achieve cost advantages through growth and horizontal

integration strategies, particularly franchising.

-strong defensive strategies will be used


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3. HOMOGENEOUS3. HOMOGENEOUSOLIGOPOLYOLIGOPOLY

Number of sellers: two to several



- strategies aimed at creating and sustaining cost advantage are the most logical.

- growth through globalizes market development

- offer basically same product or service

-the capital cost requirements indicates each competitor needs a larger proportion of the market to

cover costs and return profit.

- Eg: petrol industries, pharmaceuticals, movies theatres,

-seller try to create some differentiation between brands which change the market structure from

homogeneous to differentiated oligopoly


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4. DIFFERENTIATED4. DIFFERENTIATEDOLIGOPOLYOLIGOPOLY

Number of sellers: two to several


- partially differentiated on quality, features, price points and image

- each seller try to become the only provider for a particular point of differentiation

- each seller needs to achieve a greater market share then they would in monopolistic competition tocover cost and return profits

- eg: motor vehicles, processed foods, private school


- strategies aimed at creating and sustaining a desired point of differentiation are essential

- strong branding strategies are used.

- growth achieve through market penetration and market development

- backward or forward integration may also be considered

- defensive strategies combined with growth strategies to prevent loss of market share

-seller need to have cost management strategies that suit the positioning and its offering

such as overall cost leadership strategies.


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55..MONOPOLYMONOPOLY

Number of sellers: one seller per distinct geographic area


- no close substitute within the geographic area

- this area may be a country or a smaller geographic locality.


- strategies aimed at cost management

- pursue product development strategies to maintain its market

-strategies aimed at raising barriers to entry through the provision of service and technology

can help deter new entrants

- To be sure they do not abuse their power as seller by maximizing profits through higher

prices and lower service and neglecting customers needs.


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COMPETITIVE POSITIONCOMPETITIVE POSITION

1. DOMINANT

The firm controls the behavior of other

competitors and has a wide choice of strategic

options.

2. STRONG

The firm can take independent action without

endangering its long term position and can

maintain its long term position regardless of

competitors actions.

3. FAVOURABLE

The firm has a strength that is exploitable in

particular strategies and has a more than average

opportunity to improve its position

4. TENABLE

The firm is performing at a sufficiently

satisfactory level to warrant continuing in

business, but it exists at the sufferance of the

dominant company and has a less than average

opportunity to improve its position

-Refers to the strength or weakness of and individual business compared to its direct competitors.

-competitive position is calculated in the GE model and can be broadly characterized as strong,

medium or weak.

-Author D. Little, suggest that the competitive position can be grouped into 6 categories


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5. WEAK

The firm has un satisfactory performance but an

opportunity exists for improvement and it must

change or exit.

6. NON VIABLE

The firm has un satisfactory performance and no

opportunity for improvement.

The first two regarded as=strong, the middle two =medium and the last two = weak.

Before selecting strategies, attractiveness of the market should also be considered.Low attractiveness defensive strategies

High attractiveness need growth strategies or combination of growth and defensive strategies


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GROWTH STRATEGIESGROWTH STRATEGIES

1. INCREASING SALES WITHIN THEEXISTING MARKET

Market penetration

Increasing share at the expense ofcompetitors

Product development

Differentiation

Horizontal integration

Horizontal diversification

2. INCREASING PROFITABILITY WITHINTHE EXISTING MARKET

Cost leadership, or at least managementstrategies

Focus

Backward or forward integration

Horizontal integration combined withmaximizing efficiencies

Increasing power relative to buyers orsuppliers

3. INCREASING MARKET SEGMENTSTARGETED

Market development, geographic or segment

Franchising

Backward or forward integration

4. MOVING INTO NEW AND DIFFERENT

MARKETS OR INDUSTRIES

Concentric diversification

Conglomerate diversification


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DEFENSIVE STRATEGIESDEFENSIVE STRATEGIES

1. PROTECTING EXISTING

POSITION/MARKET SHARE

Market penetration

Market development

Brand equity

Product development

Market research

Customer loyalty strategies

Creation barriers to entry

Development of sustainable differentiation

Targeting of multiple value segments

2. RETRENCHMENT STRATEGIES TO

WITHDRAW FROM SOME OR ALL

MARKET SEGMENTS SLOWLY

Harvesting strategies

Reallocating resources to other segment/markets

when possible

Liquidating remaining stock and non transferable

resources

3. RETRENCHMENT STRATEGIES TO

WITHDRAW FROM SOME OR ALL

MARKET SEGMENTS QUICKLY

Selling if buyer can be found

If not, liquidating where possible and scrapping

where not*Choice of strategic direction will depend on market

potential, business resources and objective and on

available opportunities.


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MARKETING WARFAREMARKETING WARFARESTRATEGIESSTRATEGIES

Defensive : the firm is the dominant force in the market

Offensive : the firm is the second player in the market

Flanking : the firm is a smaller player, its strategy must be aimed at increasingits market share by attacking the flanks of its rival

Guerrilla : the firm is a minor player , it can , however be successful if it looksfor small segments of the market that have larger players overlook or avoid


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MARKET LEADERMARKET LEADERSTRATEGIESSTRATEGIES

1. Expand the whole market

- Attract new user market penetration,market development, diversification,brand equity strategies

- Identifying new uses of the product

creative research and development- Increase frequency of use market

penetration like advertising, promotionand packaging

2. Expand their marketshare

-Intensifying distribution-Horizontal distribution-Attack competitor using

- frontal attack-Flanking attack-Encirclement-Bypass strategy

-Guerilla strategies

3.Maintain and defend theirmarket share

-Maintenance of market share-Position defense-Flanking defense-Pre-emptive defense-Counter-offensive defense-Mobile defense-Contraction defense


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MARKET CHALLENGERMARKET CHALLENGERSTRATEGIESSTRATEGIES

1. Attack the market leader

This is usually very risky unless theattacker is backed up by superior resourcesor the leader is losing prominencedue to poor performance.

3. Attack smaller business

With fewer resources that are not currentlyfully satisfying their customers.

2. Attack businesses of similar size

Size that are not as capable or are poorlyResourced.


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MARKET FOLLOWERMARKET FOLLOWERSTRATEGIESSTRATEGIES

1.Cloner

-Easiest strategy, but also the mostlikely to attract retaliation fromstrong and aggressive marketleader.

-The cloner basically copies theoffering of the market leader, with onlysmall changes in packaging butlarger changes in quality and sell atlower price point.

2. Imitator

A more legitimate version ofcloning, where the leaderoffering is basically copied, butimportant identifier such aspackaging and branding areobviously different.

3. Adapter

This business takes the leaderproduct ideas and adapts them,often making improvementsthat are desired by customers.


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The classifications in marketing warfare terminologies are:

Market leader : the firm that has the largest share in the relevant product market

Market challenger: a firm that has a smaller share than the market leader, but mayhave relatively large share

Market follower : a firm that holds a market share smaller than the market leaderbut prefer to follow rather than to attack

Market nicher: a smaller firm that targets segments within segments


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MARKET NICHERMARKET NICHER

Characteristic of niche market

-According to the Kotler et al.

It has sufficient customers with enough purchasing power.

There is growth potential.It is negligible interest to larger competitor in the main market.

The business has the specialist capabilities and resources to serve the niche in a

superior fashion.It can defend itself against attacks from larger competitors through brand equityand customer loyalty.


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.areas that provide specialist possibilities for business pursuing a niche strategy

End user specialistVertical level specialistCustomer size specialistSpecific customer specialistGeographic specialistProduct or product line specialistJob shop specialistQuality-price specialistService specialistChannel specialist


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CONCLUSIONCONCLUSION

Market /competitive position and market structure are significantfactor to consider when considering the businesss strategydirection.

To remain profitable, all business need to follow expansion of theirbusiness and their specific customer base.

Developed as appropriate to the businesss resources, objectivesand capabilities within strategies suggested.


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THANK YOU.

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