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Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
Ch11 dealing with competition marzo
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Ch11 dealing with competition marzo

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  • 1. TOP 10 Learning ConceptsChapter 11: Dealing with Competition Sherrylou M. Marzo Sept. 8, 2011 http://sherryloumarzo.blogspot.com/
  • 2. Outline: Dealing with Competition Forces that Determine Market Structure Identifying Competitors Three Variables in Analyzing Competitors Selecting Competitors Competitive Strategies for Market Leaders Other Competitive Strategies http://sherryloumarzo.blogspot.com/ 2
  • 3. Outline: Dealing withCompetition Market- Challenger Strategies General Attack Strategies Specific Attack Strategies Market Follower Strategies Market- Nicher Strategies http://sherryloumarzo.blogspot.com/ 3
  • 4. Outline: Dealing with Competition Forces that Determine Market Structure Identifying Competitors Three Variables in Analyzing Competitors Selecting Competitors Competitive Strategies for Market Leaders Other Competitive Strategies http://sherryloumarzo.blogspot.com/ 4
  • 5. Concept 1:Five Forces that DetermineMarket Structure Threat of New Entrants Segment Rivalry BuyerSupplier Industry Competitors Power Power Threat of Michael Porter’s Substitutes 5 Forces http://sherryloumarzo.blogspot.com/ 5
  • 6. Concept 1:Segment is Unattractive ifThreat of Rivalry is Intense This Happens When: • Fixed cost & Exit Barriers are high Segment Rivalry • Competitors have high Industry stakes in staying in Competitors the segment • Plant Capacity must be added in large increments http://sherryloumarzo.blogspot.com/ 6
  • 7. Concept 1: Threat of Intense Segment Rivalry will results to: Segment Rivalry Industry Competitors Advertising BattlePrice Wars New Product Intro http://sherryloumarzo.blogspot.com/ 7
  • 8. Concept 1: The Most Attractive segment is when entry barriers are low & exit barriers are high Threat of New Entrants This Means:Few New Firms can enter the industry and poor Segment Rivalry performing firms can Industry easily exit. Competitors http://sherryloumarzo.blogspot.com/ 8
  • 9. Concept 1:A Segment is unattractive when thereare actual/potential substitutes for theproduct. Threat of Substitutes Can: • Limit on prices and on profits. • And if technology Segment Rivalry advances or competition Industry increases in these Competitors substitutes then prices & profits might fall Threat of Substitutes http://sherryloumarzo.blogspot.com/ 9
  • 10. Concept 1: A Segment is unattractive if buyers possess strong or growing bargaining powerBuyers’ Bargaining PowerGrows When:• Buyers become concentrated or organized• When product represents significant costs to them• When product is Segment Buyer Rivalry undifferentiated Power• When switching costs are Industry low Competitors• When buyers are price sensitive due to low profits• When they can integrate upstream http://sherryloumarzo.blogspot.com/ 10
  • 11. Concept 1:The Best Defense to Buyer Power is Developing Superior Segment Buyer Rivalry offers that Power Industrystrong buyers Competitorscannot refuse http://sherryloumarzo.blogspot.com/ 11
  • 12. Concept 1:A segment is unattractive if company’ssuppliers are able to raise price orreduce quantity supplied Suppliers Tend to be Powerful When: • They are concentrated or organized • There are few substitutes • If the supplied product is an Segment Rivalry important inputSupplier Industry • Costs of switching suppliers Power Competitors are high • Suppliers can integrate downstream http://sherryloumarzo.blogspot.com/ 12
  • 13. Concept 1:The best defenses to Supplier Poweris: • Build Win- win Segment Rivalry relationshipsSupplier Industry with them Power Competitors • Use multiple supply sources http://sherryloumarzo.blogspot.com/ 13
  • 14. Concept 1 Example: Bottled Water Segment Rivalry is Intense Absolute Nature’s SpringWilkins Nestle Segment Rivalry Water Industry Competitors Hidden Spring Summit SM Bonus http://sherryloumarzo.blogspot.com/ 14
  • 15. Concept 1 Example:Substitutes to Bottled Water House Brand Waters and Water Refilling Stations are cheaper than the usual Bottled Water House Water Refilling Stations Brands http://sherryloumarzo.blogspot.com/ 15
  • 16. Concept 1 Example: New Entrant Threat ofNew Entrants Magnolia entered the segment as a Purified Water and its pricing strategy is very cheap. http://sherryloumarzo.blogspot.com/ 16
  • 17. Concept 1 Example: Asia Brewery maintains few suppliers Asia Brewery has only oneSupplier supplier in their labels as well as Power with carton packaging http://sherryloumarzo.blogspot.com/ 17
  • 18. Concept 1 Example:Buyers with Power These accounts have the powerBuyer to dictate because main volumePower of sales comes from these key accouts http://sherryloumarzo.blogspot.com/ 18
  • 19. Outline: Dealing with Competition Forces that Determine Market Structure Identifying Competitors Three Variables in Analyzing Competitors Selecting Competitors Competitive Strategies for Market Leaders Other Competitive Strategies http://sherryloumarzo.blogspot.com/ 19
  • 20. Concept 2:Identifying Competitors Competition http://sherryloumarzo.blogspot.com/ 20
  • 21. Concept 2: Identifying Competitors Competition Industry is a group of firms that offer a product or class of products that are close substitutes for one another.From Industry http://sherryloumarzo.blogspot.com/ 21
  • 22. Concept 2: Identifying Competitors CompetitionFrom Industry From market point of view Using the market approach, competitors are companies that satisfy the same customer need. http://sherryloumarzo.blogspot.com/ 22
  • 23. Concept 2: Industry Classification According to:Number of Sellers http://sherryloumarzo.blogspot.com/ 23
  • 24. Concept 2: Industry Classification According to:Number of Sellers Degree of Differentiation http://sherryloumarzo.blogspot.com/ 24
  • 25. Concept 2: Industry Classification According to:Presence/absence of entry http://sherryloumarzo.blogspot.com/ 25
  • 26. Concept 2: Industry Classification According to:Presence/absence of entry Mobility http://sherryloumarzo.blogspot.com/ 26
  • 27. Concept 2:Industry ClassificationAccording to: Exit Barriers http://sherryloumarzo.blogspot.com/ 27
  • 28. Concept 2:Industry ClassificationAccording to: Exit Barriers Cost Structure http://sherryloumarzo.blogspot.com/ 28
  • 29. Concept 2: Industry Classification According to:Degree of Vertical Integration http://sherryloumarzo.blogspot.com/ 29
  • 30. Concept 2: Industry Classification According to:Degree of Vertical Integration Degree of Globalization http://sherryloumarzo.blogspot.com/ 30
  • 31. Concept 2 Example:Asia Brewery’s Absolute DistilledWater Absolute is under the Beverage Industry particularly in Distilled Water Category http://sherryloumarzo.blogspot.com/ 31
  • 32. Concept 2 Example: Asia Brewery’s Absolute Distilled Water Competitors Based on Industry Point of View Pepsi Cola PhilippinesCoca Cola Philippines http://sherryloumarzo.blogspot.com/ 32
  • 33. Concept 2 Example: Asia Brewery’s Absolute Distilled Water Competitors Based on Market Point of View Wilkins Hidden Spring Nature’s Spring House Brands of SummitNestle Water Retailers http://sherryloumarzo.blogspot.com/ 33
  • 34. Outline: Dealing with Competition Forces that Determine Market Structure Identifying Competitors Three Variables in Analyzing Competitors Selecting Competitors Competitive Strategies for Market Leaders Other Competitive Strategies http://sherryloumarzo.blogspot.com/ 34
  • 35. Concept 3: Three Variables in Analyzing Competitors Benchmarking to your most successful competitor can improve competitive performanceShare of Market http://sherryloumarzo.blogspot.com/ 35
  • 36. Concept 3:Three Variables in AnalyzingCompetitors % of Customers who named the competitor in respond to this statement: “Name the 1st company that comes to mind in this industry?” Share of Mind http://sherryloumarzo.blogspot.com/ 36
  • 37. Concept 3:Three Variables in AnalyzingCompetitors % of Customers who named the competitor in respond to this statement: “Name the company from which you would prefer to buy the product Share of Heart http://sherryloumarzo.blogspot.com/ 37
  • 38. Concept 3: Three Variables in Analyzing CompetitorsShare of Market Share of Mind Share of Heart http://sherryloumarzo.blogspot.com/ 38
  • 39. Concept 3 Example: Wilkins still dominates the bottled water segment in mind share and heart share thus gaining higher market share Wilkins is always on top of mind becauseAlready Build Brand advertisements are Equity everywhere Preferred Brand because its good for the family & doctors actually recommends it http://sherryloumarzo.blogspot.com/ 39
  • 40. Outline: Dealing with Competition Forces that Determine Market Structure Identifying Competitors Three Variables in Analyzing Competitors Selecting Competitors Competitive Strategies for Market Leaders Other Competitive Strategies http://sherryloumarzo.blogspot.com/ 40
  • 41. Concept 4: Selecting Competitors Classes of CompetitorsStrong vs. Weak Good vs. Bad Close vs. Distant http://sherryloumarzo.blogspot.com/ 41
  • 42. Concept 4: Classes of Competitors • Most companies aims their shots at weak competitors because it has fewer resources per share point gained. • But one should stillStrong vs. Weak compete with the strong to keep up with the best http://sherryloumarzo.blogspot.com/ 42
  • 43. Concept 4:Classes of Competitors • Most companies compete with the competitors that resemble them the most. • But one should still identify their distant competitors. Close vs. Distant http://sherryloumarzo.blogspot.com/ 43
  • 44. Concept 4: Classes of CompetitorsGood competitors: Bad Competitors:• Play by the • Try to buy industry’s rules shares than• They set prices earn it. in reasonable • Take large risks relationship to • Invest in over- cost. capacity.• They favor a • Upset industrial healthy industry. equilibrium Good vs. Bad http://sherryloumarzo.blogspot.com/ 44
  • 45. Concept 4 Example: Asia Brewery’s 100 Plus Sports Drink Strong Weak Pocari Sweat (SmallestGatorade (Market Leader) Share in the Market) http://sherryloumarzo.blogspot.com/ 45
  • 46. Concept 4 Example: Asia Brewery’s Cobra Energy Drink Close DistantSting (Energy Drink) Gatorade (Sports Drink) http://sherryloumarzo.blogspot.com/ 46
  • 47. Outline: Dealing with Competition Forces that Determine Market Structure Identifying Competitors Three Variables in Analyzing Competitors Selecting Competitors Competitive Strategies for Market Leader Other Competitive Strategies http://sherryloumarzo.blogspot.com/ 47
  • 48. Concept 5:Hypothetical MarketStructure 10% 40% Market Leader 20% Market Challenger Market Follower Market Nichers 30% http://sherryloumarzo.blogspot.com/ 48
  • 49. Concept 5:Characteristics of a MarketLeaders • The firm with the largest market share. http://sherryloumarzo.blogspot.com/ 49
  • 50. Concept 5: Characteristics of a Market Leaders Market Price Changes Distribution Coverage Leaders Leads other Firms inNew Product Intro Promotional Intensity http://sherryloumarzo.blogspot.com/ 50
  • 51. Concept 5:Strategies of Market Leaders Expand Total Market Demand Defending Market Share Expanding Market Share http://sherryloumarzo.blogspot.com/ 51
  • 52. Concept 5:Expanding the Total Market Adding New Customers More UsageIncrease TotalMarket Demand http://sherryloumarzo.blogspot.com/ 52
  • 53. Concept 5:Defending Market Share 6 Types of Defense Strategies • Position Defense- occupying the most desirable market space in consumers’ minds • Flank Defense- erect outposts to protect a weak front or possibly serve as a counterattack • Preemptive Defense- more aggressive way to attack before the enemy starts its offense. • Counteroffensive Defense- meet the attacker frontally. • Mobile Defense- stretches its domain over new new territories. • Contraction Defense-strategic withdrawal or giving up weaker territories & reassigning resources to stronger ones. http://sherryloumarzo.blogspot.com/ 53
  • 54. Concept 5:Exanding Market Share Factors before Pursuing Increased Share: • The possibility of provoking antitrust action - jealous competitors would cry monopoly if a dominant firm makes further inroads. • Economic Cost • Pursuing wrong marketing activities - go with the right activities. • Effect of increased market share on actual and perceived quality - too many customers can put strain on the firm’s resources hurting product value & service http://sherryloumarzo.blogspot.com/ 54
  • 55. Concept 5 Example: Cobra Energy Drink as Market Leader with 60% shareNew Product Intro Promotional Intensity Distribution Coverage Cobra Smart Placement already Nationwide http://sherryloumarzo.blogspot.com/ 55
  • 56. Outline: Dealing with Competition Forces that Determine Market Structure Identifying Competitors Three Variables in Analyzing Competitors Selecting Competitors Competitive Strategies for Market Leader Other Competitive Strategies http://sherryloumarzo.blogspot.com/ 56
  • 57. Concept 6: Other Competitive Strategies Market Followers Market Market NichersChallengers http://sherryloumarzo.blogspot.com/ 57
  • 58. Concept 6: Other Competitive Strategies • They have gained ground or even overtaken the leader. • They have high aspirations • They leverage their resources MarketChallengers http://sherryloumarzo.blogspot.com/ 58
  • 59. Concept 6:Other Competitive Strategies • They usually imitate the leader by Market improving the product.Followers • They bring distinction to its target market • They usually keep manufacturing costs low & its product quality and services high. • They define growth path but does not invite competitive retaliation http://sherryloumarzo.blogspot.com/ 59
  • 60. Concept 6:Other Competitive Strategies • They are the leader in the small markets. • They avoid competing with larger firms Market Nichers http://sherryloumarzo.blogspot.com/ 60
  • 61. Concept 6 Example:Absolute Distilled Water asMarket Challenger Market Challenger Market Leader TO http://sherryloumarzo.blogspot.com/ 61
  • 62. Concept 6 Example: Absolute Distilled Water as Market Challenger Market Challenger Market Leader TOShare of Absolute is not that far and there are evenmonths that Absolute’s share is larger than the leader http://sherryloumarzo.blogspot.com/ 62
  • 63. Concept 6 Example:Pacific Sun Ice Tea as MarketFollower Market Follower Market Leader TO http://sherryloumarzo.blogspot.com/ 63
  • 64. Concept 6 Example:Pacific Sun Ice Tea as MarketFollower Market Follower Market Leader TO Pacific Sun is pattern to C2, its flavors are the leadingflavors of C2 and it follows C2 in promoting Healthy Drinks to people http://sherryloumarzo.blogspot.com/ 64
  • 65. Concept 6 Example:Nature’s Spring as MarketNiche Market Niche Nature Spring is the Preferred brand of water in Visayas Region http://sherryloumarzo.blogspot.com/ 65
  • 66. Outline: Dealing withCompetition General Attack Strategies Specific Attack Strategies Market Follower Strategies Market- Nicher Strategies http://sherryloumarzo.blogspot.com/ 66
  • 67. Concept 7: General Attack Strategies Frontal Attack Flank AttackEncirclement Attack Bypass Attack Guerrilla Warfare http://sherryloumarzo.blogspot.com/ 67
  • 68. Concept 7:General Attack Strategies • Matches the opponent’s Frontal Attack product, advertising, price, distribution distribution AdvertisementProduct Price http://sherryloumarzo.blogspot.com/ 68
  • 69. Concept 7:General Attack Strategies • An Enemy’s weak spots areFlank Attack natural targets Weak Spot http://sherryloumarzo.blogspot.com/ 69
  • 70. Concept 7: General Attack Strategies • An attempt to capture aEncirclement Attack wide slice of enemy’s territory through a blitz. To capture a slice http://sherryloumarzo.blogspot.com/ 70
  • 71. Concept 7: General Attack Strategies • Bypassing the enemyBypass Attack altogether and attacking easier markets to broaden the firm’s resource base. http://sherryloumarzo.blogspot.com/ 71
  • 72. Concept 7: General Attack Strategies • Consists of waging small,Guerilla Warfare intermittent, attacks to harass and demoralize the opponent & eventually secure permanent footholds. http://sherryloumarzo.blogspot.com/ 72
  • 73. Concept 7 Example: Frontal Attack of Manila Beer to San Miguel Concerts Bundlings BillboardsWalking Advertisements http://sherryloumarzo.blogspot.com/ 73
  • 74. Outline: Dealing withCompetition General Attack Strategies Specific Attack Strategies Market Follower Strategies Market- Nicher Strategies http://sherryloumarzo.blogspot.com/ 74
  • 75. Concept 8 : Specific Attack Strategies Price Discounts Product Proliferation Lower- Priced GoodsValue- Priced Goods Prestige Goods http://sherryloumarzo.blogspot.com/ 75
  • 76. Concept 8 : Specific Attack Strategies Distribution InnovationProduct Innovation Improved Services Manufacturing Cost Intensive advertising Reduction promotion http://sherryloumarzo.blogspot.com/ 76
  • 77. Concept 8 Example: Specific Attack Strategies of Absolute Distilled Water Price DiscountsValue- Priced Goods Intensive advertising promotion http://sherryloumarzo.blogspot.com/ 77
  • 78. Outline: Dealing withCompetition General Attack Strategies Specific Attack Strategies Market Follower Strategies Market- Nicher Strategies http://sherryloumarzo.blogspot.com/ 78
  • 79. Concept 9: Market Follower StrategiesCounterfeiter Imitator Adapter Cloner http://sherryloumarzo.blogspot.com/ 79
  • 80. Concept 9:Market Follower Strategies • Duplicates the leader’s product and packages and sells it on the black market or through disreputable dealersCounterfeiter http://sherryloumarzo.blogspot.com/ 80
  • 81. Concept 9:Market Follower Strategies • Emulates the leader’s products, name, and packaging with slight variation Cloner http://sherryloumarzo.blogspot.com/ 81
  • 82. Concept 9:Market Follower Strategies • Copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. Imitator http://sherryloumarzo.blogspot.com/ 82
  • 83. Concept 9:Market Follower Strategies • Takes the leader’s products and adapts or improves them Adapter http://sherryloumarzo.blogspot.com/ 83
  • 84. Concept 9 Example: Samurai Energy Drink as an Imitator to Cobra Energy Drink • Copied the packaging, color, and size but is price a little lower than CobraSamurai Energy Cobra Energy Drink Drink http://sherryloumarzo.blogspot.com/ 84
  • 85. Outline: Dealing withCompetition General Attack Strategies Specific Attack Strategies Market Follower Strategies Market- Nicher Strategies http://sherryloumarzo.blogspot.com/ 85
  • 86. Concept 10: Market Nicher Strategies End- User Specialist Specific Customer Specialist Customer Size SpecialistVertical Level Specialist Geographic Specialist http://sherryloumarzo.blogspot.com/ 86
  • 87. Concept 10: Market Nicher Strategies Quality PriceProduct Line Specialist Specialist Service Specialist Job Shop Specialist Channel Specialist http://sherryloumarzo.blogspot.com/ 87
  • 88. Concept 10 Example:Virgin Cola as GeographicSpecialist • Asia Brewery Decided to Pull Out Virgin Cola in Luzon and Visayas and concentrate its distribution in Mindanao Area particularly in CDO. Virgin Cola http://sherryloumarzo.blogspot.com/ 88
  • 89. SUMMARY1. Forces that Determine Market Structure - Michael Porter’s 5 Forces2. Identifying Competitors - Competitors in Industry & Market Point of View3. Three Variables in Analyzing Competitors - Share of Market, Share of Mind, Share of Heart4. Selecting Competitors - Strong vs. Weak, Close vs. Distant, Good vs. Bad5. Competitive Strategies for Market Leaders - Expand Total Demand, Defend Market Share, Expand Market Share6. Other Competitive Strategies - Market Challenger, Market Follower, Market Nitcher http://sherryloumarzo.blogspot.com/ 89
  • 90. SUMMARY7. General Attack Strategies - Frontal, Flank, Encirclement, By Pass, & Guerrilla Attack8. Specific Attack Strategies - 10 strategies for Attacking specifically9. Market Follower Strategies - Counterfeiter, Cloner, Imitator, Adapter10. Market- Nicher Strategies - 10 Strategies for Market Nitchers http://sherryloumarzo.blogspot.com/ 90
  • 91. TOP 10 Learning ConceptsChapter 11: Dealing with Competition Sherrylou M. Marzo Sept. 8, 2011 http://sherryloumarzo.blogspot.com/

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