Kotler08exs dealing with the competition

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Kotler08exs dealing with the competition

  1. 1. Chapter 8 Dealing with the Competition PowerPoint by Karen E. James Louisiana State University - Shreveport ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 1 in
  2. 2. Objectives  Understand how a company identifies its primary competitors and ascertains their strategies.  Review how companies design competitive intelligence systems. ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 2 in
  3. 3. Objectives  Learn how a company decides whether to position itself as a market leader, a challenger, a follower, or a nicher.  Identify how a company can balance a customer vs. competitor orientation. ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 3 in
  4. 4. Competitive Markets  Porter’s Five Forces that Determine Market Attractiveness: – Threat of intense segment rivalry – Threat of new entrants – Threat of substitute products – Threat of buyers’ growing bargaining power – Threat of suppliers’ growing bargaining power ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 4 in
  5. 5. Competitive Markets  Failing to identify competitors can lead to extinction  Internet businesses have led to disintermediation of middlemen  Competition can be identified using the industry or market approach ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 5 in
  6. 6. Competitive Markets Industries Can Be Classified By:  Number of sellers  Entry, mobility and exit barriers and degree of differentiation  Degree of vertical  Cost structure integration  Degree of globalization ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 6 in
  7. 7. Competitive Markets Industry Structures  Pure Monopoly  Pure Oligopoly  Differentiated Oligopoly  Monopolistic Competition  Pure Competition ©2003 Prentice Hall, Inc.  Only one firm offers an undifferentiated product or service in an area – Unregulated – Regulated  Example: Most utility companies To accompany A Framework for Slide 7 in
  8. 8. Competitive Markets Industry Structures  Pure Monopoly  Pure Oligopoly  Differentiated Oligopoly  Monopolistic Competition  Pure Competition ©2003 Prentice Hall, Inc.  A few firms produce essentially identical commodities and little differentiation exists  Lower costs are the key to higher profits  Example: oil To accompany A Framework for Slide 8 in
  9. 9. Competitive Markets Industry Structures  Pure Monopoly  Pure Oligopoly  Differentiated Oligopoly  Monopolistic Competition  Pure Competition ©2003 Prentice Hall, Inc.  A few firms produce partially differentiated items  Differentiation is by key attributes  Premium price may be charged  Example: Luxury autos To accompany A Framework for Slide 9 in
  10. 10. Competitive Markets Industry Structures  Pure Monopoly  Pure Oligopoly  Differentiated Oligopoly  Monopolistic Competition  Pure Competition ©2003 Prentice Hall, Inc.  Many firms differentiate items in whole or part  Appropriate market segmentation is key to success  Example: beer, restaurants To accompany A Framework for Slide 10 in
  11. 11. Competitive Markets Industry Structures  Pure Monopoly  Pure Oligopoly  Differentiated Oligopoly  Monopolistic Competition  Pure Competition ©2003 Prentice Hall, Inc.  Many competitors offer the same product  Price is the same due to lack of differentiation  Example: farmers selling milk, crops To accompany A Framework for Slide 11 in
  12. 12. Competitive Markets  A broader group of competitors will be identified using the market approach  Competitor maps plot buying steps in purchasing and using the product, as well as direct and indirect competitors ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 12 in
  13. 13. Competitor Analysis  Key characteristics of the competition must be identified: – Strategies – Objectives – Strengths and Weaknesses Effect a firm’s competitive position in the target market – Reaction Patterns ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 13 in
  14. 14. Competitor Analysis Competitive Positions in the Target Market  Dominant  Tenable  Strong  Weak  Favorable  Nonviable ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 14 in
  15. 15. Competitive Intelligence Systems  Designing the system involves: – Setting up the system – Collecting the data – Evaluating and analyzing the data – Disseminating information and responding to queries ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 15 in
  16. 16. Competitive Intelligence Systems  Value analysis helps firms to select competitors to attack and to avoid – Customers identify and rate attributes important in the purchase decision for the company and competition  Attacking strong, close, and bad competitors will be most beneficial ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 16 in
  17. 17. Designing Competitive Strategies Major Strategies  Market-Leader  MarketChallenger  Market-Follower  Expanding the total market  Defending market share  Expanding market share  Market-Nicher ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 17 in
  18. 18. Designing Competitive Strategies  Expanding the Total Market: – Targeting Product to New Users Market-penetration strategy New-market strategy Geographical-expansion strategy – Promoting New Uses of Product – Encouraging Greater Product Use ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 18 in
  19. 19. Designing Competitive Strategies Defending Market Share  Position defense  Flank defense  Counteroffensive defense  Preemptive defense  Contraction defense ©2003 Prentice Hall, Inc.  Mobile defense To accompany A Framework for Slide 19 in
  20. 20. Designing Competitive Strategies  Before Attempting to Expand Market Share, Consider: – Probability of invoking antitrust action – Economic costs involved – Likelihood that marketing mix decisions will increase profits ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 20 in
  21. 21. Designing Competitive Strategies Major Strategies  Market-Leader  MarketChallenger  Market-Follower  Market-Nicher ©2003 Prentice Hall, Inc.  First define the strategic goals and opponent(s)  Choose general attack strategy  Choose specific attack strategy To accompany A Framework for Slide 21 in
  22. 22. Designing Competitive Strategies  General Attack Strategies: – Frontal attacks match competition – Flank attacks serve unmet market needs or underserved areas – Encirclement “blitzes” opponent – Bypassing opponent and attacking easier markets is also an option ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 22 in
  23. 23. Competitive Markets Specific Attack Strategies Include:  Price-discount  Lower-price goods  Prestige goods  Improved services  Product innovation  Distribution innovation  Manufacturing cost reduction  Product proliferation  Intensive advertising promotion ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 23 in
  24. 24. Designing Competitive Strategies Major Strategies  Market-Leader  MarketChallenger  Market-Follower  Market-Nicher ©2003 Prentice Hall, Inc.  Imitation may be more profitable than innovation  Four broad strategies: – – – – Counterfeiter Cloner Imitator Adapter To accompany A Framework for Slide 24 in
  25. 25. Designing Competitive Strategies Major Strategies  Market-Leader  MarketChallenger  Market-Follower  Market-Nicher ©2003 Prentice Hall, Inc.  Niche specialties: – – – – – – – – – – – End-user Vertical-level Customer-size Specific customer Geographic Product/product line Product feature Job-shop Quality-price Service Channel To accompany A Framework for Slide 25 in
  26. 26. Balancing Customer and Competitor Orientations  Competitor-centered companies evaluate what competitors are doing, then formulate competitive reactions  Customer-centered companies focus on customer developments when formulating strategy ©2003 Prentice Hall, Inc. To accompany A Framework for Slide 26 in

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