The document discusses different competitive strategies that firms can adopt based on their position in the market. Market leaders aim to expand the total market and defend their market share through creative defense strategies or by attacking competitors. Market challengers seek to gain market share by attacking the market leader through frontal, flank, encirclement, bypass or guerrilla attacks. Market followers imitate the market leader through cloning or adapting. Smaller firms can target market niches not addressed by larger competitors. Firms must balance competitor-centered and customer-centered orientations when developing competitive strategies.

1. 9
Dealing
with Competition
Marketing Management, 13th ed-
A South Asian Perspective

2. Chapter Questions
 How do marketers identify primary competitors?
 How should we analyze competitors’ strategies,
objectives, strengths, and weaknesses?
 How can market leaders expand the total market and
defend market share?
 How should market challengers attack market
leaders?
 How can market followers or nichers compete
effectively?

3. Five Forces Determining Segment Structural
Attractiveness
•Number of sellers and
degree of differentiation
•Entry, mobility, and exit
barriers
•Cost structure
•Degree of vertical
integration
•Degree of globalization

4. Barriers and Profitability
Exit barriers
Low High
Entry Barriers
Low Low, stable Low, risky
returns returns
High, stable High, risky
High returns returns

5. Competitive Strategy
Generic Strategies
Industry
Force Cost
Differentiation Focus
Leadership
Entry Ability to cut price Customer loyalty can
Focusing develops core competencies
in retaliation deters discourage potential
Barriers that can act as an entry barrier.
potential entrants. entrants.
Buyer Ability to offer Large buyers have less
Large buyers have less power to
lower price to power to negotiate because
Power negotiate because of few alternatives.
powerful buyers. of few close alternatives.
Suppliers have power because of low
Supplier Better able to pass on
Better insulated from volumes, but a differentiation-focused
supplier price increases to
Power powerful suppliers. firm is better able to pass on supplier
customers.
price increases.
Customer's become
Threat of Can use low price to
attached to differentiating Specialized products & core competency
defend against
Substitutes attributes, reducing threat protect against substitutes.
substitutes.
of substitutes.
Better able to Brand loyalty to keep Rivals cannot meet differentiation-
Rivalry compete on price. customers from rivals. focused customer needs.

6. Analyzing Competitors
Objectives
Strategies
Competitor
Actions
Reaction
Patterns Strengths &
Weaknesses

7. A Competitor’s Expansion Plans
Customers’ ratings of competition on Key Success
Factors: An example
Customer Product Technical
Product Quality Selling Staff
Awareness Availability Assistance
Junaid Jamshed E E P E E
R-Sheen G G G G G
Shahid Afridi F P E F P
Note: E= Excellent, G= good, F = Fair, P= poor

8. Strengths and Weaknesses
Share of market
(The competitor’s share of the target market)
(The competitor’s share of the target market)
Share of mind
(The first company that comes to mind)
(The first company that comes to mind)
Share of heart
(The company from which you would prefer to
(The company from which you would prefer to
buy)
buy)

9. Selecting Competitor
Market Share Mind Share Heart Share
2006 2007 2008 2006 2007 2008 2006 2007 2008
Junaid Jamshed 50% 47% 44% 60% 58% 54% 45% 42% 39%
R-Sheen 30 34 37 30 31 35 44 47 53
Shahid Afridi 20 19 19 10 11 11 11 11 8
Strong Vs Weak (Fewer Resources required)
Close Vs Distant (Resemblance)
Good Vs Bad

10. Competitive Strategies for Market
Leaders
Market
nicher
Market Market Market
leader challenger follower
40% 30% 20% 10%
Expand Market Attack leader Imitate Special-
Defend Market Share Status quo ize
Expand Market Share

11. Expanding the Total Market
New customers
(Penetration/new market
(Penetration/new market
segmentation/geographical-expansion)
segmentation/geographical-expansion)
More usage
(Consumption Amount/Frequency)
(Consumption Amount/Frequency)

12. Defense Strategy- Creative/Anticipative/Responsive
 A market leader should generally adopt a defense strategy
 Six commonly used defense strategies
 Position Defense
 e.g. Mercedes was using a position defense strategy until Toyota
launched a frontal attack with its Lexus.
 Mobile Defense
 By market broadening and diversification (Dialog Telekom Srilanka)
 Flanking Defense
 Secondary markets (flanks) are the weaker areas and prone to
being attacked
 Contraction Defense
 Withdraw from the most vulnerable segments and redirect
resources to those that are more defendable
 Pre-emptive Defense
 Detect potential attacks and attack the enemies first
 Counter-Offensive Defense
 Responding to competitors’ head-on attack by identifying the
attacker’s weakness and then launch a counter attack
 e.g. Toyota launched the Lexus to respond to Mercedes attack

13. Market Challenger Strategies
The market challengers’ strategic objective is to
gain market share and to become the leader
eventually
How?
 By attacking the market leader
 By attacking other firms of the same size
 By attacking smaller firms

14. Market Challenger Strategies (cont’d)
Types of Attack
Strategies
 Frontal attack
 Flank attack
 Encirclement attack
 Bypass attack
 Guerrilla attack

15. Frontal Attack
 Seldom work unless
 The challenger has sufficient fire-power (a
3:1 advantage) and staying power, and
 The challenger has clear distinctive
advantage(s)
 e.g. Japanese and Korean firms launched
frontal attacks in various ASPAC
countries through quality, price and low
cost
 Surf Vs Ariel

16. Flank attack
 Attack the enemy at its weak points or
blind spots i.e. its flanks
 Ideal for challenger who does not have
sufficient resources
 e.g. Google Vs ChaCha and or
Wikipedia

17. Encirclement attack
 Attack the enemy at many fronts at the
same time
 Ideal for challenger having superior
resources
 e.g. Seiko attacked on fashion,
features, user preferences and
anything that might interest the
consumer
 Zong???

18. Bypass attack
 By diversifying into unrelated products
or markets neglected by the leader
 Could overtake the leader by using new
technologies
 e.g. Pepsi used a bypass attack strategy
against Coke by acquiring Tropicana Vs.
Minute Maid
 Telenor in Pakistan
 Instead of launching carbonated drinks
Nestle brought pure jiuces vs. the
carbonated drinks

19. Guerrilla attack
 By launching small, intermittent hit-and-
run attacks to harass and destabilize
the leader
 Usually use to precede a stronger
attack
 e.g. airlines use short promotions to attack
the national carriers especially when
passenger loads in certain routes are low
 local water brands vs. multinational water
brands

20. Which Attack Strategy should a Challenger
Choose?
Use a combination of several strategies
to improve market share over time

21. Market-Follower Strategies
 Theodore Levitt in his article, “Innovative
Imitation” argued that a product imitation
strategy might be just as profitable as a
product innovation strategy
e.g. Product innovation--Sony
Product-imitation--Panasonic

22. Market-Follower Strategies (cont’d)
 Each follower tries to bring distinctive
advantages to its target market--location,
services, financing
 Four broad follower strategies:
 Counterfeiter (which is illegal)
 Cloner (emulation of leader’s product, name & package)
 e.g. New Joshanda Brand Vs Qarshi
 S&S Cycle Vs. Harley
 Imitator e.g. car manufacturers imitate the style of one
another
 Adapter e.g. many Japanese firms are excellent
adapters initially before developing into challengers and
eventually leaders

24. Market-Nicher Strategies
 Smaller firms can avoid
larger firms by targeting
smaller markets or
niches that are of little
or no interest to the
larger firms
e.g. Zippo
Digicel
Bullet-Proof Cars

25. Market-Nicher Strategies (cont’d)
 Nichers must create niches, expand the
niches and protect them
 e.g. Nike constantly creates new niches--
cycling, walking, hiking, cheerleading, etc
 What is the major risk faced by nichers?
 Market niche may be attacked by larger firms
once they notice the niches are successful

26. Multiple Niching
“[A] firm should `stick to its niching’ but not
necessarily to its niche. That is why multiple
niching is preferable to single niching. By
developing strength in two or more niches the
company increases its chances for survival.”
Philip Kotler

27. Balancing Orientations
Competitor- Customer-
Centered Centered