The document discusses strategies for different types of competitors in a market. It explains that market leaders should focus on expanding the total market and defending their market share through strategies like position defense, mobile defense, and counter-offensive defense. Market challengers should directly attack the market leader through frontal, flank, encirclement, bypass, or guerrilla attacks. Market followers imitate the leader through cloning, imitation, or adaptation. Small niche competitors focus on specialized market segments ignored by larger firms. The optimal strategy combines elements from different approaches over time.

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
Low
Low, stable
returns
Low
High, stable
High returns
High
Low, risky
returns
High, risky
returns
Entry Barriers
Exit barriers

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

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

7. A Competitor’s Expansion Plans
Customers’ ratings of competition on Key Success
Factors: An example
Customer
Awareness
Product Quality
Product
Availability
Technical
Assistance
Selling Staff
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)
Share of mind
(The first company that comes to mind)
Share of heart
(The company from which you would prefer to
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
leader
40%
Market
challenger
30%
Market
nicher
Market
follower
20%
Expand Market
Defend Market Share
Expand Market Share
Attack leader
Status quo
Imitate
10%
Special-ize

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