This document discusses various competitive strategies for companies in different market positions. It describes strategies for market leaders, such as protecting market share through continuous development. It also outlines strategies for challengers, such as innovative imitation of leaders. Finally, it discusses niche strategies, where companies target small, specialized markets, as well as strategies for economic downturns like emphasizing value and cost-effectiveness. Examples are provided to illustrate each strategy.

1. Prof. Remigio Joseph De Ungria
Chapter 11
Competitive Dynamics – Dealing
with Competition
Michael Allen D. Santillana

2. Competitive Strategies for Market
Leaders
• Market leaders have the largest share and
usually lead in price changes, new product
introductions, distribution coverage, and
promotional intensity.
• Kotler Example:
– One such well-known brand and market leader is
Xerox – more than just a copier company, it paved
the way for color printing and the overall boom of
the printing service market through continuous
development and revamping their machines.

3. Competitive Strategies for Market
Leaders
• Local Example:
– The now multinational fast food chain, Jollibee,
dominates the fast-food industry in the Philippines
today, owning around 65% market share. Perhaps its
main competitive advantages over fast food giants
such as McDonald’s and KFC are its relatively higher
turnover rates and very low prices.
• Medical Example:
– The two main competitive advantages that
pharmaceutical giant Pfizer has over a lot of its
adversaries is its large and diversified portfolio and
tremendous brand recognition for quality.

4. When Your Competitor Delivers More
for Less
• Companies offering the powerful combination
of low prices and high quality are capturing
the hearts and wallets of consumers all over
the world.
• In order to compete, mainstream companies
need to utilize the old imperatives of
DIFFERENTIATION and EXECUTION to gain a
much needed competitive advantage.

5. When Your Competitor Delivers More
for Less
• Kotler Example:
– Low-cost operations set up by HSBC, ING, Merrill Lynch,
and Royal Bank of Scotland succeed in part thanks to
synergies be- tween the old and new lines of business.
• Local Example:
– PAL, Cebu Pacific, and Air Philippines offering their own
low-cost carriers.
• Medical Example:
– Many health care providers, such as The Medical City,
have found out that electronic health records (EHRs) can
help improve medical practice by being more efficient
(e.g., in receiving labs faster) and increasing cost savings.

6. Expanding Total Market Demand
• When the total market expands, the dominant
firm usually gains the most.
• In general, the market leader should look for
new customers or more usage from existing
customers.
• This involves gaining NEW CUSTOMERS and
giving them NEW WAYS and ADDITIONAL
OPPORTUNITIES to use your brand.

7. Expanding Total Market Demand
• Kotler Example:
– In addition to sales through company-operated retail stores, Starbucks
sells whole bean coffees through a specialty sales group and
supermarkets, and by selling bottled Frappuccino® coffee drinks and ice
cream through its joint venture partnerships.
• Local Example:
– There is currently a growing market for premium ice cream, most notably
Magnum, Baskin-Robbins, and Ben & Jerry’s, here in the Philippines,
mostly because of our sense of adventure in terms of taste, and strong
purchasing power.
• Medical Example:
– Dra. Vicki Belo, the CEO of the Belo Medical Group, has an unending drive
to pioneer many cosmetic breakthroughs and deliver the latest
innovations, as seen in her skin products. That way, she is at the forefront
of the cosmetics industry in the Philippines.

8. Protecting Market Share
• The most constructive response to actively
defend any business is CONTINUOUS
DEVELOPMENT.
• The front-runner should lead the industry in
developing new products and customer
services, distribution effectiveness, and cost
cutting.
• Comprehensive solutions increase its
competitive strength and value to customers.

9. Protecting Market Share
• Kotler Example:
– When Philip Morris recognized the growing curbs
against smoking, they purchased several
industries whose products are unrelated to theirs,
such as beer, liquor, and soft drinks.
• Local Example:
• Medical Example:

10. Increasing Market Share
• Gaining increased share does not automatically
produce higher profits, however, especially for labor-
intensive service companies that may not experience
many economies of scale.
• Because the cost of buying higher market share
through acquisition may far exceed its revenue value, a
company should first consider four factors:
– The possibility of provoking antitrust action
– Economic cost
– The danger of pursuing the wrong marketing activities
– The effect of increased market share on actual and
perceived quality

11. Increasing Market Share
• Kotler Example:
– FairPoint Communications struggled to integrate the
1.3 million customers it gained in buying Verizon
Communications’s New England franchise. A slow
conversion and significant service problems led to
massive customer dissatisfaction, and eventually
bankruptcy.
• Local Example:
• Medical Example:

12. Other Competitive Strategies

13. Market-Challenger Strategies
• Market Challenger
– A company that can attack the leader and other direct
competitors in an aggressive bid for further market share.
• Many market challengers have gained ground or even
overtaken the leader.
• Kotler Example:
– SoBe; positioned against Snapple and Arizona, The first
successful product was SoBe Black Tea 3G with ginseng,
guarana, and ginkgo. The lizard character on the
packaging, from an iconic South Beach hotel, became an
integral part of SoBe’s brand imagery. SoBe’s explosive
growth was based on a combination of functional benefits
(the 3 Gs), colorful packaging, a powerful sales force
establishing strong shelf presence in the store.

14. Market-Challenger Strategies
• Local Example:
• Medical Example:

15. Market-Follower Strategies
• Innovative imitation; where another firm can
come along and copy or improve on the new
product.
• Although it probably will not over- take the
leader, the follower can achieve high profits
because it did not bear any of the innovation
expense.

16. Market-Follower Strategies
• Kotler Example:
– Pepsi vs. Coke. Although Pepsi may never be as
well-consumed, it used a bypass approach to
battle Coke by finding new markets to enter.
• Local Example:
• Medical Example:

17. Market-Nicher Strategies
• An alternative to being a follower in a large
market is to be a leader in a small market, or
NICHE.
• Smaller firms normally avoid competing with
larger firms by targeting small markets of little
or no interest to the larger firms, but even
large, profitable firms may choose to use
niching strategies for some of their business
units or companies.

18. Market-Nicher Strategies
• Kotler Example:
– With smoking on a steady decline, Zippo Manufacturing is
finding the market for its iconic metal cigarette lighter drying
up. Its marketers need to diversify and broaden their focus to
“selling flame.”
• Local Example:
– Vista Land, a Filipino property development group, has a new
unit called Lessandra that will focus on the specialized housing
needs of a lower-bracket market, that of the P800,000 to P1.2
million bracket.
• Medical Example:
– Many physicians have niche patient marketing strategies. For
example, in pediatrics, the parents of young children are likely
to relate well to topics such as primary care, pediatrics,
vaccinations and illnesses common among children.

19. Product Life-Cycle Marketing
Strategies
• A company’s positioning and differentiation strategy
must change as the product, market, and competitors
change over the PRODUCT LIFE CYCLE (PLC). To say a
product has a life cycle is to assert four things:
– Products have limited lives
– Product sales pass through distinct stages, each posing
different challenges, opportunities, and problems to the
seller.
– Profits rise and fall at different stages of the product life
cycle.
– Products require different marketing, financial,
manufacturing, purchasing, and human resource
strategies in each life-cycle stage.

20. Product Life-Cycle Marketing
Strategies
• Kotler Example:
– Electrolux uses an elaborate seg- mentation plan
and an expansive product line to make sure its
brand is not stuck in the middle of a shrinking
market.
• Local Example:
• Medical Example:

21. Marketing in an Economic Downturn
• Given economic cycles, there will always be
tough times, such as 2008–2010 in many parts
of the world.
• Despite reduced funding for marketing
programs and intense pressure to justify them
as cost effective, some marketers survived—
or even thrived—in the recession.

22. Marketing in an Economic Downturn
• Kotler Example:
– With slogans like “Feed your family for a fiver”,
Sainsbury’s no-nonsense value appeal was just the
right message to send to UK customers in the
midst of a recession.
• Local Example:
• Medical Example: