This document discusses competitive strategies and how firms can develop strategies based on their market position. It explains that firms should understand how they compete, their basis of competition, where they operate, and their competitors. The document then outlines offensive and defensive strategies and strategies specifically for market leaders, challengers, followers and nichers. Market leader strategies focus on expanding the market and protecting share, while challengers look to gain share and become the leader. Followers and nichers aim to target smaller markets not of interest to larger firms.

1. Competitive Strategy

2. Introduction
• Having a competitive advantage is necessary for a
firm to compete in the market
• But what is more important is whether the
competitive advantage is sustainable
• A firm must identify its position relative to the
competition in the market
• By knowing if it is a leader, challenger, follower or
nicher, it can adopt appropriate strategies to
compete

3. Sustainable Competitive
Advantage
• Aaker suggested looking at the
following:
– How you compete ?
– Basis of competition ?
– Where you compete ?
– Whom you are competing against ?

4. Building strategies
• Offensive strategies (Overt offensive,
covert offensive)
• Defensive strategies

5. • Overt-offensive strategy
– To knock out a business rival so as to take
over his company
– To knock out a competing product so as to
take over its market share
• Covert-offensive strategy
– Keep as low a profile as possible while
making offensive moves

6. Strategies for Market Leaders
Market Leader’s objectives:
• Expand the total market
-Finding new users
– Creating new uses, and
– Encouraging more usage
• Protect its current market share
– Adopting defense strategies
– Increase its market share

7. Which strategy to use?
Depends on your answer to the following:
• Is it worth fighting?
• Are you strong enough to fight?
• How strong is your defense?
• Do you have any choice but to fight?

8. 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

9. Market-Follower Strategies (cont’d)
• Each follower tries to bring distinctive
advantages to its target market--
location, services, financing

10. 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. Logitech--mice
Microbrewers--special beers

11. Market-Nicher Strategies
(cont’d)
• Nichers must create niches, expand the
niches and protect them
– e.g. Nike constantly created 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

12. Strategies for the leader
• Pre-emptive
• Defensive
• Counter offensive

13. Strategies for the
challenger
• Price discount strategy
• Cheaper goods strategy
• Prestige goods strategy
• Product proliferation strategy
• Product innovation strategy
• Improved services strategy
• Distribution innovation strategy
• Cost reduction strategy
• Intensive promotion strategy

14. Strategies for the
follower
• Counterfeit product strategy (duplicate
products)
• Cloner products strategy (copy leaders
product, package etc.)
• Adapter strategy
• Imitator products strategy ( using
leaders products but adding a little
differentiation)