1. Marketing Management
By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha
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SUMMARY by
Chapter 9
Dealing with Competition
Building strong brands requires a keen understanding of competition. To effectively devise and
implement the best possible brand positioning strategies, companies must pay attention to
their competitors. Markets have become too competitive to just focus on the consumer alone.
Vertical Integration is to integrate backward or forward i.e. with suppliers and
costumers which often lowers costs and can manipulate prices and costs in different parts of
Technological the value chain.
leapfrogging Benchmarking is the art of learning from companies that perform certain tasks
better than other companies.
is a bypass strategy
practiced in high-tech Competitive Forces (Michael Porter’s 5 forces)
1. Threat of intense segment rivalry - segment is unattractive if it contains numerous, strong,
industries. The
or aggressive competitors.
challenger patiently 2. Threat of new entrants - segment's attractiveness varies with the height of its entry and exit
barriers. The most attractive segment has high entry barriers and low exit barriers.
researches and
3. Threat of substitute products - A segment is unattractive when there are actual or potential
develops the next substitutes for the product.
4. Threat of buyers' growing bargaining power - A segment is unattractive if buyers possess
technology and
strong or growing bargaining power.
launches an attack, 5. Threat of suppliers' growing bargaining power - A segment is unattractive if the company's
suppliers are able to raise prices or reduce quantity supplied.
shifting the
battleground to its Identifying Competitors
territory, where it has Industry Concept
an advantage. • Number Of Sellers And Degree Of Differentiation
• Entry, Mobility, And Exit Barriers
• Cost Structure
• Degree Of Vertical Integration
• Degree Of Globalization
Marketing Concept
According to marketing approach, competitors are companies that satisfy the same customer
need. The market concept of competition reveals a broader set of actual and potential
competitors. By mapping the buyer's steps in obtaining and using the product a company's
direct and indirect competitors can be identified.

2. Chapter 9 - Dealing with Competition
Trends Analyzing Competitors
• Strategies: What strategies a company uses to enter/survive in the market?
• Objectives: What are the objectives of the competitor’s and what drives its behavior?
Factors shaping a competitor’s objectives include size, history, current management,
and financial situation.
Selecting • Strengths and Weaknesses: A company needs to gather information on each
competitor's strengths and weaknesses.
Competitors: Three Important Variables for analyzing competitors
• Share of market - The competitor's share of the target market.
• Share of mind - The percentage of customers who named the competitor in
responding to the statement, "Name the first company that comes to mind in this
Strong versus Weak:
industry."
Weak require fewer • Share of heart - The percentage of customers who named the competitor in
responding to the statement, "Name the company from which you would prefer to buy
resources per share
the product."
point gained. The firm
Companies that make steady gains in mind share and heart share will inevitably make gains in
should also compete market share and profitability.
with strong
competitors to keep
up with the best.
Competitive Strategies for Market Leaders
Expanding the Total Market
New customers: Potential new users maybe divided into three groups:
Close versus Distant: • Those who might use it but do not (market-penetration strategy)
• Those who have never used it (new-market segment strategy)
Most companies • Those who live elsewhere (geographical-expansion strategy)
compete with
More usage: Two ways of increasing usage
competitors who • Increasing the level or quantity of consumption: through packaging or product
resemble them the design or by increasing the availability of product
• Increasing the frequency of consumption: identifying completely new and different
most ways to use the brand and communicate the advantages of using the brand more
frequently
"Good" versus "Bad": Defending Market Share
The most constructive response is continuous innovation. The leader leads the industry in
should support its developing new product and customer services, distribution effectiveness, and cost cutting. It
good competitors keeps increasing its competitive strength and value to customers.
• Position Defense: It involves occupying the most desirable market space in the minds
(Play by the rules) of the consumers
and attack its bad • Flank Defense: the market leader should also erect outposts to protect a weak front or
possibly serve as an invasion base for counterattack.
competitors.
• Preemptive Defense: A more aggressive maneuver is to attack before the enemy starts
its offense. A company can launch a preemptive defense in several ways
• Counteroffensive Defense: the leader can meet the attacker frontally or hit its flank or
launch a pincer movement. An effective counterattack is to invade the attacker's main
territory so that it will have to pull back to defend the territory.
• Mobile Defense: In mobile defense, the leader stretches its domain over new
territories that can serve as future centers for defense and offense through market
broadening and market diversification.
• Contraction Defense: giving up weaker territories and reassigning resources to
stronger territories.

3. Chapter 9 - Dealing with Competition
Competitive Expanding Market Share
A company should consider four factors before pursuing increased market share:
Strategies for • The possibility of provoking antitrust action
• Economic cost
Market • Pursuing the wrong marketing-mix strategy
• The effect of increased market share on actual and perceived quality
Follower:
A market follower must Competitive Strategies for Market Challengers
know how to hold
Defining the Strategic Objective and Opponent(S)
current customers and A market challenger must decide whom to attack:
win a fair share of new It can attack the market leader. This is a high-risk but potentially high-payoff strategy
It can attack firms of its own size that are not doing the job and are underfinanced
customers. It must keep It can attack small local and regional firms
its manufacturing costs
Choosing a General Attack Strategy
low and its product • Frontal Attack: The attacker matches its opponent's product, advertising, price, and
distribution
quality and services
• Flank Attack: Identifying shifts in market segments geographic areas that are causing
high. Four broad gaps to develop, and then rushing in to fill the gaps and develop them into strong
segments.
strategies can be
• Encirclement Attack: The encirclement involves launching a grand offensive on
distinguished: several fronts. Make sense when the challenger commands superior resources
• Bypass Attack: It means bypassing the enemy and attacking easier markets to
• Counterfeiter -
broaden one's resource base. Three lines of approach: diversifying into unrelated
duplicates the products, diversifying into new geographical markets, and leapfrogging into new
technologies to supplant existing products.
leader's product and
• Guerrilla Warfare: Small, intermittent attacks to harass and demoralize the
package and sells it opponent and eventually secure permanent footholds (selective price cuts, intense
promotional blitzes, and occasional legal action)
• Cloner - emulates the
leader's products, Few more specific strategies: Price discount, Lower price goods, Value-priced goods and
services, Prestige goods, Product proliferation, Product innovation, improved services,
name, and Distribution innovation, Manufacturing-cost reduction, Intensive advertising promotion
packaging, with slight
variations.
Competitive Strategies for Market-Nicher
• Imitator - copies The nicher achieves high margin, whereas the mass marketer achieves high volume. Nichers
some things from the have three tasks: creating niches, expanding niches, and protecting niches. Because niches
can weaken, the firm must continually create new ones therefore multiple niching is
leader but maintains preferable to single niching. The key idea in successful nichemanship is specialization. Here
differentiation in are some possible niche roles:
• End-user specialist: The firm specializes in serving one type of end-use customer.
terms of packaging, • Customer-size specialist: The firm concentrates on selling to small, medium-sized, or
advertising, pricing, large customers.
• Geographic specialist: The firm sells only in a certain locality, region, or area of the
or location. world.
• Adapter - takes the • Product-feature specialist: The firm specializes in producing a certain type of
product or product feature
leader's products and • Quality-price specialist: The firm operates at the low- or high-quality ends of the
adapts or improves market
• Channel specialist: The firm specializes in serving only one channel of distribution
them.