The document discusses strategies for dealing with competition in the marketplace. It covers identifying competitors and analyzing their strengths, weaknesses, objectives and strategies. It also outlines different competitive strategies for market leaders, challengers and followers to either defend or expand their market share. These include strategies like expanding total market demand, preemptive defense, flank attacks, guerrilla warfare, and product imitation for followers. Porter's five forces model and concepts like strategic groups and mind/heart share are also covered.

3. Chapter 9: Dealing with Competition

5. Source: www.googleimages.com Michael Porter’s Five forces Model

7. Industry Concept • 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. Identify Competitors

8. Group A Narrow line Lower mfg. cost Very high service High price Group C Moderate line Medium mfg. cost Medium service Medium price Group B Full line Low mfg. cost Good service Medium price Group D Broad line Medium mfg. cost Low service Low price High Low Low High Quality Vertical Integration Figure 9.2 Strategic groups in the major- appliance industry Page 228

9. 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 behaviour? Factors shaping a competitor’s objectives include size, history, current management, and financial situation. Analyze Competitors

13. INDIVIDUAL USER COMMERICAL & INDUSTRIAL EDUCATIONAL PERSONAL COMPUTERS HARDWARE ACCESORIES SOFTWARE Strengths and Weaknesses: A company needs to gather information on each competitor's strengths and weaknesses. FIGURE 9.4 PAGE 230 A COMPETITORS EXPANSION PLAN DELL

14. TABLE 9.1 PAGE 231 – CUSTOMERS RATINGS OF COMPETITION ON KEY SUCCESS FACTORS CUSTOMER AWARENESS PRODUCT QUALITY PRODUCT AVAILABILITY TECHINCAL ASSISTANCE SELLING STAFF COMPETITOR A E E P P G COMPETITOR B G G E G E COMPETITOR C F P G F F E= EXCELLENT G = GOOD F= FAIR P = POOR

16. MARKET SHARE MIND SHARE HEART SHARE TABLE 9.2 PAGE 231 MARKET SHARE, MIND SHARE, AND HEART SHARE 2005 2006 2007 2005 2006 2007 2005 2006 2007 COMPETITOR A 50% 47% 44% 60% 58% 54% 45% 42% 39% COMPETITOR B 30 34 37 30 31 35 44 47 53 COMPETITOR C 20 19 19 10 11 11 11 11 8

17. Selecting Competitors: Strong versus Weak: Weak require fewer resources per share point gained. The firm should also compete with strong competitors to keep up with the best. Close versus Distant: Most companies compete with competitors who resemble them the most "Good" versus "Bad": should support its good competitors (Play by the rules) and attack its bad competitors.

19. Competitive Strategies for Market Leaders Expanding the Total Market New customers: Potential new users maybe divided into three groups: • Those who might use it but do not (market-penetration strategy) • Those who have never used it (new-market segment strategy) • Those who live elsewhere (geographical-expansion strategy)

21. Figure 9.6 – Six types of Defense Strategies page 236 Attacker 3) Pre-emptive 4)Counteroffensive 1) Position DEFENDER 2)FLANK 6) Contraction 5)Mobile

22. Defending Market Share The most constructive response is continuous innovation . The leader leads the industry in developing new product and customer services, distribution effectiveness, and cost cutting. It keeps increasing its competitive strength and value to customers. • Position Defense: It involves occupying the most desirable market space in the minds of the consumers • Flank Defense: the market leader should also erect outposts to protect a weak front or possibly serve as an invasion base for counterattack. • Pre-emptive Defense: A more aggressive manoeuvre is to attack before the enemy starts its offense. A company can launch a pre-emptive defence in several ways

23. Defending Market Share Cont’d • 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 defence, the leader stretches its domain over new territories that can serve as future centres for defence and offense through market broadening and market diversification. • Contraction Defense: giving up weaker territories and reassigning resources to stronger territories.

26. Choosing a General Attack Strategy • Frontal Attack: The attacker matches its opponent's product, advertising, price, and distribution • Flank Attack: Identifying shifts in market segments geographic areas that are causing gaps to develop, and then rushing in to fill the gaps and develop them into strong segments. • Encirclement Attack: The encirclement involves launching a grand offensive on several fronts. Make sense when the challenger commands superior resources

27. Choosing a General Attack Strategy • Bypass Attack: It means bypassing the enemy and attacking easier markets to broaden one's resource base. Three lines of approach: diversifying into unrelated products, diversifying into new geographical markets, and leapfrogging into new technologies to supplant existing products. • Guerrilla Warfare: Small, intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds (selective price cuts, intense promotional blitzes, and occasional legal action)

28. Market follower strategies A strategy of product imitation might be as profitable as a strategy of product innovation. The innovators bear the expense of developing the new product, getting it into distribution, and informing and educating the market. Counterfeiter – duplicates the leader’s product and packages and sells it on the black market. Cloner – the cloner emulates the leader’s products, name, and packaging, with slight variations. Imitator – copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. Adapter – takes the leader’s products and adapts or improves them.

30. Here are some possible niche roles: • End-user specialist : The firm specializes in serving one type of end-use customer. • Customer-size specialist: The firm concentrates on selling to small, medium-sized, or large customers. • Geographic specialist: The firm sells only in a certain locality, region, or area of the world.

31. possible niche roles CONt’D: • Product-feature specialist : The firm specializes in producing a certain type of product or product feature • Quality-price specialist: The firm operates at the low- or high-quality ends of the market • Channel specialist: The firm specializes in serving only one channel of distribution