OM KOTHARI INSTITUTE OF MANAGEMENT &TECHNOLOGY

PROJECT REPORT ON BUILDING STRONG BRANDS -DEALING COMPETITORS WITH COMPETITION

SUBMITED TO:RICHA JAIN MAM SUBMITED BY:RUCHI GIRI&JYOTI VERMA MBA SEM-I

 COMPETITIVE FORCES
Michael porter has identified five forces that determine the intrinsic long term attractivenes of a market segment.

Threats of intense segment rivalry:

A segment is

unattractive if it already contains numerous ,strong, or aggressive competitors .it is even more attractive if it is stable or declining, if plant capacity additions are done in large increments These condition lead to frequent price War advertising battles & new products Introduction.

Threats of new entrants A segmentattractiveness varies with

the height of its entry &exit barrier .the most attractive segment is one in which entry barriers are high and exit low barriers.the airline industry has low barriers but high exit barriers,leaving all the companies struggling during economic downturns

Threats of substitute products:A segment is unattractive

when there are Actual or potential substitutes places for the product .substitutes places a limit on prices and on profit .the company has to monitor price trends closely.if technoloy advances or competition increases in the these substitute industries ,prices& profit in the segment are likely to fall.

Threats of buyers growing bargaining power: A

segment is unattractive if buyer possess strong or growing bargaining power .the rise of retails giantSuch as walmart, food world has led some analyst to that the potential profitability of packaged goods companies will become curtailed .buyer bargaining power grows when they become more concentrated or organized,when the product represent a significant fraction of the buyers cost.

Threats of suppliers growing bargaining : A segment is

unattractive if The companies supplier are able to raise prices or reduces

quantity supplied .oil companies such as Exxonmobil ,Shell ,BP.the best defences are to build win-win relation with suppliers or use multiple supply sources.

IDENTIFYING COMPETITORS
A simplistic way of identifying is that unilever competes with procter & gamble ,sony in India competes with LG ,Onida, and so on. Also, a company is more likely to be hurt by emerging competitors or new technology than by current competetiors.

MARKET CONCEPT OF COMPETITION:

Using the market approach, competitors are companies that satisfy the same customer need. For eg. A customer who buys a word processing package really wants writing ability a need that can also be satisfied by pencils or typewriters. Marketers must overcome marketing myopia and stop defining competition in traditional category terms The market concept of competition reveals A broader set of actual and potential competitors .

Analyzing Competitors
Once a company identifies its primary competitors ,it must ascertain their strategies ,objectives,strength,weakness.

Strategies
A group of firms following the same strategy in a given target market is called a Strategic group.the height of the entry barrier differ from each group.if the company successfully enter a group the member of that group become its key competitors.

Objectives
Once company has identified its main competitors and their strategies ,it must

Ask what is each competitor seeking in the marketplace? What drives each competitors Behaviour .many factors shape a competitors objective ,including size,history.current Management and financial situation .

Strength and weakness

A company needs to gather information on each company competitors strength Weakness .three variables when analyzing competitors. Share of market Share of mind Share of heart

Selecting competitors
it can focus its attack on one of the following classes.

Strong versus weak : most companies aim their shots at weak competitors
, but they also compete with strong competitors to Keep up the best

Close versus distant

.

: most company compete with the competitors who

resemble them the most .for instance Maruti comp Etes with Hyundai &Tata motors not with mercedez Benz.

Good versus Bad

: every company has its good & bad competitors. A

Should support its good competitor not bad one.

BENCHMARKING TO IMPROVE COMPETITIVE PERFORMANCE

Benchmarking is the art of learing companies that perform

certain task better than other companies it includes seven steps . 1.Determine which functions to benchmark; 2.Identify the key performance variables to Measure; 3.Identify the best in class companies; 4.measure performance of best in class Companies; 5.measure the companys performance 6.specify programs & actions to close gap; 7.implement & monitor results.

COMPETITIVE STRATEGIES FOR MARKET LEADERS:

We can gain further insight by classifying firms by the roles they play in the target Market ;leader ,challenger,follower,or nicher.to be the number one calls for action On three fronts . i) The firm must find ways to expand the total market demand. ii) The firm must protect its current market through good defensive & offensive actions. iii) The firm can try to increase its market share even when it is constant.

EXPANDING THE TOTAL MARKET:

The dominant firms gains the most when the total market.for expanding the total market, the market leader should look for new users,uses & usage of its products. New customer :every product class has the potential of attracting buyers who are unaware of the product.or who are resisting it becauseof price or Lack certain features. More usage :usage can be increased by increasing the level or quantity Of consumption or increasing the frequency of consumption.

DEFENDING THE MARKET SHARE:

While trying to expand the size market ,the dominant firm must continously defend its current certain policies to explain caterpillar success. i)Premium performance ii)extensive and efficient dealership system iii)superior service iv)full-line strategy v)good financing the aim of defensive strategy is to reduce the probability of attack,divert attacks to less threating areas,and lessen their intensity.a dominant firm can use six defence summerized below:

Defense
i) Position defense : Position defense involves building superior brand power .nescafe for eg,has defended its position against several attacking brands using this strategy. ii)Flank defense : although position defense is important ,the market leader should erect outpost to protect a weak front or possibly serve as an invasion base for counterattack. iii)Preemptive defense: A more aggressive maneuver is to attack before the enemy starts its offense.a company can launch this defense in many ways .it can wages guerrilla action across the market hitting one competitor here,& keep everyone off balance;or it can try to achieve a grand market envelop -ment. iv)Counteroffensive defense: when attacked ,most market leader will respond with a counterattack .in a counteroffensive, the leader can meet the attacker frontally or hits flank or launch a pincer movement.several U.S. companies used this strategy when they invaded the Japanese domestic market to reduce the pressure of Japanese firms on the U.S market. v)Mobile defense : In mobile defense,the stretches its domain over new territories that can serve as future centers for defense & offensive through market

diversification. vi)contraction defense : large companies sometimes recognise that they can no longer defend all of their territory .the best course of action then appears to be planned contraction giving up weaker territories &reasoning resources to stronger territories.

EXPANDING MARKET SHARE:

Market leader can improve their profitability by increasing their market share . this has led to marketing warfare .gaining increased share in the served market ,however doesnot automatically produce higher profits. especially for..labor intensive services companies that may not experience many economies of scale .much depends on the company strategy.

DEFINING THE STRATEGIC OBJECTIVE &OPPONENTS: I

It main aim is to incresa market share.The challenger should decide whom to attack : 1.it can attack the market leader. 2.it can attack firms of its own size that are not doing the job and are underfinanced. 3.it can attack small local &regional firms.

CHOSSING A GENERAL ATTACK STRATEGY :

i)Frontal attack :In pure frontal attack,the attacker matches its opponents product ,advertising price &distribution.the principle of force says that the side with the greater manpower (resources)will win. ii)Flank attack :An enemy weak spots are natural targets.it can be of two strategic dimensions..one is geographical..and other is segmental.in geographical attack the challenger spots areas where the opponents is underperforming. iii)Encirclement attack: The encirclement maneuver is an attempt to capture a wide slice of the enemys territory through a blitz.it involves launching a grand offensive on several fronts. iv)Bypass attack : The most indirect assault strategy is the bypass .it means bypassing the enemy & attacking easier markets to broaden ones resource base .

CHOSSING A SPECIFIC ATTACK STRATEGY:

Strategy .
*Price discount *Lower price goods *Value-priced goods *Prestige proliferation *Product Innovation *Improved services *Distribution advertising promotion *manufacturing-cost reduction *intensive advertising promotion

GUERRILLA WARFARE: Guerrilla

warfare consists of waging small

,intermittent attacks to harass & demoralize the opponent & eventually secure Permanaent footholds,the guerrilla challenger uses both conventional & unconventional means of attack .these includes selective prices cuts ,intense Promotional blitzes ,& occasional legal action. Normally it is practised by smaller firm against a larger firm.

BALANCING CUSTOMER AND COMPETITOR ORIENTATION: COMPETITOR CENTERRED COMPANIES :

#Situation :
* In competitor W is going all out to crush us the north zone . *competitor Z has introduced a new service feature in the west zone affecting our sales . #Reaction: *we will withdraw from the north zone to avoid a messy battle.

*we will increase our advertising expenditure in the west zone.

CUSTOMER-CENTERED COMPANIES: #Situation
*The total market is growing at 4 percent annually. *The quality-sensitive segment is growing at 8% annually.

# Reactions:
*we will focus more efforts on reaching & satisfying the quality control segment of the market. *we will buy better components , improve control & shift our advertising theme to quality .

Figure 1.1 Five Forces Determining Segment Structural Attractiveness

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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