COMPETITION

9-1
 Response Mechanism
9-2

Poor firms ignore

their
competitors;
average firms
copy their
competitors;
winning firms
lead their
competitors.
 Competition
9-3

 Competition: “A market in which rival

sellers are trying to gain extra business
at one another's expense and thus are
forced both to be as efficient as possible
and to hold their prices down as much as
possible.”

 www.mvp.cfee.org/en/glossary.html
 Competitors
9-4

 Competitors : “those firms or individuals

who seek to satisfy the same customers
or customer needs and offer similar
products or services, close substitutes or
brands to them”.
 Identifying Competitors
9-5
 Industry Concept of Competition
 Industry

 Number of Sellers and

Degree of Differentiation
 Pure monopoly
 Oligopoly
 Pure oligopoly
 Differentiated oligopoly
 Monopolisticcompetition
 Pure competition
 Analyzing Competitors
9-6

 Three
Variables to Monitor
When Analyzing Competitors:
 Share of market
 Share of mind
 Share of heart
What it is ?
 Share of market : The competitor’s
share of the target market
 Share of mind: The percentage of
customers who name the competitor in
responding to the statement, “Name the
first company that comes to your mind
in this industry.”
 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 the product.”
 Competitive Forces
Michael Porter’s 5 forces theory
9-8

Threat of:
2. intense
segment
rivalry
3. new entrants
4. substitute
products
5. buyers’
Figure 9-1: Five Forces Determining growing
Segment Structural Attractiveness bargaining
 Barriers and Profitability
9-9

Figure 9-2:
 Effects of Competition
9-
10

 Enlarging the product mix

 The mix is defined by :
3. the industry and
4. manufacturing environment and
5. management strategies
 that position the company as a
7. specialty,
8. niche or
9. broad-based supplier
of goods and services
 Levels of Competition
9-
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 Brand Competition
 Industry Competition
 Form Competition
 Generic Competition
 Brand Competition
9-
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 Rival companies offering a similar

product and services to the same
customer at similar prices.

 Maruti800,
 Santro,
 Matiz
 Industry Competition
9-
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 A Competition within all companies

making same product and class of
products.

 Maruti800 could compete against all

other automobile manufacturers
 Form Competition
9-
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 All companies manufacturing products

that supply the same resultant to the
consumer

 Maruti800 would see itself competing

against not only automobiles
manufacturers but also against
manufacturers of trucks,LCVs and even
with manufacturers of various motor
cycles mfg companies.
 Generic Competition
9-
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 All companies that compete for the same

consumer’s wallet and try to achieve
maximum share of wallet.

 Maruti800 would see itself competing

with companies that sell white goods.
 Analysis of Competition
9-
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 Two Approaches
 Industry analysis
 Key player analysis
 Industry Analysis
9-
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 5 Steps:
Defining an industry : E.g. Cement
ndustry,automobiles industry
Study of key aspects: Market
Size,growth,structure,gov.policy etc.
SWOT
Predicting the changes in industry strategies
Analysis of Results identification of strategic player
 Creative Marketer
9-
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 It discovers & produce solutions

customers did not ask for but to which
they enthusiastically respond.
 A market driving firm
 Anticipative marketer
9-
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 It looks ahead into what needs

customers may have in the near future.
 Responsive Marketer
9-
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 It finds a stated need & fills it

 Defending the Market Share
9-
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 Continuous innovation
 Developing new products
 Distribution effectiveness
 Cost cutting
 6 defense strategies
 Designing Competitive Strategies
9-
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6 Defense Strategies
 Position Defense
 Flank Defense
 Preemptive Defense
 Counteroffensive Defense
 Mobile Defense
 Contraction Defense
 Planned contraction
(Strategic withdrawal)
 Position defense
9-
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 Building superior brand power and

making the brand almost Impregnable
(unassailable)
 Flank defense
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 Erect outposts to protect a weak front or

possibly serve as an Invasion base for
counterattacking the possible challenge
for the weak (low) product.
 Preemptive defense
9-
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 To attack before the enemy starts its

offense.
 Keep your competitors off balanced:
open many pockets of offense.
 Preannouncements
Small firms may choose another
direction to avoid head to head
competition.
 Counter offensive defense
9-
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 Launching a pincer movement

 counter attacking attacker’s main
territory:
So that the aggressor will have to pull
back some of its troops to defend its
territory.
 Mobile defense: The Leader stretches its domain
over new territories that can serve as future centers for defense &
offense through market broadening and diversification.
9-
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Market broadening: Shifting focus from the

current product to the underlying generic need.
Company gets involved in the R & D across the
whole range of technology associated with that
need.

Principle of the objective: The most important

military principle is the Principle of the Objective.
This principle requires that you decide in advance
exactly what it is that you are trying to
accomplish. What exactly is your objective? 80%
of all problems in personal and corporate life
come from a lack of clarity with regard to
objectives and goals.

Principle of mass: The principle of mass should be

understood in terms of its components: (1) effects -
not forces, (2) place and time, (3) joint integration,
and (4) synchronization.

Market diversification : Shifting into the unrelated

industries.
 Designing Competitive
9-
Strategies
28

 Market-Challenger Strategies
 Defining
the Strategic Objective and
Opponent(s)
 It can attack the market leader
 It can attack firms of its own size that are
not doing the job and are underfinanced
 It can attack small local and regional
firms
 Choosing a General Attack Strategy
 Designing Competitive
9-
Strategies
29

 Brand-extension strategy
 Multibrand strategy
 Heavy advertising and
media pioneer
 Aggressive sales force
 Effective sales promotion
 Competitive toughness
 Manufacturing efficiency
and cost cutting
 Brand-management system
 Attack Strategies
9-
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Figure 9-
10:
 Designing Attack Strategies
9-
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5 Attack Strategies
 Frontal Attack

 Flank Attack

 Encirclement Attack

 Bypass Attack

 Guerrilla Warfare
 Analyzing Competitors
9-
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 Reaction Patterns
1. If competitors are nearly identical and make
their living the same way, then their
competitive equilibrium is unstable.
2. If a single major factor is the critical factor,
then the competitive equilibrium is unstable.
3. If multiple factors may be critical factors, then
it is possible for each competitor to have some
advantage and be differentially attractive to
some customers. The more factors that may
provide an advantage, the more competitors
who can coexist. Competitors all have their
segment, defined by the preference for the
factor trade-offs they offer.
4. The fewer the number of critical competitive
variables, the fewer the number of
competitors.
5. A ratio of 2 to 1 in market share between any
two competitors seems to be the equilibrium
point at which it is neither practical nor
Definition of Attack
 Frontal Attack : The attacker matches
its opponent’s product , advertising
,price and distribution.
 Flank Attack : An enemy’s weak spots
are targeted.
 Encirclement Attack : It is attempt to
capture a wide slice of the enemy’s
territory through a blitz
 Bypass Attack : Bypassing the enemy
and attacking easier markets to broaden
resource base.
 Designing Competitive Strategies
9-
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Figure 9-6:
Hypothetical
Market
Structure
 Designing Competitive
9-
Strategies
35

 Market-Leader Strategies
 Expanding the Total Market
 New Users
 Market-penetration strategy
 New-market segment strategy
 Geographical-expansion strategy
 New Uses
 More Usage

 Defending Market Share

 Designing Competitive
9-
Strategies
36

Choosing a Specific Attack Strategy

 Price-discount
 Lower price goods
 Prestige goods
 Product proliferation
 Product innovation
 Improved services
 Distribution innovation
 Manufacturing cost reduction
 Intensive advertising promotion
 Designing Competitive
9-
Strategies
37

 Market-Follower Strategies
 Innovative imitation
(Product imitation)
 Product innovation
 Four Broad Strategies:
 Counterfeiter
 Cloner
 Imitator
 Adapter
Counterfeiter
 The counterfeiter duplicates the leader’s
product and package and sell it on the
black market or through disreputable
dealers
Cloner
 The Cloner emulates the leader’s
 product,
 name and
 packaging, with slight variation.
Imitator
 The imitator copies some things but
maintains differentiation in terms of
 Packaging
 Advertising
 Pricing
 Location
Adapter
 The adapter takes (legally) the leader’s
product and improves them and sell it
probably at a different country.
 Designing Competitive
9-
Strategies
42

 Market-Nicher
Strategies
 High margin versus
high
volume  Product-feature
 Nicher Specialist Roles specialist
 Job-shop
 End-user specialist specialist
 Value-added reseller  Quality-price
 Vertical-level specialist specialist
 Customer-size specialist  Service specialist
 Specific-customer  Channel
specialist specialist
 Geographic specialist
 Balancing Customer and
9-
Competitor Orientations
43

Competitor-centeredcompany
Customer-centered company