11

Dealing
with Competition

Marketing Management, 13th ed

 Figure 1.1 Five Forces Determining
Segment Structural Attractiveness

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 Industry Concept of Competition

• Number of sellers and degree of

differentiation
• Entry, mobility, and exit barriers
• Cost structure
• Degree of vertical integration
• Degree of globalization

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 Figure 11.2 Strategic Groups

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 Competitive Markets

Industries Can Be Classified By:

• Number of sellers • Entry, mobility and exit

and degree of barriers
differentiation • Degree of vertical
• Cost structure integration

 Degree of globalization

To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in

 Competitive Markets

Industry Structures • Only one firm offers

an undifferentiated
• Pure Monopoly product or service in
• Pure Oligopoly an area
• Differentiated • Unregulated
Oligopoly • Regulated
• Monopolistic • Example: Most utility
Competition
companies
• Pure Competition

To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in

 Competitive Markets

Industry Structures • A few firms produce

essentially identical
• Pure Monopoly commodities and little
• Pure Oligopoly differentiation exists
• Differentiated • Lower costs are the
Oligopoly key to higher profits
• Monopolistic
• Example: oil
Competition
• Pure Competition

To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in

 Competitive Markets

Industry Structures • A few firms produce

partially differentiated
• Pure Monopoly items
• Pure Oligopoly • Differentiation is by
• Differentiated key attributes
Oligopoly • Premium price may
• Monopolistic be charged
Competition • Example: Luxury
• Pure Competition autos

To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in

 Competitive Markets

Industry Structures • Many firms

differentiate items in
• Pure Monopoly whole or part
• Pure Oligopoly • Appropriate market
• Differentiated segmentation is key
Oligopoly to success
• Monopolistic
• Example: beer,
Competition
restaurants
• Pure Competition

To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in

 Competitive Markets

Industry Structures • Many competitors

offer the same
• Pure Monopoly product
• Pure Oligopoly • Price is the same due
• Differentiated to lack of
Oligopoly differentiation
• Monopolistic
• Example: farmers
Competition
selling milk, crops
• Pure Competition

To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in

 Competitive Markets

• A broader group of competitors will be

identified using the market approach
• Competitor maps plot buying steps in
purchasing and using the product, as
well as direct and indirect competitors

To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in

 Competitor Analysis

• Key characteristics of the competition

must be identified:
• Strategies
• Objectives
• Strengths and Weaknesses
• Effect a firm’s competitive position in the
target market
• Reaction Patterns

To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in

 Competitor Analysis

Competitive Positions in
the Target Market
• Dominant • Tenable :defendable
• Strong • Weak
• Favorable • Nonviable: not correct

To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in

 Table 11.1 Customer Ratings of
Competitors on Key Success Factors

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 Strengths and Weaknesses

Share of market; competitor market

share

Share of mind; first company in

industry

Share of heart;
preferring to by from

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 Figure 11.5
Hypothetical Market Structure

10% 20% 30% 40%

Market Market Market Market
Nichers Follower Challenger Leader

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 Other Competitive Strategies

Market
Challengers

Market Market
Followers Nichers

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 Designing Competitive
Strategies
• Expanding the
Major Strategies total market
• • Defending market
Market-Leader
share
• Market-Challenger
• • Expanding
Market-Follower
market share
• Market-Nicher

Slide 18 in
To accompany A Framework for Marketing Management, 2nd Edition
Chapter 8
 Designing Competitive
Strategies
• Expanding the Total Market:
• Targeting Product to New Users
• Market-penetration strategy
• New-market strategy
• Geographical-expansion strategy
• Promoting New Uses of Product
• Encouraging Greater Product Use

To accompany A Framework for Marketing Management, 2nd Edition Slide 19 in

 Figure 11.4 A Competitor’s
Expansion Plans

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 Figure 11.6 Six Types of
Defense Strategies

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 Designing Competitive
Strategies

Defending Market Share

• Position • Counteroffensive
defense defense
• Flank defense • Mobile defense
• Preemptive • Contraction
defense defense

To accompany A Framework for Marketing Management, 2nd Edition Slide 22 in

 Designing Competitive
Strategies
• Before Attempting to Expand Market
Share, Consider:
• Probability of invoking antitrust action
• Economic costs involved
• Likelihood that marketing mix decisions
will increase profits

To accompany A Framework for Marketing Management, 2nd Edition Slide 23 in

 Designing Competitive
Strategies
• First define the
Major Strategies strategic goals
and opponent(s)
• Market-Leader
• Choose general
• Market-Challenger
attack strategy
• Market-Follower
• Choose specific
• Market-Nicher
attack strategy

To accompany A Framework for Marketing Management, 2nd Edition Slide 24 in

 General Attack Strategies

Frontal Attack Flank Attack

Encirclement
Bypass Attack
Attack

Guerrilla Warfare
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 11-25
 Designing Competitive
Strategies

• General Attack Strategies:

• Frontal attacks match competition
• Flank attacks serve unmet market needs or
underserved areas
• Encirclement “blitzes” opponent
• Bypassing opponent and attacking easier
markets is also an option

To accompany A Framework for Marketing Management, 2nd Edition Slide 26 in

 Competitive Markets

Specific Attack Strategies Include:

• Price-discount • Product innovation
• Lower-price goods • Distribution
• Prestige goods innovation
• • Manufacturing cost
Improved services
reduction
• Product proliferation

 Intensive advertising promotion

To accompany A Framework for Marketing Management, 2nd Edition Slide 27 in
 Designing Competitive
Strategies
• Imitation may be
Major Strategies more profitable than
innovation
• Market-Leader • Four broad
strategies:
• Market-Challenger • Counterfeiter
• Market-Follower • Cloner
• Market-Nicher • Imitator
• Adapter

To accompany A Framework for Marketing Management, 2nd Edition Slide 28 in

 Market Follower Strategies

Counterfeiter

Cloner

Imitator

Adapter

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 Designing Competitive
Strategies
• Niche specialties:
Major Strategies • End-user
• Vertical-level
• Market-Leader • Customer-size
• Specific customer
• Market-Challenger • Geographic
• Product/product line
• Market-Follower • Product feature
• Market-Nicher • Job-shop
• Quality-price
• Service
• Channel

To accompany A Framework for Marketing Management, 2nd Edition Slide 30 in

 Niche Specialist Roles

• End-User Specialist • Product-Line

• Vertical-Level Specialist
Specialist • Job-Shop Specialist
• Customer-Size • Quality-Price
Specialist Specialist
• Specific-Customer • Service-Specialist
Specialist • Channel Specialist
• Geographic
Specialist

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 Balancing Customer and
Competitor Orientations

• Competitor-centered companies
evaluate what competitors are doing,
then formulate competitive reactions
• Customer-centered companies focus on
customer developments when
formulating strategy

To accompany A Framework for Marketing Management, 2nd Edition Slide 32 in