Kotler on Marketing

Poor firms ignore their

competitors; average firms copy
their competitors; winning firms
lead their competitors.

August 17, 20 1 Dr. HG

22
 Designing Competitive Strategies

Market Leader Strategies – An industry may have one

market leader. This firm has the largest market share
in the relevant product market, and usually leads the
other firms in price changes, new product
introductions, distribution coverage, and promotional
intensity.

August 17, 20 2 Dr. HG

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 Being the leader calls for action on three fronts :

1. The firm must find ways to expand total market

demand.

2. The firm must protect its current market share

through good defensive and offensive actions and

3. The firm can try to increase its market share,

even if market size remains constant.

August 17, 20 3 Dr. HG

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 Expanding total market.
a. New users
b. New uses
c. More usage

Protecting Market Share

Continues improvement
Developing new products, customer services, distribution
effectiveness and cost cutting.
Proactive Marketing
To satisfy customer needs companies use responsive
marketing, anticipative marketing and creative marketing.

August 17, 20 4 Dr. HG

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 Defensive Marketing

Defense Strategies

Position Defense – involves building superior brand power,

making the brand almost impregnable.

Flank Defense – The market leader should erect outposts to

protect a weak front or possibly serve as an invasion base for
counter attack.

August 17, 20 5 Dr. HG

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 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.

 It can wage a guerrilla action across the market –

hitting one competitor here, and another there – and keep
everyone off balance or it can try to achieve a grand market
envelopment.

August 17, 20 6 Dr. HG

22
 Counter Offensive Defense.

 Here, the leader can meet the attacker frontally or

hit its flank or launch a pincer movement.

 An effective counter attack is to invade the

attacker’s main territory so that it will have to pull back
some troops to defend the territory.

August 17, 20 7 Dr. HG

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 Mobile Defense
 The leader stretches its domain over new territories that
can serve as future centers for defense offense. It spreads
through market broadening and market diversification.
Contraction Defense
 Large companies recognize that they no longer defend all
of their territory.
 The best course of action then is planned contraction (also
called strategic withdrawal) It means giving up weaker
territories and reassigning resources to stronger territories.

August 17, 20 8 Dr. HG

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 Increasing Market Share

 Market leaders can improve their profitability by

increasing their market share.

Market challenger strategies

 Firms that occupy second, third & lower ranks in
the industry are often called runner-up or trailing
firms.

August 17, 20 9 Dr. HG

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 Frontal Attack
 The attacker matches its opponent’s product,
advertising, price and distribution. The principle of force
says that the side with greater manpower (resources) will
win.

 A modified frontal attack such as cutting price vis-

à-vis opponent’s can work if the market leader does not
retaliate and if the competitor convinces the market that its
product is equal to the leaders.

August 17, 20 10 Dr. HG

22
 Flank Attack
 The enemy’s weak spots are natural targets. A flank
attack can be directed along two strategic dimensions –
geographical and segmental.

 In a geographical attack, the challenger spots areas

where the opponent is under performing

 The other strategy is to serve uncovered market needs.

 Flank attacks are particularly attractive to a challenger

with fewer resources than its opponent and are much
more likely to be successful than frontal attacks.

August 17, 20 11 Dr. HG

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 Encirclement Attack
It involves launching a grand offensive on several fronts.
Encirclement makes sense when the challenger commands
superior resources and believes a swift encirclement will
break the opponents will.

Bypass Attack

Most indirect attack. It means bypassing the enemy and

attacking easier markets to broaden one’s reserve base.

August 17, 20 12 Dr. HG

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 This strategy offers three lines of approach :

a. Diversifying into unrelated products

b. Diversifying into new geographical markets, and

c. Leapfrogging into new technologies to supplant

existing products.

August 17, 20 13 Dr. HG

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 Guerrilla Attacks

 Guerrilla warfare consists of waging small,

intermittent attacks to harass and demoralize the
opponent and eventually secure permanent footholds.

 These include selective price cuts, intense

promotional blitzes, and occasional legal actions.

August 17, 20 14 Dr. HG

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 Market follower strategies
 The follower has to define a growth path, but one
that does not invite competition retaliation. Four
broad strategies can be distinguished :

1. Counterfeiter
 The counterfeiter duplicate the leader’s product and
package and sells it on the black market or through
disreputable dealers.

August 17, 20 15 Dr. HG

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 2. Cloner
 The cloner emulates the leader’s products, name, and
packaging, with slight variations.

3. Imitator
 The imitator copies some things from the leader but
maintains differentiation in terms of packaging,
pricing, etc.

August 17, 20 16 Dr. HG

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 4. Adapter

 The adapter takes the leader’s products and adapts or

improves them. The adapter may choose to sell to
different markets, but often the adapter grows into the
future challenger, as many Japanese firms have done
after adapting and improving the products developed
elsewhere.

August 17, 20 17 Dr. HG

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 Market Nicher Strategies

 An alternative to being a follower in a large

market is to be a leader in small market or niche. Smaller
firms normally avoid competing with larger firms by
targeting small markets of little or no interest to the
larger firms.

August 17, 20 18 Dr. HG

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