Mkt Leader,follower,challenger

Marketing Strategies for Competitive Positions

Definition • Competitive Analysis – The process of identifying key competitors; assessing their objectives, strategies, strengths and weaknesses, and reaction patterns; and selecting which competitors to attack or avoid.

Types of Competitive Positions Market Leaders Market Challengers Market Followers Nichers

Market Leaders

Competitive Strategy Competitive Positions • • • •

Market Leader Market Challenger Market Follower Market Nicher

•

Expanding the total demand – Finding new users – Discovering and promoting new product uses – Encouraging greater product usage

•

Protecting market share – Many considerations – Continuous innovation

•

Expanding market share – Profitability rises with market share

Marketing Strategy Market Leader Strategies • Increase Size of Total Market • Product-Market Growth Strategies • Protect Market Share • Fortification • Assortment of brands, sizes • Innovation • Best defense is a good offense • Counteroffensive

Market Share

100%

Marketing Effort ($)

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

Designing Competitive Strategies Defending Market Share • • Position defense • • Flank defense • Preemptive defense •

Counteroffensive defense Mobile defense Contraction defense

Expand Expand Total Total Market Market Kodak ----- New user, new uses, more uses Arms and hammer’s baking soda, refrigerator demand and kitchen grace fires

Michelin Tire (French) – French car owners to drive there car more miles per year. More tire replacement

Defend Defend market market Share Share Coca vs. Peps, Gillette vs. Bick, Hertz vs. Avis

Defense Defense Strategy Strategy

Vs.

Heinz ketchup market enjoy high market share Hunts costly attack failed

Flank Flank Defense Defense

Heublein’s brand Smirnoff attack by Wolf Schmidt vodka. Smirnoff price rise by one dollar for the advertising

Market Leader Strategies Position Position

Flanking Flanking protect weakness create assault posts

fortification

Preemptive Preemptive guerrilla psychological preventative

Market Market Leader Leader

Counteroffensive Counteroffensive

Mobile Mobile

fast, solid,

broadening fronts

Contraction Contraction strategic withdrawal

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

Competitive Strategy Competitive Positions • • • •

Market Leader Market Challenger Market Follower Market Nicher

•

Option 1: challenge the market leader – High-risk but high-gain – Sustainable competitive advantage over the leader is key to success

•

•

Option 2: challenge firms of the same size, smaller size or challenge regional or local firms Full frontal vs. indirect attacks

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

Market Challenger Strategies Encirclement Encirclement Flanking Flanking Frontal Frontal

Bypass Bypass Guerrilla Guerrilla

Challenger Challenger Strategies Strategies

Competitive Strategy Competitive Positions • • • •

Market Leader Market Challenger Market Follower Market Nicher

• Follow the market leader – Focus is on improving profit instead of market share – Many advantages: • Learn from the market leader’s experience • Copy or improve on the leader’s offerings • Strong profitability

Market Follower Strategies Cloner Cloner Imitator Imitator Adapter Adapter

Designing Competitive Strategies Specific Attack Strategies Include: • • • • •

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

Competitive Strategy Competitive Positions • • • •

Market Leader Market Challenger Market Follower Market Nicher

• • • •

Serving market niches means targeting sub segments Good strategy for small firms with limited resources Offers high margins Specialization is key – By market, customer, product, or marketing mix lines

Nicher Strategies for Advantage End-Use Specialist

Geographic Specialist

Vertical-Level Specialist

Product/Feature Specialist

Customer-Size Specialist

Quality-Price Specialist

Specific-Customer Specialist

Service Specialist

What makes a Niche a Good Niche? General Nicher - Rules • Be satisfied being small. • Stay stealthy, stay healthy. • Don’t be myopic. • The customer’s always right but not always right for you. • stick to niching but not necessarily to your niche.