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Dealing with Competition
Marketing Management, 13th ed
11
Chapter Questions
• How do marketers identify primary competitors?
• How should we analyze competitors’ strategies, objectives, strengths, and weaknesses?
• How can market leaders expand the total market and defend market share?
Chapter Questions (cont.)
• How should market challengers attack market leaders?
• How can market followers or nichers compete effectively?
Figure 1.1 Five Forces Determining Segment Structural Attractiveness
Figure 1.1 Five Forces Determining Segment Structural Attractiveness
• Threat of intense segment rivalry . A segment is unattractive if it already contains numerous strong aggressive competitors.
• Threat of new entrants. A segment's attractiveness varies with the height of its entry and exit barriers. The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter the industry, and poor-performing firms can easily exit.
Figure 1.1 Five Forces Determining Segment Structural Attractiveness
• Threat of substitute products -A segment is unattractive when there are actual or potential substitutes for the product.
• Threat of buyers' growing bargaining power - A segment is unattractive if buyers possess strong or growing bargaining power.
• Threat of suppliers' growing bargaining power - A segment is unattractive if the company's suppliers are able to raise prices or reduce quantity supplied
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
Figure 11.2 Strategic Groups
Figure 11.2 Strategic Groups
• A group of firms following the same strategy in a given target market is called a strategic group. Suppose a company wants to enter the major appliance industry. What is its strategic group?
• Once a company has identified its main competitors and their strategies, it must ask: What is each competitor seeking in the marketplace? What drives each competitor's behavior? Many factors shape a competitor's objectives, including size, history, current management, and financial situation.
Figure 11.4 A Competitor’s Expansion Plans
Table 11.1 Customer Ratings of Competitors on Key Success Factors
Strengths and Weaknesses
Share of marketShare of market
Share of mindShare of mind
Share of heartShare of heart
Strengths and Weaknesses
• Share of market - The competitor's share of the target market.
• Share of mind-The percentage of customers who named the competitor in responding to the statement, "Name the first company that comes to mind in this industry." (EVOKE SET)
• 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."
Table 11.2 Market Share, Mind Share, and Heart Share
Figure 11.5 Hypothetical Market Structure
10%
Market
Nichers
20%
Market
Follower
30%
Market
Challenger
40%
Market
Leader
Figure 11.6 Six Types of Defense Strategies
Figure 11.7 Optimal Market Share
Other Competitive Strategies
Market
Challengers
Market
NichersMarket
Followers
Market Challenger Strategies
• Define the strategic objective and opponents
• Choose a general attack strategy
• Choose a specific attack strategy
General Attack Strategies
Frontal Attack
Encirclement
AttackBypass Attack
Flank Attack
Guerrilla Warfare
Specific Attack Strategies
• Price discounts• Lower-priced goods• Value-priced goods• Prestige goods• Product proliferation• Product innovation
• Improved services• Distribution
innovation• Manufacturing-cost
reduction• Intensive advertising
promotion
Market Follower Strategies
Counterfeiter
Cloner
Imitator
Adapter
Niche Specialist Roles
• End-User Specialist• Vertical-Level
Specialist• Customer-Size
Specialist• Specific-Customer
Specialist• Geographic
Specialist
• Product-Line Specialist
• Job-Shop Specialist• Quality-Price
Specialist• Service-Specialist• Channel Specialist
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