Competitive Competitive ReactionReaction

Competitive Competitive ReactionReaction

Team members:Team members:Jenny Cheung 97475650Jenny Cheung 97475650

Grace Zhang 97472174Grace Zhang 97472174

Liz Yeung 97490192Liz Yeung 97490192

Elisa Woo 97480961Elisa Woo 97480961

OutlineOutlineOutlineOutline IntroductionIntroduction Case studyCase study Case1. Price War of Newspaper Case1. Price War of Newspaper Case2. How Yahoo! won the search Case2. How Yahoo! won the search

war war Case3. Nike v.s. ReebokCase3. Nike v.s. Reebok ConclusionConclusion

IntroductionIntroductionIntroductionIntroduction

What is competitor?What is competitor? Offer similar product/services Offer similar product/services

to same group of customersto same group of customers Using marketing strategies to Using marketing strategies to

gain competitive advantagegain competitive advantage

Marketing strategyMarketing strategyMarketing strategyMarketing strategy

Competitors Competitors analysisanalysis

Competitive Competitive marketing marketing strategiesstrategies

Steps in analyzing Steps in analyzing competitorscompetitors

Steps in analyzing Steps in analyzing competitorscompetitors

Identifying Company’s competitors

Determining competitors’ objectives

Identifying competitors’ strategies

Assessing their strengths and weaknesses

Estimating competitors’ reactions

Selecting competitors to attack and avoid

Basic competitive Basic competitive strategiesstrategies

Basic competitive Basic competitive strategiesstrategies

Overall cost-leadershipOverall cost-leadership DifferentiationDifferentiation FocusFocus Value disciplinesValue disciplines

Case 1: NewspaperCase 1: NewspaperCase 1: NewspaperCase 1: Newspaper The newspaper price war which The newspaper price war which

erupted in December 1995erupted in December 1995 The successful launch in June 1995 The successful launch in June 1995

of the Apple Daily , owned by of the Apple Daily , owned by Jimmy Lai Jimmy Lai

The newspaper’s initial success in The newspaper’s initial success in building circulation was its one-building circulation was its one-month promotional price of HK$ 2 month promotional price of HK$ 2

The Apple Daily vs The Oriental The Apple Daily vs The Oriental DailyDaily

The Apple Daily vs The Oriental The Apple Daily vs The Oriental DailyDaily

StrategyStrategy Cost advantageCost advantage Lower PriceLower Price

Lower PriceLower Price

ResultResult 200,000200,000 600,000600,000

circulationcirculation circulationcirculation

MarketMarket 23%23% Drop fromDrop from

ShareShare 31% to 26%31% to 26%

PositionPosition MarketMarket MarketMarket

ChallengerChallenger LeaderLeader

Market Followers’ StrategyMarket Followers’ StrategyMarket Followers’ StrategyMarket Followers’ Strategy

Sing Pao , Tin Tin Daily as the Sing Pao , Tin Tin Daily as the market followers also dropped market followers also dropped their price to HK$ 2 their price to HK$ 2

The Hong Kong Daily News The Hong Kong Daily News preserve and increase its relatively preserve and increase its relatively small market share dropped to small market share dropped to HK$ 1HK$ 1

Market followers’ StrategyMarket followers’ StrategyMarket followers’ StrategyMarket followers’ Strategy

1. Must keep its 1. Must keep its manufacturing manufacturing cost low cost low

2. Its product quality and 2. Its product quality and service service high high

3. Enter new markets as they 3. Enter new markets as they open open up up

Market Nicher’s StrategyMarket Nicher’s StrategyMarket Nicher’s StrategyMarket Nicher’s Strategy

Hong Kong Economic Journal , Hong Kong Economic Journal , Hong Kong Economic Times , Ming Hong Kong Economic Times , Ming Pao Daily , Sing Tao Daily hold Pao Daily , Sing Tao Daily hold their prices steady at HK$ 5 their prices steady at HK$ 5

Those newspapers adopt the Those newspapers adopt the market-nicher strategies market-nicher strategies

Market Nicher’s StrategyMarket Nicher’s StrategyMarket Nicher’s StrategyMarket Nicher’s Strategy Ming Pao can build the good image Ming Pao can build the good image

and customer goodwill to defend itselfand customer goodwill to defend itself Hong Kong Economic Times specialize Hong Kong Economic Times specialize

in financial market and their main in financial market and their main target are business grouptarget are business group

As a result , the readers are more loyal As a result , the readers are more loyal to them because of functional needs to them because of functional needs and ideological identificationand ideological identification

Case 2: Yahoo!Case 2: Yahoo!Case 2: Yahoo!Case 2: Yahoo!

Yahoo! is now the market leader Yahoo! is now the market leader in the internet search marketin the internet search market

Its technology is not as good as Its technology is not as good as its competitors like Infoseek, its competitors like Infoseek, excite and Lycos. excite and Lycos.

Advantage of other Search Advantage of other Search EnginesEngines

Advantage of other Search Advantage of other Search EnginesEngines

LycosLycos Can search more web pagesCan search more web pages InfoseekInfoseek Good Engineering SupportGood Engineering Support ExciteExcite Advanced Search Technology Advanced Search Technology

Why people still stick with Why people still stick with Yahoo!?Yahoo!?

How Yahoo!How Yahoo! WONWON the search the search warwar

How Yahoo!How Yahoo! WONWON the search the search warwar

Human-created directory was Human-created directory was all that distinguished Yahoo! all that distinguished Yahoo! from its competitorsfrom its competitors

It helps web users to find out It helps web users to find out what they wanted exactly what they wanted exactly

Yahoo! became Market Yahoo! became Market LeaderLeader

Yahoo! became Market Yahoo! became Market LeaderLeader

It choose the frontal attack to It choose the frontal attack to

attack Infoseek, Excite and Lycosattack Infoseek, Excite and Lycos In early 1996, Yahoo! spent $5 In early 1996, Yahoo! spent $5

million to be one of five search million to be one of five search engines from Netscape’s site.engines from Netscape’s site.

After the first month, Infoseek’s After the first month, Infoseek’s traffic dropped in half traffic dropped in half

Yahoo! became Market Yahoo! became Market LeaderLeader

Yahoo! became Market Yahoo! became Market LeaderLeader

At the end of 1997, Yahoo! visitors with At the end of 1997, Yahoo! visitors with more than the other three search more than the other three search engines combinedengines combined

It still improves its services by giving It still improves its services by giving free E-mailfree E-mail

ConclusionConclusion: The freebies, the : The freebies, the branding and the human touch branding and the human touch combined to make it more attractive combined to make it more attractive than others than others

Case 3: Nike v.s. ReebokCase 3: Nike v.s. ReebokCase 3: Nike v.s. ReebokCase 3: Nike v.s. Reebok

Nike: Nike: Market LeaderMarket Leader

Published in Published in 19801980

Revenue:Revenue:

US$270 millionUS$270 million

(1980)(1980)

Reebok: Reebok:

Market ChallengerMarket Challenger Published in 1985Published in 1985 Revenue: Revenue:

US$ 13 million US$ 13 million (1983)(1983)

US$1.4 billion US$1.4 billion (1987)(1987)

Revenue of Nike and ReebokRevenue of Nike and Reebok(in billion US$)(in billion US$)

Revenue of Nike and ReebokRevenue of Nike and Reebok(in billion US$)(in billion US$)

2.242.16

3.79

3.28

3.77

1.28

0

0.5

1

1.5

2

2.5

3

3.5

4

1990 1994 1997

NikeReebok

Strategies of NikeStrategies of NikeStrategies of NikeStrategies of Nike Use very powerful marketing sloganUse very powerful marketing slogan “ Just Do It ” --demonstrate a passion for sports--demonstrate a passion for sports A sports company rather than a shoe cA sports company rather than a shoe c

ompanyompany Stars effect: sign up with athletic stars Stars effect: sign up with athletic stars Control cost by setting manufacturing Control cost by setting manufacturing

base at low-cost countriesbase at low-cost countries

Strategies of ReebokStrategies of ReebokStrategies of ReebokStrategies of Reebok

Control cost by setting manufacturing base at Control cost by setting manufacturing base at low-cost countrieslow-cost countries

Star’s effect: sign up with athletic stars Star’s effect: sign up with athletic stars Differentiation: concentrate on women’s Differentiation: concentrate on women’s

fitnessfitness Change product line:Change product line: Athletic shoes to Non-athletic shoesAthletic shoes to Non-athletic shoes Customer intimacy: tailor-made products for Customer intimacy: tailor-made products for

customers by investigate high-tech shoes customers by investigate high-tech shoes

Nike vs. ReebokNike vs. ReebokNike vs. ReebokNike vs. Reebok

NikeNike ReebokReebok

BasketballBasketball Michael JordanMichael Jordan O’Neal & KempO’Neal & Kemp

TennisTennis Agassi &Agassi & Michael ChangMichael Chang

Pete SamprasPete Sampras

Football Football RonaldoRonaldo

BaseballBaseball Ken GriffeyKen Griffey Frank ThomasFrank Thomas

AthleteAthlete Troy AikmanTroy Aikman Emmitt SmithEmmitt Smith

Threats to Nike & ReebokThreats to Nike & ReebokThreats to Nike & ReebokThreats to Nike & Reebok People have wide range of style to cPeople have wide range of style to c

hoose now hoose now Rapid growth sales of competitors Rapid growth sales of competitors New entrance to share the market New entrance to share the market Economic problem of AsiaEconomic problem of Asia More ads. use sports heroes to creatMore ads. use sports heroes to creat

e emotional effecte emotional effect

Revenue of Nike and Revenue of Nike and ReebokReebok

Revenue of Nike and Revenue of Nike and ReebokReebok

2.242.16

3.79

3.28

3.77

1.28

0

0.5

1

1.5

2

2.5

3

3.5

4

1990 1994 1997

NikeReebok

ConclusionConclusionConclusionConclusion

No one strategy best for all companiesNo one strategy best for all companies Some fight with main competitorsSome fight with main competitors Some may combine with other similar Some may combine with other similar

firms to fightfirms to fight Determine by their industry position, Determine by their industry position,

objectives, opportunities and resourcesobjectives, opportunities and resources Balancing customer and competitor Balancing customer and competitor

orientationorientation