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