Session 19 :Dealing with Competition

Theme : 6

In business,

the competition will bite you if you keep

running,

if you stand still, they will swallow you.


Victor Kiam






Gil Atkinson
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-4
Balancing Orientations
Competitor-
Centered
Customer-
Centered
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-5
Five Forces Determining Segment Structural
Attractiveness (PORTERS DIAMOND FRAMEWORK)
Five Forces Determining Segment Structural
Attractiveness
1. Industry competitors
2. Threat of Potential
entrant
3. Bargaining power of
Suppliers
4. Bargaining Power of
Buyers
5. Threat of Substitutes

Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-7
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
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-8
Analyzing Competitors
Competitor
Actions
Objectives
Strengths &
Weaknesses
Reaction
Patterns
Strategies
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-9
A Competitors Expansion Plans
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-10
Strengths and Weaknesses
Share of market
Share of mind
Share of heart
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-11
Market Share, Mind Share, and Heart Share
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
11-12
Expanding the Total Market
New customers
More usage
Industry Concept of Competition
Marketers classify industry according to.
1. Number of sellers and degree of differentiation
2. Entry, mobility, and exit barriers
3. Cost structure
4. Degree of vertical integration
5. Degree of globalization

An industry is a group of firms that offer a product
or class of products that are close substitutes for
one another
Once a company identifies its primary competitors, it
must ascertain their strategies , objectives , strengths
and weaknesses.

A group of firms following the same strategy in a given
target market is a STRATEGIC GROUP

Once a company has identified its main competitors
and their strategies , it must ask:
1. What is each competitor seeking in the market?
2. What drives each competitors behavior?
Strengths and Weaknesses of competitors
Share of market- the competitors share of 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
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
Companies that make steady gains in mind share and
heart share will inevitably make gains in market share
and profitability

Benchmarking
To improve market share
many companies
benchmark their most
successful competitors as
well as other world class
performers.
Steps in Benchmarking
I. Determine which functions or processes to
benchmark
II. Identify the key performance variables to measure
III. Identify the best-in-class companies
IV. Measure the performance of best-in-class companies
V. Measure the companys performance
VI. Specify programs and actions to close the gap
VII. Implement and monitor results


Strategy to Remain No. 1
Staying the number one firm calls for action on three
fronts.
1. First, the firm must find ways to expand total market
demand.
2. Second , the firm must protect its current market
share through good defensive and offensive
strategies.
3. Third the firm can try to increase its market share
even if its market size remains constant.

Expanding the Total Market
New customers
More usage
Six Types of Defense Strategies
1. Position Defense
2. Flank Defense
3. Preemptive Defense
(preannouncements/vaporware)
4. Counteroffensive Defense
5. Mobile Defense ( market broadening/ market
diversification)
6. Contraction Defense ( strategic withdrawal)
Six types of defense strategies
ATTACKER
(3) PREEMPTIVE
(4) COUNTEROFFENSIVE
(1) POSITION

DEFENDER
(6) CONTRACTION
(5) MOBILE
(2) FLANK
Factors Relevant to Pursuing Increased
Market Share
Possibility of provoking antitrust action
Economic cost
Pursuing the wrong marketing-mix strategy
The effect of increased market share on actual and
perceived quality
Other Competitive Strategies
Market challengers
Market followers
Market nichers
Market Challenger Strategies
1. Define the strategic objective and opponents
It can attack the market leader
It can attack firms of its own size that are not doing
the job and are underfinanced
It can attack small local and regional firms
2. Choose a general attack strategy
3. Choose a specific attack strategy
Balancing Orientations
Competitor-centered
Customer-centered
REFERENCES
Marketing Management,
Thirteen edition, A South
Asian Perspective. Philip
Kotler, Kevin lane Keller,
Abraham Koshy,
Mithileshwar Jha.
http://studygalaxy.com/