Marketing Strategies for Competitive Positions

Definition

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

• Competitive Competitive AnalysisAnalysis

Types of Competitive Positions

Market Leaders

Market Challengers

Market Followers

Nichers

Market Leaders

Competitive Strategy

• 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

Competitive Competitive Positions Positions

Marketing Strategy

Market Share

Marketing Effort ($)

100%

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

• 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

• Position defense

• Flank defense• Preemptive defense

• Counteroffensive defense

• Mobile defense• Contraction defense

Defending Market Share

Designing Competitive Strategies

Expand Total Market Expand Total 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

Coca vs. Peps, Gillette vs. Bick, Hertz vs. Avis

Defend market ShareDefend market Share

Vs.

Heinz ketchup market enjoy high market share Hunts costly attack failed

Defense Strategy Defense Strategy

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

Flank Defense Flank Defense

Market LeaderMarket Leader

CounteroffensiveCounteroffensive

PositionPosition

ContractionContraction

PreemptivePreemptiveFlankingFlanking

MobileMobile

Market Leader Strategies

fortificationprotect

weaknesscreate

assault posts

guerrillapsychologicalpreventative

fast, solid, strategic withdrawalbroadening fronts

• Before Attempting to Expand Market Share, Consider:– Probability of invoking antitrust action– Economic costs involved– Likelihood that marketing mix decisions will

increase profits

Designing Competitive Strategies

Competitive Strategy

• 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

Competitive Competitive Positions Positions

• 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

Designing Competitive Strategies

FlankingFlanking BypassBypass

FrontalFrontal GuerrillaGuerrilla

EncirclementEncirclement

Challenger StrategiesChallenger Strategies

Market Challenger Strategies

Competitive Strategy

• 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

Competitive Competitive Positions Positions

ImitatorImitator

AdapterAdapter

ClonerCloner

Market Follower Strategies

• Price-discount• Lower-price goods• Prestige goods• Improved services • Product proliferation

• Product innovation

• Distribution innovation

• Manufacturing cost reduction

Specific Attack Strategies Include:

Designing Competitive Strategies

Competitive Strategy

• 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

Competitive Competitive Positions Positions

Service Specialist

Quality-Price Specialist

Product/Feature Specialist

Geographic Specialist

Specific-Customer Specialist

Customer-Size Specialist

Vertical-Level Specialist

End-Use Specialist

Nicher Strategies for Advantage

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.