Competitive strategies

Competitive strategy adopted by marketers

1. Marketing Management Seminar Prepared by Group 4 “Competitive strategies for Market leader, Challenger & Follower”

2. “To be a long term Market leader is the goal of any Marketer”

3. The competitive strategies adopted by the company depends largely on its position in the Market. It design its strategies based on its position and objectives. The different position or roles the companies can have are:- Market leader Challenger Follower Nicher

4. Market Leader In the majority of industries, there is one firm that is generally recognized to be the leader. It typically has the largest market share and, by virtue of its pricing, advertising intensity, distribution coverage, technological advance and rate of new product introductions, it determines the nature, pace and bases of competition. It is this dominance that typically provides the benchmark for other companies in the industry.

5. Market challenger & Follower Firms with a slightly smaller market share can adopt one of two stances. They may choose to adopt an aggressive stance and attack other firms , including the market leader, in an attempt to gain share and perhaps dominance (market challengers ), or they may adopt a less aggressive stance in order to maintain the status quo (market followers)

6. Market Nichers Virtually every industry has a series of small firms that survive, and indeed often prosper, by choosing to specialize in parts of the market that are too limited in size and have potential for growth. By concentrating their efforts in this way, market nichers are able to build up specialist market knowledge and avoid expensive head-on fights with larger companies.

7. Competitive Strategies for the Market leader . To stay number one, the firm must First find ways to expand total market demand Second it must protect its current share through defensive and offensive actions Third it must increase its market share Expand total market demand New customers Every product class has the potential to attract buyers who are unaware of the product or are resisting it because of price or lack of certain features. Those who might use it but do not(Market penetration strategy) Those who have never used it(New market segment) Those who live elsewhere( Geographical expansion)

8. New uses As a second stage the strategist might search for new uses for the product . Perhaps the most successful example of this is Du Pont’s Nylon, which was first used as a synthetic fibre for parachutes and then subsequently for stockings, shirts, tyres , upholstery, carpets and a spectrum of industrial and engineering uses. 3. More usage Marketers can try to increase the amount, level or frequency of consumption. They can sometimes boost the amount through packaging or product design.---Large packages, Make it available more.

9. Protecting the Market share At the same time as trying to expand the total market, the market leader should not lose sight of the need to defend its market share. It has long been recognized that leaders represent a convenient target since, because of their size, they are often vulnerable to attack The need for this is illustrated by examples from many industries, including photography (Kodak having been attacked in the film market by Fuji and in the camera market by Polaroid, Minolta, Nikon, Canon and Pentax), soft drinks (Pepsi attacking Coca-Cola), car hire (Avis against Hertz), razors (Bic and Wilkinson Sword attacking Gillette) Offensive and defensive strategies(Without exposing the weakness)

10. Defensive Marketing The aim of defensive marketing is to reduce the probability of attack, divert attacks to less threatened areas and lessen their intensity. A dominant firm can use the following 6 defense strategies. Position defense : Means occupying the most desirable market space in consumer’s minds, making the brand almost impregnable----P&G (Tide with cleaning, Pampers with dryness) Flank Deffense : The market leader should erect outposts to protect a weak front or support a possible counterattack. P&G ---Gain and Cheer laundry detergents. Pre-emptive Defense : Detect potential attacks and attack the enemies first. Seiko with 2000 models.

11. Counteroffensive Defense Responding to competitors’ head-on attack by identifying the attacker’s weakness and then launch a counter attack. Toyota launched Lexus to meet the attack of Mercedes. Mobile Defense : Leader stretches its domain over new territories market broadening and market diversification. Tobacco giant ITC started focusing in FMC products. Contraction Defense : Withdraw from the most vulnerable segments and redirect resources to those that are more defendable Tata group sold its soap and detergents to Unilever in 1993.

12. Increasing Market share This can typically be done in a variety of ways, including by means of heavier advertising, improved distribution , price incentives, new products and, as by mergers, takeovers, alliances and distribution deals

13. Competitive Strategies for Challengers The market challengers’ strategic objective is to gain market share and to become the leader eventually How? 1. By attacking the market leader 2. By attacking other firms of the same size 3. By attacking smaller firms. The eight most commonly used and successful strategic strands are: 1. Price discounting 2. Product and/or service innovation 3.Distribution innovation 4. Heavy advertising 5. Market development 6. Clearer and more meaningful positioning 7.Product proliferation 8. Higher added value.

14. Flank Attack Attack the enemy at its weak points or blind spots i.e. its flanks Ideal for challenger who does not have sufficient resources Encirclement Attack Attack the enemy at many fronts at the same time Ideal for challenger having superior resources Bypass Attack By diversifying into unrelated products or markets neglected by the leader Could overtake the leader by using new technologies Pepsi used bypass attack on Coke

15. Frontal Attack In a pure frontal attack, the attacker matches its opponent’s product, advertising, price and distribution. The side with greater resources will win the market. Guerilla Attack By launching small, intermittent hit-and-run attacks to harass and destabilize the leader Usually use to precede a stronger attack

16. Market follower Strategy As an alternative to challenging for leadership, many companies are con- tent to adopt a far less proactive posture simply by following what others do. There are 3 types of following:- 1 . Following closely , with as similar a marketing mix and market segmentation combination as possible 2. Following at a distance , so that, although there are obvious similarities, there are also areas of differentiation between the two 3. Following selectively , both in product and market terms, so that the likelihood of direct competition is minimized

17. Types of following :- Counterfeiter: Duplicates the leader product and packages and sells it on the black market or through disreputable sellers. Cloner: Emulates the leader’s products, name, and packaging with slight variations. Imitator: Copies some things from the leader but differentiates on packaging, advertising, pricing or location. The leader doesn’t mind as long as the imitator attack aggressively. Adapter: The adapter takes leader’s product and adapts or improve them. The adapter may choose to sell in different market but often it grows to a future challenge.

18. Market- Nicher strategies Smaller firms can avoid larger firms by targeting smaller markets or niches that are of little or no interest to the larger firms Nichers must create niches, expand the niches and protect them What is the major risk faced by nichers ? Market niche may be attacked by larger firms once they notice the niches are successful “Develop multiple niches. By developing strength in more than one niche the company increases its chances for survival”.

19. Thank You……….!