3. Chapter 9: Dealing with Competition

5. Source: www.googleimages.com Michael Porter’s Five forces Model

7. Industry Concept • Number Of Sellers And Degree Of Differentiation • Entry, Mobility, And Exit Barriers • Cost Structure • Degree Of Vertical Integration • Degree Of Globalization Marketing Concept According to marketing approach, competitors are companies that satisfy the same customer need. The market concept of competition reveals a broader set of actual and potential competitors. By mapping the buyer's steps in obtaining and using the product a company's direct and indirect competitors can be identified. Identify Competitors

8. Group A Narrow line Lower mfg. cost Very high service High price Group C Moderate line Medium mfg. cost Medium service Medium price Group B Full line Low mfg. cost Good service Medium price Group D Broad line Medium mfg. cost Low service Low price High Low Low High Quality Vertical Integration Figure 9.2 Strategic groups in the major- appliance industry Page 228

9. Strategies: What strategies a company uses to enter/survive in the market? Objectives: What are the objectives of the competitor’s and what drives its behaviour? Factors shaping a competitor’s objectives include size, history, current management, and financial situation. Analyze Competitors

13. INDIVIDUAL USER COMMERICAL & INDUSTRIAL EDUCATIONAL PERSONAL COMPUTERS HARDWARE ACCESORIES SOFTWARE Strengths and Weaknesses: A company needs to gather information on each competitor's strengths and weaknesses. FIGURE 9.4 PAGE 230 A COMPETITORS EXPANSION PLAN DELL

14. TABLE 9.1 PAGE 231 – CUSTOMERS RATINGS OF COMPETITION ON KEY SUCCESS FACTORS CUSTOMER AWARENESS PRODUCT QUALITY PRODUCT AVAILABILITY TECHINCAL ASSISTANCE SELLING STAFF COMPETITOR A E E P P G COMPETITOR B G G E G E COMPETITOR C F P G F F E= EXCELLENT G = GOOD F= FAIR P = POOR

16. MARKET SHARE MIND SHARE HEART SHARE TABLE 9.2 PAGE 231 MARKET SHARE, MIND SHARE, AND HEART SHARE 2005 2006 2007 2005 2006 2007 2005 2006 2007 COMPETITOR A 50% 47% 44% 60% 58% 54% 45% 42% 39% COMPETITOR B 30 34 37 30 31 35 44 47 53 COMPETITOR C 20 19 19 10 11 11 11 11 8

17. Selecting Competitors: Strong versus Weak: Weak require fewer resources per share point gained. The firm should also compete with strong competitors to keep up with the best. Close versus Distant: Most companies compete with competitors who resemble them the most "Good" versus "Bad": should support its good competitors (Play by the rules) and attack its bad competitors.

19. Competitive Strategies for Market Leaders Expanding the Total Market New customers: Potential new users maybe divided into three groups: • Those who might use it but do not (market-penetration strategy) • Those who have never used it (new-market segment strategy) • Those who live elsewhere (geographical-expansion strategy)

21. Figure 9.6 – Six types of Defense Strategies page 236 Attacker 3) Pre-emptive 4)Counteroffensive 1) Position DEFENDER 2)FLANK 6) Contraction 5)Mobile

22. Defending Market Share The most constructive response is continuous innovation . The leader leads the industry in developing new product and customer services, distribution effectiveness, and cost cutting. It keeps increasing its competitive strength and value to customers. • Position Defense: It involves occupying the most desirable market space in the minds of the consumers • Flank Defense: the market leader should also erect outposts to protect a weak front or possibly serve as an invasion base for counterattack. • Pre-emptive Defense: A more aggressive manoeuvre is to attack before the enemy starts its offense. A company can launch a pre-emptive defence in several ways

23. Defending Market Share Cont’d • Counteroffensive Defense: the leader can meet the attacker frontally or hit its flank or launch a pincer movement. An effective counterattack is to invade the attacker's main territory so that it will have to pull back to defend the territory. • Mobile Defense: In mobile defence, the leader stretches its domain over new territories that can serve as future centres for defence and offense through market broadening and market diversification. • Contraction Defense: giving up weaker territories and reassigning resources to stronger territories.

26. Choosing a General Attack Strategy • Frontal Attack: The attacker matches its opponent's product, advertising, price, and distribution • Flank Attack: Identifying shifts in market segments geographic areas that are causing gaps to develop, and then rushing in to fill the gaps and develop them into strong segments. • Encirclement Attack: The encirclement involves launching a grand offensive on several fronts. Make sense when the challenger commands superior resources

27. Choosing a General Attack Strategy • Bypass Attack: It means bypassing the enemy and attacking easier markets to broaden one's resource base. Three lines of approach: diversifying into unrelated products, diversifying into new geographical markets, and leapfrogging into new technologies to supplant existing products. • Guerrilla Warfare: Small, intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds (selective price cuts, intense promotional blitzes, and occasional legal action)

28. Market follower strategies A strategy of product imitation might be as profitable as a strategy of product innovation. The innovators bear the expense of developing the new product, getting it into distribution, and informing and educating the market. Counterfeiter – duplicates the leader’s product and packages and sells it on the black market. Cloner – the cloner emulates the leader’s products, name, and packaging, with slight variations. Imitator – copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. Adapter – takes the leader’s products and adapts or improves them.

30. Here are some possible niche roles: • End-user specialist : The firm specializes in serving one type of end-use customer. • Customer-size specialist: The firm concentrates on selling to small, medium-sized, or large customers. • Geographic specialist: The firm sells only in a certain locality, region, or area of the world.

31. possible niche roles CONt’D: • Product-feature specialist : The firm specializes in producing a certain type of product or product feature • Quality-price specialist: The firm operates at the low- or high-quality ends of the market • Channel specialist: The firm specializes in serving only one channel of distribution