Based on Marketing Management by Kotler & Keller

1. COMPETITIVE DYNAMICS
IBM-Mini Case

2. 4 Important Questions
• How can market leaders expand the total market and
defend market share?
• How should market challengers attack market leaders?
• How can market followers or nichers compete effectively?
• What marketing strategies are appropriate at each stage of
the product life cycle?

3. Hypothetical Market Structure
40%
30%
20%
10%
Market
Leader
Maket
Challenger
Market
Follower
Market
Nicher

4. Competitive Strategies for Market Leaders
v Expanding Total Market Demand
New Customers
More Usage
Additional Opportunities to
use the brand
New Ways to use the brand

5. Competitive Strategies for Market Leaders
v Protecting Market Share
Proac<ve
Marke<ng
Defensive
Marke<ng
Posi<on
Defense
Flank
Defense
Preemp<ve
Defense
Counteroffensive
Defense
Mobile
Defense

6. Competitive Strategies for Market Leaders
v 6 Types of Defense Strategies

7. Competitive Strategies for Market Leaders
v Increasing Market Share
Possibility of
provoking
antitrust action
Economic cost
Danger of pursuing
wrong marketing
activities
Effect of increased
market share on actual
& perceived quality
Factors to be considered

8. Strategies for Market Challengers
v Defining the strategic objective & opponent
1. Can attack the Market Leader
2. Can attack firms its own size that aren’t doing the job
3. Can attack small local & regional firms

9. Strategies for Market Challengers
v Choosing a general attack strategy
AGack
Strategies
Frontal
AGack
Flank
AGack
Encircle
ment
AGack
Bypass
AGack
Guerilla
AGack

10. Strategies for Market-Followers
Counterfeiter
Cloner
Imitator
Adapter

11. Strategies for Market-Nichers
v What? A leader in a small market (niche).
v Competition? Avoid competing with larger firms.
v Customers? Small markets of little/no interest to larger firms.
v Profitability? Greater than larger firms.
v ROI? Higher because they know target customers very well.
① Creating Niches
② Expanding Niches
③ Protecting Niches
Three important tasks :-

12. Product Life Cycles
Growth-Slump-Maturity Cycle-Recycle Scalloped
The different phases of the cycle:-
① Introduction
② Growth
③ Maturity
④ Decline

13. International Business Machines – A mini case study!

14. Manufactures & sells Computer
Hardware & Software
Offers Infrastructural services
Provides Global Consulting
Services
What does IBM do?
Company Timeline
1910-­‐1940
1950-­‐1980
1980-­‐present
Thomas Watson Sr.
• Focus on large-scale custom
solutions for businesses
• Explosive Growth
• War related Technologies
Thomas Watson Jr.
• Worked with US Govt during cold
war to build air defense SAGE sys
• 70% Market Share
• Beginning of the Personal
Computing era
Louis Gerstner & Samuel P.
• Launched 1st personal computer
• Outsource components of PC to
Microsoft (Sales declined)
• New CEO turned the fortunes,
refocused co. in a strategic
direction

15. 1880-­‐1924
Custom-­‐built
solu<ons
for
businesses,
Tabula<ng
machines,
War
related
technologies
for
WW1
&
WW2
1950-­‐1980
Innova<ons
in
computa<on,
Air
Defense
SAGE
computer,
System/360
Computers,
IBM
Architecture-­‐
Industry
standard
1980-­‐2000
Personal
Compu<ng
era-­‐
Launched
first
PC,
Outsourced
components
of
PC
to
MicrosoZ,
Transformed
&
focused
on
high-­‐margin
business
like
consul<ng
&
middleware-­‐soZware
development
2000-­‐present
Moved
away
from
Hardware
business,
embraced
Global
Consul<ng
&
Analy<cs,
Acquired
100
companies,
focuses
on
solving
world’s
most
challenging
problems
like,
pollu<on
&
traffic
Core
Business
Focus
Re-thinking Marketing Strategy
• In order to rebuild brand image, consolidated marketing efforts from 70 advertising
agencies to 1 & created a consistent, universal message.
• In 1997, IBM’s chess-playing computer system, Deep Blue, also helped lift IBM’s
brand image by defeating the world’s reigning chess champion in a historic event
that captured the attention of millions.
• Latest campaign, “Smarter Planet”, conveys company’s vision.

16. IBM’s Marketing & Promotional Activities

17. Few companies have had such a long history of ups and downs as IBM. What
were some of the keys to its recent success? Can its plans to solve some of the
world’s most challenging problems succeed? Why or why not?
• The
key
to
IBM’s
recent
success
is
focusing
on
big
problems
that
might
affect
businesses
and
consumers.
• Yes,
I
believe
that
IBM
is
able
to
solve
some
of
the
world’s
problem,
such
as
pollu<on,
traffic
conges<on,
etc.
With
a
technically
proficient
workforce
comprising
of
scien<sts,
engineers,
consultants,
and
sales
professionals,
they
can
help
solve
some
of
the
big
problem
and
make
people’s
life
easier
and
healthier.
• IBM
has
been
inves<ng
30%
of
their
annual
budget
into
R&D,
which
bound
to
yield
results.
We
can
expect
them
to
come
up
with
something
that
will
fix
some
of
the
important
problems
that
we
are
facing.

18. Who are IBM’s biggest competitors today, and what
risks do they face with their current strategy?
IBM’s
major
rivals
include
Technical
&
Consul<ng
firm
that
are
into
the
Hardware
&
SoZware
sector.
For
eg,
Accenture,
HP,
XEROX,
CSC,
etc
The
risks
involved
with
the
current
strategy
are:-­‐
• Focusing
on
solving
big
issues
may
involve
greater
resources
(<me,
money
&
energy)
&
may
not
yield
desirable
results.
• AZer
heavily
inves<ng
resources
in
solving
big
issues,
IBM
may
have
to
face
situa<ons
when
rival
companies
come
out
with
more
efficient
solu<ons.
• R&D
may
become
obsolete
coupled
with
low
success
rate.

19. SUMMARY
Market
Structure
• Market
Leader
• Market
Challenger
• Market
Follower
• Market
Nicher
Compe<<ve
Strategies
• For
Market
Leader
• For
Challenger
• For
Follower
• For
Nicher
Product
Life
Cycles
• Growth-­‐Slump-­‐Maturity
• Cycle-­‐Recycle
• Scalloped
IBM
Case
Study

20. DISCLAIMER
Created by Akshay Julka(DTU, Delhi), during a Marketing
internship under Prof. Sameer Mathur, IIM Lucknow.