Strategies for Dealing with Competition

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Strategies for Dealing with Competition

• Professor Charles D. Schewe

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Objectives

• Identifying Competitors
• Evaluating Competitors
• Competitive Intelligence Systems
• Competitive Strategies
• Customer vs. Competitor Orientation

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Induce your competitors not to invest in those
products, markets and services where you expect
to invest the most that is the fundamental rule
of strategy. Bruce Henderson,
Founder of BCG
There is nothing more exhilarating than to be
shot at without result.
Winston Churchill
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Five Forces Determining Segment Structural
Attractiveness
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Barriers and Profitability
Low, risky returns
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Industry Competition

• Number of Sellers - Degree of Differentiation
• Entry, Mobility, Exit barriers
• Cost Structure
• Degree of Vertical Integration
• Degree of Globalization

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Strategic Groups in the Major Appliance Industry

• 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

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Analyzing Competitors
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Competitors Expansion Plans
Markets
Products
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Hypothetical Market Structure Strategies
Expand Market
Attack leader
Special- ize
Imitate
Defend Market Share
Status quo
Expand Market Share
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Market Leader Strategies
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Expanding the Total Market

• New Users

• New Uses

• More Usage

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Protecting Market Share

• Innovation

• Fortification

• Confrontation

• Harrassment

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Expanding Market Share

• Product Innovation

• Market Segment Innovation

• Distribution Innovation

• Promotion Innovation

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Defensive Strategies

• Flanking

• Preemptive

• Counteroffensive

• Mobile

• Contraction

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Defense Strategies
Attacker
Defender
(1) Position defense
(6) Contraction defense
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Optimal Market Share
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Market Challenger Strategies
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Market Challenger Strategies

• Direct Attack

• Backdoor Attack

• Guppy Attack

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Attack Strategies

• Frontal Attack

• Flank Attack

• Encirclement Attack

• Guerilla Attack

• Bypass Strategy

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Attack Strategies
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Specific Attack Strategies

• Price-discount
• Cheaper goods
• Prestige goods
• Product proliferation
• Product innovation
• Improved services
• Distribution innovation
• Manufacturing cost reduction
• Intensive advertising promotion

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Market Follower Strategies
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Market Follower Strategies

• Strategy of Conscious Parallelism

• Found Where
• Homogeneous Product
• High Capital Intensity
• Low Differentiation Options
• High Price Sensitivity
• Highly Competitive Industry

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Market Follower Strategies

• Strategic Considerations
• Segment, Segment, Segment
• Use R D Efficiently
• Think Small
• Have an Energetic CEO Who is Everywhere at Once

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Market Nicher Strategies
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Nichemanship

• End-user specialist
• Vertical-level specialist
• Customer-size specialist
• Specific-customer specialist
• Geographic specialist
• Product or product-line specialist
• Product-feature specialist
• Job-shop specialist
• Quality-price specialist
• Service specialist
• Channel specialist

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Balance
Customer
Competition
ID opportunities
Fighter orientation
Long-run profit
Alert
Emerging needs groups
Exploit weaknesses
- Reactive