Strategic Marketing Fall 2005 Tinker AFB Campus

1
Strategic Marketing Fall 2005Tinker AFB Campus

• Chapter Eight
• Dealing with the Competition

2
Competitive Markets and Competitors

• Market Attractiveness - Porter's Five Forces
  determine the attractiveness of the market
• Three of the Porter forces emanate from threats
  related to competitors intense segment rivalry,
  new entrants and substitute products.
• The other two forces respond to threats connected
  to the firm's more immediate market environment
  Buyer bargaining power and supplier bargaining
  power.

3
Identifying Competitors -Four levels brand,
industry, form, and generic

• Industry Concept of Competition - Changing with
  the Internet
• Number of Sellers and Degree of Differentiation
  (monopoly, oligopoly, monopolistic competition,
  and pure competition)
• Entry, Mobility, and Exit Barriers
• a) Ease of entry into market and various
  (existing and new) segments'
• b) Exit and Shrinkage Barriers - Ease of exit and
  reduction in size. Cost Structure - Reducing
  largest costs and most cost efficient plant(s)

4
Identifying Competitors -Four levels brand,
industry, form, and generic (cont.)

• Degree of Vertical Integration
• Backward and forward
• Integration from source through retail (degree
  of)
• Outsourcing to specialists to lower costs
• Degree of Globalization

5
Identifying Competitors -Four levels brand,
industry, form, and generic (cont.)

• Market Concept of Competition
• Many companies make the same product
• Many companies pay attention to other companies
  that satisfy the same customer need.

6
Competitor Analysis

• Strategies Strategic groups - differs, depending
  on various key variables in an industry.
• Objectives What drives the competitors -
  constant monitoring.

7
Competitor Analysis (cont.)

• Strengths and Weaknesses - competitive positions
  in the market
• Dominant, strong, favorable, tenable, weak,
  nonviable.
• The basis for evaluation of strengths and
  weaknesses
• Share of market
• Share of mind
• Share of heart
• Result Those that make steady gains in mind and
  heart share inevitably make gains in market share
  and profitability.
• Reaction Patterns
• Depends on competitive equilibrium
• Single factor critical and multiple competitive
  factors

8
Competitive Intelligence System

• Designing the Competitive Intelligence System
• Four Main Steps
• Setting up the system
• Collecting the data
• Evaluating and analyzing the data
• Disseminating information and responding

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Competitive Intelligence System (cont.)

• Selecting competitors to attack and to avoid -
  major steps in customer value analysis are
• Customer Value Analysis - Evaluating major
  attributes that customers value.
• Assess quantitative importance of the different
  attributes.
• Assess company and competitor performance on the
  different customer values against their rated
  importance.
• Examine how customers in a specific segment rate
  the company's performance against a specific
  major competitor on an attribute-by-attribute
  basis.
• Monitor customer values over time.

10
Competitive Intelligence System (cont.)

• Classes of Competitors - following customer value
  analysis
• Strong versus weak
• Close versus distant
• Good versus bad
• Customer value analysis helps a marketer perceive
  company/product value to a customer relative to
  competitor product value(s).

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Designing Competitive Strategies

• Market-Leader Strategies
• Expanding the total market, with new users, new
  uses, and more usage.
• Defending market share, with position, flank,
  preemptive, counter offensive, mobile, and
  contraction defensive strategies.
• Expanding market share (note Procter Gamble and
  Caterpillar case studies) - Line-extension,
  brand-extension, multibrand, etc., strategies.

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Designing Competitive Strategies (cont.)

• Market-Challenger Strategies
• Defining the strategic objective and the opponent
• Choosing a general attack strategy (frontal,
  flank, encirclement, bypass, guerrilla)
• Marketing Skills Guerrilla Marketing - Creative
  Thinking (maximum customer attention with minimal
  investment)
• Choosing a specific attack strategy
  (Price-discount, lower-price goods, prestige
  goods, product proliferation, product innovation,
  improved services, distribution innovation,
  manufacturing cost reduction, and intensive
  advertising promotion)

13
Designing Competitive Strategies (cont.)

• Market-Follower Strategies
• Levitt product imitation might be as profitable
  as product innovation
• Broad strategies counterfeiter, cloner,
  imitator, adapter

14
Designing Competitive Strategies (cont.)

• Market-Nicher Strategies
• The key is specialization
• They must constantly create new niches, expand
  and protect.
• High margin versus high volume

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Designing Competitive Strategies (cont.)

• Balancing Customer and Competitor Orientations
• A firm should not become consumed by a
  competitor-centered strategy.
• A customer-centered company relies on customer
  developments and research and can better identify
  new opportunities and long run marketing
  strategies.