Chapter 8

Competitive Dynamics
by

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 Designing Competitive Strategies
Market-Leader Strategies
Expanding the Total Market
New Users
Market-penetration strategy (Those who might use it but do not)
New-market segment strategy (Who never use it)
Geographical-expansion strategy (Those who live elsewhere)
New Uses (Hot tea to ice Tea)
More Usage (By quantity of consumption or frequency of consumption)
Defending Market Share (Continuous Innovation)
Premium Performance: CAT produces high quality of pdts
Extensive dealership: Largest number of dealership
Superior service: World wide parts and service system
Full-line strategy: Full line of construction equipment
Good financing: Offering good terms to their customers

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 Designing Competitive Strategy
Analyzing the latent demand and satisfying the
customer needs (Proactive Marketing):
Responsive Marketer (Find stated need and fills it)
Anticipative Marketer (Looks ahead into what needs
customers)
Creative Marketer (Discovers and produces solutions
of customer did not ask)

9-3
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 Designing Competitive Strategies
Defense Strategies (Defensive Marketing)
Position Defense (Most desirable market space; Crest for cavity)
Flank Defense (Protect the weak front or sides for counter attack)
Preemptive Defense (Attack before enemy start its offense; like
guerilla attacking)
Counteroffensive Defense (When attack the respond with counter
attack; FedEx and UPS..UPS for Airborne..FedEx..Ground Delivery)
Mobile Defense
Market broadening (Oil company for coal, nuclear, hydroelectric
etc.)
Market diversification (Shifting to unrelated industry)
Contraction Defense
Planned contraction
(Strategic withdrawal, giving up weaker territory and invest stronger
one)
9-4
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 Designing Competitive Strategies
Market-Challenger Strategies
Defining the Strategic Objective and Opponent(s)
It can attack the market leader (Canon grabbed Xerox with desk
copier)
It can attack firms of its own size that are not doing the job and
are underfinanced (firms charging excessive price or not satisfying
customers)
It can attack small local and regional firms
Choosing a General Attack Strategy

9-5
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 By passing enemy attacking easier markets
(Coke bought Tropicana; orange juice)
Geographic or
segmental
Attackers matches
opponents products,
advertising, price and
distribution

With superior
resources and
believes to break the
will of opponent

Selective price cut, Intense promotional

blitzes and occasional legal action 9-6
Copyright 2003 Prentice-Hall, Inc.
 Designing Competitive Strategies
Choosing a Specific Attack
Strategy
Price-discount
Lower price goods (Lower quality goods sells much lower price)
Prestige goods (Toyota Century)
Product proliferation (larger product variety) Baskin
Robbins Ice Cream
Product innovation; 3M
Improved services
Distribution innovation (Avon door to door selling)
Manufacturing cost reduction (Lower labor costefficient
purchasing, mordern production equip)
Intensive advertising promotion

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 Designing Competitive Strategies
Market-Follower Strategies
Innovative imitation
(Product imitation)
Product innovation
Four Broad Strategies:
Counterfeiter (duplicates the leaders product and sell in
black market)
Cloner (Pdts, name and packaging with slight variation)
Imitator (copies something from the leader but maintains
differentiation in packaging, advertising, pricing and
location)
Adapter (takes leaders products and adapts or improves
them) Most of the Japanese Firms had done it before.

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 Designing Competitive Strategies

Market-Nicher Strategies
High margin versus high
volume Product-feature
Nicher Specialist Roles specialist
Job-shop specialist
End-user specialist
Quality-price specialist
Value-added reseller
Service specialist
Vertical-level specialist Channel specialist
Customer-size specialist
Specific-customer specialist
Geographic specialist
Product or product-line
specialist

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Product Life Cycle

Copyright 2003 Prentice-Hall, Inc.

 Facts about Life Cycles

Products have a limited life.

Product sales pass through distinct
stages.
Profits rise and fall at different stages.
Products require different marketing,
financial, manufacturing, purchasing,
and human resource strategies in each
stage.
Copyright 2003 Prentice-Hall, Inc.
Style, Fashion, and Fad Life Cycles

Copyright 2003 Prentice-Hall, Inc.

Product Life-Cycle Marketing Strategies

Marketing Strategies: Introduction Stage

The Pioneer Advantage
Inventor (First to develop patent in a new product
category)
Product pioneer (First to develop working model)
Market pioneer (First to sell in the new-product
category)
Market pioneer gains most advantage:
Campbell, Coca-Cola, Hallmark, Radhuni
in BD, Flexiload by Grameen

Figure
Long-Range Product Market Expansion
Strategy (P = Product; M = Market)

Copyright 2003 Prentice-Hall, Inc.

Product Life-Cycle Marketing Strategies

Marketing Strategies: Introduction Stage

Inform potential consumers
Induce product trial
Secure distribution in retail outlets
Focus on those buyers who are ready to buy,
usually high income group, due to high price.
Speeding up innovation time is essential in an
age of shortening product life cycles.

Copyright 2003 Prentice-Hall, Inc.

Product Life-Cycle Marketing Strategies
Marketing Strategies: Growth Stage
Improve product quality and add new product features and
improved styling
Add new models and flanker products (products of
different sizes, flavors and protect the main line product)
Enter new market segments
Increase distribution coverage and enter new distribution
channels
Shift from product-awareness advertising to product-
preference advertising
Lower prices to attract next layer of price-sensitive buyers

Copyright 2003 Prentice-Hall, Inc.

Product Life-Cycle Marketing Strategies

Marketing Strategies: Maturity Stage

Market Modification
Expand number of brand users by:
Increase sales volume: (users* usage rate per user)
1. Converting nonusers
2. Entering new market segments
3. Winning competitors customers
Convince current users to increase usage by:
1. Using the product on more occasions
2. Using more of the product on each occasion
3. Using the product in new ways

Copyright 2003 Prentice-Hall, Inc.

Product Life-Cycle Marketing Strategies
Marketing Strategies: Maturity Stage
Product Modification
Quality improvement (new and improved product)
Feature improvement (size, weight, materials,
additives etc.)
Style improvement (Esthetic appeal; new model car is
appearing into the market)
Marketing Program Modification
Price: Would price cut attracts new buyers?
Distribution: More outlets? New distribution
channel?
Advertising: Advertising expenditure be increased?
Sales promotion: trade deals, cents off coupons,
rebates, warranties, gifts and contests
Personal selling: Personal selling need to modify?
(territory, personnel etc.)
Service: Speed up delivery service?
Copyright 2003 Prentice-Hall, Inc.
Product Life-Cycle Marketing Strategies

Marketing Strategies: Decline Stage

1. Increase firms investment (to dominate the market and
strengthen its competitive position)
2. Maintain the firms investment level until the
uncertainties about the industry are resolved.
3. Decrease the firms investment level selectively by
dropping unprofitable customer groups, while
simultaneously strengthening the firms investment in
lucrative niches
4. Harvesting (milking) the firms investment to recover
cash quickly
5. Divesting the business quickly by disposing of its assets
as advantageously as possible.

Copyright 2003 Prentice-Hall, Inc.

 Table 11.5: Summary of Product Life-Cycle
Characteristics, Objectives, and Strategies

Introduction Growth Maturity

Characteristics

Sales Low sales Rapidly rising Peak sales

sales
Costs High cost per Average cost per Low cost per
customer customer customer
Profits Negative Rising profits High profits

Customers Few Growing Number Stable number

beginning to
decline

Copyright 2003 Prentice-Hall, Inc.