COMPETITIVEMARKETING STRATEGIES

OUTLINE

• Introduction

• Strategies for• Market Leaders

• Challengers

• Followers, and

• Nichers

INTRODUCTION

STRATEGIES FOR MARKET LEADERS

Market Leader’s objectives:

•Expand the total market by• Finding new users

• Creating new uses, and

• Encouraging more usage

•Protect its current market share by• Adopting defense strategies

• Increase its market share• Note the relationship between market share and

profitability

•For example, Rupa Publishers is a

leading brand in book publishing in

India.

•They have adopted a new promotional

activity for their new book for the new

customers as well as protecting its

market shares of existing customers.

DEFENSE STRATEGY

• A market leader should generally adopt a defense

strategy

• Six commonly used defense strategies

• Position Defense

• Mobile Defense

• Flanking Defense

• Contraction Defense

• Pre-emptive Defense

• Counter-Offensive Defense

Position Defense• Least successful of the defense strategies

• Involves building superior brand power, and making the brand almost impregnable.

• e.g. Mercedes was using a position defense strategy until Toyota launched a frontal attack with its Lexus.

• Google is the market leader in “cloud” technology services. To stay ahead of new competitors, the company actually attacks itself by producing new products that force their old ones into obsolescence.

Mobile Defense

•By market broadening and

diversification

•For marketing broadening, there is

a need to

•Redefine the business (principle of

objective), and

•Focus efforts on the competition (the

principle of mass)

• ITC (Indian Tobacco Company) have diversified their

strategies and come into food products (brand

“Asirbaad”) and FMCG (brand “VIVEL” etc) and 5 star

Hospitality (brand “SONAR BANGLA”)

• Legend Holdings, the top China PC maker Legend

has announced a joint venture with AOL to broaden

its business to provide Internet services in the

mainland

Flanking Defense:

• Tactics of Marketing where a market leader

not only satisfies in Position defense but also

puts up an outpost to defend the weak front

or to act as a counter invasion base

• Secondary markets (flanks) are the weaker

areas and prone to being attacked

• Pay attention to the flanks

• In India, Bharti Airtel keeps its call

rates higher than Vodafone, and

expenses those revenue to

promotions to flank others.

•Such as the new advertisement by

Airtel. They make a psychological

effect through those promotions that

what they give others don’t.

Contraction Defense

•Withdraw from the most vulnerable

segments and redirect resources to

those that are more defendable

•By planned contraction or strategic

withdrawal

•e.g. India’s TATA Group sold its soaps

and detergents business units to

Unilever in 1993

Pre-emptive Defense

• A more aggressive maneuver is to attack before enemy

starts its offense. A company can launch a preemptive

defense by several ways. It can wage guerrilla action

across the market- hitting one competitor here, another

there and keep every one off balance; or it can try to

achieve grand market envelopment.

• Detect potential attacks and attack the enemies first

• Let it be known how it will retaliate

• To protect its position in the diet food arena, Thompson

Medical, manufacturer of Slim-Fast introduced Ultra Slim

Fast that was directed at a wealthier market demographic

that surprised competitors, which were selling near cost.

Counter-Offensive Defense

• Responding to competitors’ head-on attack

by identifying the attacker’s weakness and

then launch a counter attack

• e.g. Toyota launched the Lexus to respond to

Mercedes attack

• high-end automaker, Mercedes was attacked

by BMW with the introduction of the higher

priced BMW Series 5, 7, and 8 models. To

counter-attack, Mercedes introduced the

Series 190, later known as the C.

MARKET CHALLENGER STRATEGIES

The market challengers’ strategic objective is to gain

market share and to become the leader eventually

How?

• By attacking the market leader

• By attacking other firms of the same size

• By attacking smaller firms

Types of Attack Strategies

• Frontal attack

• Flank attack

• Encirclement attack

• Bypass attack

• Guerrilla attack

FRONTAL ATTACK

• Seldom work unless

• The challenger has clear distinctive advantage(s)

• In a pure frontal attack, the attacker matches its opponent’s

product, advertising, price, and distribution. A modified frontal

attack, such as cutting price vis-a-vis convinces the market that

it’s product is equal to the leaders product.

• e.g. Newly launched BMW series advertisement challenged

all other big commercial family vehicles by its speed,

trustworthyness and safety.

• RCA, Xerox and Univac tried to attack IBM’s

mainframe business but failed due to lack of

competitive advantage.

• The Cola wars between Pepsi and Coke

starting from the early 1900s is an example

of frontal attack strategies.

•McDonald’s McCafes which are coffee joints

are seen as a direct frontal attack on

Starbucks.

FLANK ATTACK

• Attack the enemy at its weak points or blind spots i.e.

its flanks

• Ideal for challenger who does not have sufficient

resources

• An enemy’s weak spots are natural targets. A flank

attack can be directed along two strategic dimensions-

geographic and segmental. In a geographic attack,

challenger target the areas the leader’s product is

under performing. Other flanking strategy is to serve

uncovered market needs, as Japanese automakers did

when they developed more fuel-efficient cars.

• e.g. In the 1990s, Yaohan attacked Mitsukoshi and

• Mercedes-Benz began a flanking maneuver against

General Motors back in the 1950s, targeting the

prestige market (dominated by the Cadillac brand).

They purposely priced their luxury cars much

higher than Cadillac as part of their campaign to

represent Mercedes as a superior car (“engineered

like no other car in the world”).

• Still today also, MB uses this strategy.

ENCIRCLEMENT ATTACK

• Attack the enemy at many fronts at the same time

• Ideal for challenger having superior resources

• e.g. Seiko attacked on fashion, features, user

preferences and anything that might interest the

consumer

• In making a stand against rival Microsoft, Sun

Microsystems licensed its JAVA software to hundreds

pf companies and millions of software developers for

all sorts of consumer devices. As consumer electric

products began to go digital, Java started appearing in

a wide range of gadgets.

BYPASS ATTACK

• By diversifying into unrelated products or markets

neglected by the leader

• Could overtake the leader by using new technologies

• The most indirect assault strategy is the bypass. It

means bypassing enemy and attacking easer markets to

broaden one’s resource based. This strategy offers three

lines approach: diversifying into unrelated product,

diversifying into new geographic markets, leapfrogging

into new technologies to supplant existing products.

• e.g. Pepsi use a bypass attack strategy against Coke in

China by locating its bottling plants in the interior

provinces

GUERRILLA ATTACK• By launching small, intermittent hit-and-run attacks to

harass and destabilize the leader

• Usually use to precede a stronger attack

• Guerrilla challenger uses both conventional and unconventional means of attack. These include selective price cuts, intense promotional blitzes, and occasional legal action. Normally Guerrilla warfare is practiced by smaller firm against larger one.

• Guerrilla Marketing is about taking the consumer by surprise, make an indelible impression and create copious amounts of social buzz. Guerrilla marketing is said to make a far more valuable impression with consumers in comparison to more traditional forms of advertising and marketing.

• This is due to the fact that most guerrilla marketing campaigns aim to strike the consumer at a more

• airlines use short promotions to attack the national

carriers especially when passenger loads in certain

routes are low

• KBC 2014 in Sony Entertainment made an

emotional attack on the viewers.

MARKET-FOLLOWER STRATEGIES

• Theodore Levitt in his article, “Innovative Imitation”

argued that a product imitation strategy might be

just as profitable as a product innovation strategy

e.g. Product innovation--Sony

Product-imitation--Panasonic

MARKET-FOLLOWER STRATEGIES (CONT’D)

• Each follower tries to bring distinctive

advantages to its target market--location,

services, financing

• Four broad follower strategies:

• Counterfeiter (which is illegal)

• Cloner e.g. the IBM PC clones

• Imitator e.g. car manufacturers imitate the style

of one another

• Adapter e.g. many Japanese firms are excellent

adapters initially before developing into

challengers and eventually leaders

MARKET-NICHER STRATEGIES

• Smaller firms can avoid larger firms by targeting

smaller markets or niches that are of little or no

interest to the larger firms

e.g. Logitech– keyboard & mouse

Microbrewers--special beers

MARKET-NICHER STRATEGIES

• Nichers must create niches, expand the niches and

protect them

• e.g. Nike constantly created new niches--cycling, walking,

hiking, cheerleading, etc

• What is the major risk faced by nichers?

• Market niche may be attacked by larger firms once they

notice the niches are successful

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