1. COMPETITION

2. Response Mechanism
Poor firms ignore their competitors; average firms copy their competitors; winning firms lead their competitors.

3. Competition
Competition: “A market in which rival sellers are trying to gain extra business at one another's expense and thus are forced both to be as efficient as possible and to hold their prices down as much as possible.”

4. Competitors
Competitors : “those firms or individuals who seek to satisfy the same customers or customer needs and offer similar products or services, close substitutes or brands to them”.

5. Identifying Competitors
Industry Concept of Competition
Industry
Number of Sellers and Degree of Differentiation
Pure monopoly
Oligopoly
Pure oligopoly
Differentiated oligopoly
Monopolistic competition
Pure competition

6. Analyzing Competitors
Three Variables to Monitor When Analyzing Competitors:
Share of market
Share of mind
Share of heart

7. What it is ?
Share of market : The competitor’s share of the target market
Share of mind: The percentage of customers who name the competitor in responding to the statement, “Name the first company that comes to your mind in this industry.”
Share of heart: The percentage of customers who named the competitor in responding to the statement, “Name the company from which you would prefer to buy the product.”

8. Figure 9-1: Five Forces Determining Segment Structural Attractiveness
Competitive Forces
Michael Porter’s 5 forces theory
Threat of:
intense segment rivalry
new entrants
substitute products
buyers’ growing bargaining power
suppliers’ growing bargaining power
Figure 9-1: Five Forces Determining Segment Structural Attractiveness

9. Barriers and Profitability
Figure 9-2:

10. Effects of Competition
Enlarging the product mix
The mix is defined by :
the industry and
manufacturing environment and
management strategies
that position the company as a
specialty,
niche or
broad-based supplier
of goods and services

11. Levels of Competition Brand Competition Industry Competition
Form Competition
Generic Competition

12. Brand Competition
Rival companies offering a similar product and services to the same customer at similar prices.
Maruti800,
Santro,
Matiz

13. Industry Competition
A Competition within all companies making same product and class of products.
Maruti800 could compete against all other automobile manufacturers

14. Form Competition
All companies manufacturing products that supply the same resultant to the consumer
Maruti800 would see itself competing against not only automobiles manufacturers but also against manufacturers of trucks,LCVs and even with manufacturers of various motor cycles mfg companies.

15. Generic Competition
All companies that compete for the same consumer’s wallet and try to achieve maximum share of wallet.
Maruti800 would see itself competing with companies that sell white goods.

16. Analysis of Competition
Two Approaches
Industry analysis
Key player analysis

17. Industry Analysis 5 Steps:
Defining an industry : E.g. Cement ndustry,automobiles industry
Study of key aspects: Market Size,growth,structure,gov.policy etc.
SWOT
Predicting the changes in industry strategies
Analysis of Results identification of strategic player

18. Creative Marketer
It discovers & produce solutions customers did not ask for but to which they enthusiastically respond.
A market driving firm

19. Anticipative marketer
It looks ahead into what needs customers may have in the near future.

20. Responsive Marketer
It finds a stated need & fills it

21. Defending the Market Share
Continuous innovation
Developing new products
Distribution effectiveness
Cost cutting
6 defense strategies

22. Designing Competitive Strategies
6 Defense Strategies
Position Defense
Flank Defense
Preemptive Defense
Counteroffensive Defense
Mobile Defense
Contraction Defense
Planned contraction (Strategic withdrawal)

23. Position defense
Building superior brand power and making the brand almost Impregnable (unassailable)

24. Flank defense
Erect outposts to protect a weak front or possibly serve as an Invasion base for counterattacking the possible challenge for the weak (low) product.

25. Preemptive defense To attack before the enemy starts its offense.
Keep your competitors off balanced: open many pockets of offense.
Preannouncements
Small firms may choose another direction to avoid head to head competition.

26. Counter offensive defense
Launching a pincer movement
counter attacking attacker’s main territory:
So that the aggressor will have to pull back some of its troops to defend its territory.

27. Mobile defense: The Leader stretches its domain over new territories that can serve as future centers for defense & offense through market broadening and diversification.
Market broadening: Shifting focus from the current product to the underlying generic need. Company gets involved in the R & D across the whole range of technology associated with that need.
Principle of the objective: The most important military principle is the Principle of the Objective. This principle requires that you decide in advance exactly what it is that you are trying to accomplish. What exactly is your objective? 80% of all problems in personal and corporate life come from a lack of clarity with regard to objectives and goals.
Principle of mass: The principle of mass should be understood in terms of its components: (1) effects - not forces, (2) place and time, (3) joint integration, and (4) synchronization.
Market diversification : Shifting into the unrelated industries.

28. Designing Competitive Strategies
Market-Challenger Strategies
Defining the Strategic Objective and Opponent(s)
It can attack the market leader
It can attack firms of its own size that are not doing the job and are underfinanced
It can attack small local and regional firms
Choosing a General Attack Strategy

29. Designing Competitive Strategies
Brand-extension strategy
Multibrand strategy
Heavy advertising and media pioneer
Aggressive sales force
Effective sales promotion
Competitive toughness
Manufacturing efficiency and cost cutting
Brand-management system

30. Attack Strategies
Figure 9-10:

31. Designing Attack Strategies
Frontal Attack
Flank Attack
Encirclement Attack
Bypass Attack
Guerrilla Warfare

32. Analyzing Competitors
Reaction Patterns
1. If competitors are nearly identical and make their living the same way, then their competitive equilibrium is unstable.
2. If a single major factor is the critical factor, then the competitive equilibrium is unstable.
3. If multiple factors may be critical factors, then it is possible for each competitor to have some advantage and be differentially attractive to some customers. The more factors that may provide an advantage, the more competitors who can coexist. Competitors all have their segment, defined by the preference for the factor trade-offs they offer.
4. The fewer the number of critical competitive variables, the fewer the number of competitors.
5. A ratio of 2 to 1 in market share between any two competitors seems to be the equilibrium point at which it is neither practical nor advantageous for either competitor to increase or decrease share.

33. Definition of Attack
Frontal Attack : The attacker matches its opponent’s product , advertising ,price and distribution.
Flank Attack : An enemy’s weak spots are targeted.
Encirclement Attack : It is attempt to capture a wide slice of the enemy’s territory through a blitz
Bypass Attack : Bypassing the enemy and attacking easier markets to broaden resource base.
Guerrilla Attack : Waging small, intermittent attacks to harass & demoralize the opponent.

34. Figure 9-6: Hypothetical Market Structure
Designing Competitive Strategies
Figure 9-6: Hypothetical Market Structure

35. Designing Competitive Strategies
Market-Leader Strategies
Expanding the Total Market
New Users
Market-penetration strategy
New-market segment strategy
Geographical-expansion strategy
New Uses
More Usage
Defending Market Share

36. Designing Competitive Strategies
Choosing a Specific Attack Strategy
Price-discount
Lower price goods
Prestige goods
Product proliferation
Product innovation
Improved services
Distribution innovation
Manufacturing cost reduction
Intensive advertising promotion

37. Designing Competitive Strategies
Market-Follower Strategies
Innovative imitation (Product imitation)
Product innovation
Four Broad Strategies:
Counterfeiter
Cloner
Imitator
Adapter

38. Counterfeiter
The counterfeiter duplicates the leader’s product and package and sell it on the black market or through disreputable dealers

39. Cloner The Cloner emulates the leader’s product, name and
packaging, with slight variation.

40. Imitator
The imitator copies some things but maintains differentiation in terms of
Packaging
Advertising
Pricing
Location

41. Adapter
The adapter takes (legally) the leader’s product and improves them and sell it probably at a different country.

42. Designing Competitive Strategies
Market-Nicher Strategies
High margin versus high volume
Nicher Specialist Roles
End-user specialist
Value-added reseller
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

43. Balancing Customer and Competitor Orientations
Competitor-centered company
Customer-centered company