Topic Dealing with the Competition

1. TopicDealing with the Competition

2. Creating Competitive Advantage • Competitive advantages require delivering more value and satisfaction to target consumers than competitors do • Competitive marketing strategies are how companies analyze their competitors and develop value-based strategies for profitable customer relationships

3. Competitor Analysis Competitor analysis is the process of identifying, assessing, and selecting key competitors

4. Competitor Analysis • Identifying Competitors Manufacturer or seller of a product or service whose product or service can be used to fill or satisfy a consumer need in a market where other sellers offer products that will also fill or satisfy the same need. Business competitors are: • Other organizations offering the same product or service now. • Other organizations offering similar products or services now. • Organizations that could offer the same or similar products or services in the future. • Organizations that could remove the need for a product or service.

5. Beers Ice cream Tea Regular colas Diet lemon limes Diet-Rite cola Wine Product form competition: Diet colas Diet Pepsi Diet Coke Juices Fast food Fruit flavored colas Product category competition: Soft drinks Video rentals Lemon limes Bottled water Generic competition: Beverages Coffee Baseball cards Budget competition: Food and entertainment LEVELS OF COMPETITION

6. Competition Myopic Who might Jet Airways consider its Competitor? Who Might Ritz Carlson consider its competitor? • Competing against Premium Airlines • Competing against anyone who offers Air travel • Competing against anyone who offers Travel • Competing for same consumer dollar

7. Competitor Analysis Assessing Competitors • Company needs to look in each competitors product quality , features , and mix , customer services , pricing policy, • distribution coverage , sales force strategy , and Advertising and sales promotion program • Study each competitors R&D , Manufacturing , purchasing , Financial and other strategies

8. Competitor Analysis Assessing Competitors

9. Competitor Analysis Selecting Competitors to Attack and Avoid Strong or weak competitors: Customer value analysisdetermines the benefits that target customers’ value and how customers rate the relative value of various competitors’ offers • Identification of major attributes that customers value and the importance of these values • Assessment of the company’s and competitors’ performance on the valued attributes • “Strategic Sweet Spot” (it meet customers need in a way rivals can’t)

10. Competitor Analysis Close or distant competitors: Nike with Adidas …….Bata’s power in India • Bausch and Lomb vs Johnson and Johnson (Vistakon - Acuvue) Good or bad competitors: Share the cost and product development , increase Demand • E.g Yahoo! Music unlimited sees Rhapsody, Napster , AOL Music , Amazon.com , other music download services as good competitors and Apple i-Tunes music store as bad competitor

11. Competitor Analysis Blue Ocean Strategy : Finding uncontested market spaces: Value Innovation Cirque du soleil reinvented the circus , finding and uncontested market space that created new Demand and rendered rival irrelevant . Animal acts to theatrical experiences against competitor Ringling bros. and Barnum & Bailey

12. Competitor Analysis Designing a Competitive Intelligence System • Identifies competitive information and the best sources of this information • Continually collects information • Checks information for validity and reliability • Interprets information • Organizes information • Sends key information to relevant decision makers • Responds to inquiries about competitors

13. Competitive Strategies Approaches to Marketing Strategy Entrepreneurial marketing involves visualizing an opportunity and constructing and implementing flexible strategies Formulated marketing involves developing formal marketing strategies and following them closely Intrepreneurial marketing involves the attempt to reestablish an internal entrepreneurial spirit and refresh marketing strategies and approaches Formulated side vs Creativity side

14. Competitive Strategies Basic Competitive Strategies Michael Porter’s four basic competitive positioning strategies

15. Competitive Strategies Basic Competitive Strategies Michael Treacy and Fred Wiersema suggest companies can gain leadership positions by delivering superior value to their customers in three strategies or “value disciplines:” • Operational excellence : Superior Value, efficient value delivery system, reliable , good quality products.(Wal-Mart , Big Bazar, IndiGo) • Customer intimacy: Superior value and tailoring its products or services to match the needs of targeted customers(TajGroups,Lexus) • Product leadership: Superior value by continuous stream of leading –edge products(Nokia , Apple) Fed Ex , Wal-Mart

16. Market nicher Market leader Market challenger Market follower 40% 30% 20% 10% Hypothetical Market Structure & Strategies Special- ize Attack leader Defend Market Share Imitate Expand Market Share

17. Designing Competitive Strategies • Market-Leader Strategies – Many industries contain one firm that is acknowledged market leader and leads the other firms in price changes , new-product development, distribution coverage and promotion intensity. • Microsoft – ( Computer software) • Intel – (Microprocessors) • Gillette – ( Razor Blades) • L.G – (Consumer Electronics) • Future Group (Retailing) • Tata Motors (Commercial Vehicles) • Mc Donald's (Fast Food)

18. Action Plan To remain number one calls for action on three fronts • The firm must find ways to expand thetotal market demand • The firm must protect its current market share through good defensive actions • Firm can try to increase its market share even when it is constant

19. Expanding the Total Market New Users New Uses More Usage

20. Protect Market share

21. Expand Market Share • Even small Market share : 1% is $90 billion (Digital Camera Market) , $ 720 billion (Carbonated drink market) • Profitability rises with increasing Market share. Why GE shed its computer , air-conditioning , small appliances and television business? Gaining Increased Market share will not always generate profits : Depends on strategy for gaining increased share.

22. Market Challenger Strategies Frontal Attack: Attacking the Competitors Strengths rather than weaknesses Captain cook & Tata Salt Indirect Attack: Attacking unguarded or weakly guarded grounds Honeywell IBM’s Rival The market challengers’ strategic objective is to gain market share and to become the leader eventually. Colgate , Ford , P&G • By attacking the market leader: • “Second Mover Advantage” • By attacking other firms of the same size or by attacking smaller firms e.g. Johnson and Johnson took Vistakon – Acuvue & attacked Bausch and Lomb

23. 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 Imitator – It copies something but maintains differentiation in terms of packaging , advertising , pricing or location . Dominos home delivery Idea , car manufacturers imitate the style of one another Adapter – It takes the leaders products and adapts or improves them . The adapter may choose to sell in different markets e.g. Japanese firms after adapting and improving products developed elsewhere

24. 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 (Interface Device maker)– a Little Mouse that roars vs Microsoft Nike constantly created new niches--cycling, walking, hiking, cheerleading, etc Nicher achieves high Margins

25. Balancing Customer and Competitor Orientations Can companies spend too much on tacking competitor damaging its customer orientation ?

26. Balancing Customer and Competitor Orientations