rd 3 Strategic Marketing, edition Chapter 4: Strategic marketing decisions, choices, and mistakes C. Functional Level Step 1: Setting the Marketing Objectives Some possible Objectives? • • • • • • Sales Growth Market Share Innovativeness Customer Satisfaction Reputation Brand Loyalty Objectives should be • Hierarchical: most to least important objective • Quantitative • Realistic: research based • Consistent : SR and LR approach Step 2: Strategic Decision of Products to offer and Markets to target Market dependent Sales Cannibalization Market Penetration Product dev Market dev Product dev for Gourmet Bazar Horizontal Integration for Gemcon Product development Diversification by Kazi under Gemcon Product development Step 3: Strategic Decision for Competitive Tactics Marketing Strategy: the manner in which company recourses are used in the search for a differential advantage and should be formulated with reference to external market environment in which that firm operated. Tactic: an operating action specifying how, when and where a strategy is to be implemented. Narrow in scope and is of SR. Four Market Position • Market Leader • Market Challenger • Market Followers • Market Nicher Step 3: Strategic Decision for Competitive Tactics Raising entry barriers Competitive Positions: Market Leader 1. Market Leader (firm with largest market share, can be country specific): GP, NSU, Nike, Google, Microsoft, etc. other firms keep challenging them…if the competition is very close, anytime they can loose their position. (new tech/ trend/arrogance). To remain at one, these companies are: a. Expanding the Total Demand (Offensive) : a small increase boosts up • • • the sale. Finding new users/customers: MovenPick at Uttara, Maggi noodles for villages. Discovering and promoting new product uses: Cadbury: Celebration, coke: open happiness, Encouraging greater product usage: Campbell Soup, M&M Easter dessert Recipe, Mobile as interactive platform, etc b. Expanding Market Share (Offensive) • Profitability rises with market share: intro of a better marketing mix Protecting Market Share (Defensive) • • • • • Prevent or Fix Weaknesses: now newer better service, etc Fulfill Value Promised Keep Prices consistent with Value Build Relationships: banks Continuous Innovation: Apple, Honda, Sony, etc New/greater product uses New/greater product uses new /greater product uses Incentives Competitive Positions: Market Leader: Defensive Tactics: Protect Market share 6 different types of defensive tactics • • • • • • Position Defense Flanking Defense Pre-emptive Defense Counter Offensive Defense Mobile Defense Contraction Defense http://www.yourarticlelibrary.com/marketing/market-leadership-strategiesexplained/43538/ Competitive Positions: Market Leader: Defensive Tactics: Protect Market share • Position Defense: The position defense is the simplest defensive strategy. It simply involves trying to hold your current position in the market. To do this, you simply continue to invest in your current markets and attempt to build your brand name and customer loyalty. • The problem with this strategy is that it can make you a target for new entrants to the market. • To overcome a position defense an attacker therefore typically adopts an indirect approach rather than the head-on attack that the defender expects. For example, HUL increased its ad-spend on Clinic Plus and Sun silk shampoos and gave heavy promotions through price reduction. https://tbsnews.net/companies/l ights-go-dim-philips-bulbsempire#:~:text=As%20industry% 20insiders%20put%20it,with%20 about%2015%20percent%20shar e. https://www.thedailystar.net/business/news/electricalproducts-market-growing-fast-1814353 Competitive Positions: Market Leader: Defensive Tactics: Protect Market share • Flanking Defense: the fighter brand: In marketing, taking a flanking position means that you establish a defensive presence in a weaker segment which you anticipate your competitor will move into. • Flanking compels the threatened competitor to either allocate resources to the segments being attacked (and thus dilute the competitor's marketing efforts) or to lose them to the attacker. When a firm uses the flanking defense, it defends its market share by diversifying into new markets and niche segments. Competitive Positions: Market Leader: Defensive Tactics: Protect Market share • Pre-emptive Defense: the leading firm can be aggressive and strike competitors before they can make any move against it. • Maybe you’ve heard rumors that they’re working on a product to rival yours. If this is the case then you could be in the position to launch a pre-emptive defense to shut down your competitor’s attack before it gets a chance to start! • GP blocked all TV spots, billboards, newspapers to thwart Warid’s launch plan • Titan launched more brands and sub-brands to corner the market http://www.thedailystar.net/supplements/25th-anniversary-special-part-2/comeback-thehorizon-real-estate-210853 Competitive Positions: Market Leader: Defensive Tactics: Protect Market share • Counter-offensive Defense: This involves that the market leader will attack the attacker in its main territories so that the attacker will have to put back some resources for the attacked territories and will have to divert its attention from launching attack on the market leader. This may involve significantly lowering the prices of the product or aggressive marketing communications or flooding the market with the products. • RB’s Mortein, Harpic and Dettol. Square’s Xpel, Shakti and Sepnil. To protect Mortein, RB can go attack the toilet cleaning segment, so that Square diverts all resources to that segment and can’t do anything with Xpel, so Mortein is safe • When Ceat tyres attacked TVS Srichakra in Tamil Nadu markets, TVS decided to expand its coverage to Ceat tyre’s hub in the north and west of India through innovative campaigns like road rallies, road shows and attractive public campaigns. Competitive Positions: Market Leader: Defensive Tactics: Protect Market share • Mobile Defense: By spreading your efforts out this way, you become a much more difficult target to pin down. They’ll be reluctant to commit to a large-scale attack on you as it will only affect one part of your business, and may not deal the massive blow they want it to. • the leader extends itself to new markets that can serve as future bases for defense or offence. Competitive Positions: Market Leader: Defensive Tactics: Protect Market share • STRATEGIC WITHDRAWAL/ Contraction Defense: This isn’t the same as just giving up, the word ‘strategic’ means that it’s different! It’s always better to live and fight another day than to foolishly fight a losing battle until the inevitable grizzly end. • This strategy is where you withdraw from your more vulnerable areas and redirect your resources to the more defendable ones. So you might sell off some of your smaller operations to focus more efforts on your more profitable ones Competitive Positions: Market Challenger: 2. Market Challenger • Challenge the market leader • High-risk but high-gain (2nd movers advantages) • Sustainable competitive advantage over the leader is key to success • Neutralize other competencies of the Leader. • Alternatively, Firms can challenge firms of the same size or smaller regional and local firms Competitive Positions: Market Challenger: Possible attack Tactics Frontal Attack : challenger opposes competitor directly using its own weapons and trying not to expose its weak points Full Frontal (matching competitors product, advertising, price n distribution vs. indirect attacks (focusing on leader’s weaknesses). Challenger opposes competitor directly using its own competencies/ strengths and trying not to expose its weak points. Syndicating distribution channel/ buying out media space. Competitive Positions: Market Challenger: Possible attack Tactics Flanking Attack: choose the weak spots and attack. Honda vs Harley in US market. Absolut performed a similar maneuver in the vodka market. Purposely pricing themselves about 50 percent higher than leading competitor Smirnoff, they flanked them on the nearly established premium vodka market. A few years later, Grey Goose offered a vodka priced 60 percent higher than Absolut, in turn flanking them in the “ultra-premium” vodka market. ACI went strong in areas like Mymensingh and Bogra where Mortein had poor distribution. Cheap coils started cropping up in these areas as well. Competitive Positions: Market Challenger: Possible attack Tactics Encirclement Attack: Front+ Flank: challenger encircles competitor’s position in terms of products or markets or both. It attacks rivals in as many ways as possible by stretching product lines Competitive Positions: Market Challenger: Possible attack Tactics Bypass Attacks: the challenger chooses to diversify into unrelated products, moving into new markets, technologies to replace existing products Partex introduced the concept of Partex, to be used instead of wood. Hatil Otobi started bringing these specific boards, which were made of wood but not really wood Also goes to new geography Enters new sub-category – cocacola enters juice category Competitive Positions: Market Challenger: Possible attack Tactics Guerrilla Attack: or ambush marketing, attack marketing is a form of marketing that incorporates a series of creative and strategic techniques used to build and maintain public awareness surrounding a person, place, product, or event. Making small but useful changes, which repeatedly puts the brand in the forefront, and slowly but surely makes it a huge name in the market, is the root of Guerrilla marketing. Smaller companies with relatively limited resource base employs this by using price cuts, promotional outburst etc Competitive Positions: Market Followers 3. Market Followers • Follow the market leader (closely/distance/selectively) • Many advantages: • • • • • Less investment as the foot step is already set, market is ready, research result is there, etc Learn from the market leader’s experience Copy or improve on the leader’s offerings Does not mean being a carbon copy of the leader, followers must also find a way to win customers by offering low price with high quality. Potential target of challengers. (low cost/Quality/Market Development Competitive Positions: Market Followers Market Followers 4 types Adapter : has own PODs, Brand identities but follow the leaders/challengers (some features/attributes) : Zen, Alto, Nano etc Imitators: has own brand identity , copy most of the features/attributes of leaders/challengers/competitors but offer the propositions at a lower price compromising the quality . Tata Sky vs Reliance Tv top box set. Cloner : keep brand elements very similar to the leaders and challengers but offer poor quality products as lower price. PraaDA, RaDA, Take Out 2.0, Mini Love, GK Men Counterfeiter : grey market replica products Cloner Competitive Positions: Market Nicher 4. Market Nicher • Serving market niches means targeting sub-segments • Good strategy for small firms with limited resources • Earns high margins rather than high volume • Specialization is key • Customer size (key customers) , geographic, quality-price, service
