Addressing
Competition
Driving Growth
and
Discussion Questions
1. How can market leaders expand the total market
and defend market share?
2. How should market challengers attack market
leaders?
3. How can market followers or niche compete
effectively?
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Growth Strategies
• Good marketing can help to induce trial and
promote word of mouth and diffusion.
• Marketing in more mature markets can be more
challenging.
• Fighting over market share is less productive than
expanding the size of the market as a whole.
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Growth Strategies
Phil and Milton Kotler stress the following strategies :
Grow by building your market share
Grow by developing committed customers and stakeholders
Grow by building a powerful brand
Grow by innovating new products, services, and experiences
Grow by international expansion
Grow by acquisitions, mergers, and alliances
Grow by building an outstanding reputation for social
responsibility
Grow by partnering with government and NGOs
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Growth Strategies
UK marketing guru David Taylor advocates three main strategies,
citing these example:
1. Make the core of the brand as distinctive as possible.
Galaxy chocolate has successfully competed with Cadbury by
positioning itself as “your partner in chocolate indulgence” and
featuring smoother product shapes, more refined taste, and
sleeker packaging.
2. Drive distribution through both existing and new
channels. Costa Coffee, the number-one coffee shop in the
United Kingdom, has found new distribution routes using
drive-through outlets, vending machines at service stations,
and in school coffee shops.
3. Offer the core product in new formats or versions. WD40
offers a Smart Straw version of its popular multipurpose
lubricant with a built-in straw that pops up for use.
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Hypothetical Market Structure
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Market Members
Market leader
Market challenger
Market nichers
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Market follower
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Market Members
• Market leaders have the higher market share and
usually base-line in terms of price. Leaders also
lead the market in new-product introductions,
distribution coverage, and promotional intensity.
Historic market leaders include: McDonald’s,
Microsoft, Visa, Gatorade, Best Buy, and Blue Cross.
• Other market members include challengers,
followers, and niche players. Other firms enter and
exit the markets, primarily during the maturity and
decline stage of the product life cycle.
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Staying Number One
1. Expand total market demand
2. Protect current market share
3. Increase market share
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Expanding Total Market Demand
New Customers
More Usage
Replacement rate
New product uses
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Expanding Total Market Demand
• NEW CUSTOMERS : a company can search for new
users among three groups:
• those who might use it but do not ( marketpenetration strategy ),
• those who have never used it ( new-market
segment strategy ), or
• those who live elsewhere ( geographical-expansion
Strategy)
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Expanding Total Market Demand
• More Usage: Marketers can try to increase the
amount, level, or frequency of consumption. They
can sometimes boost the amount through packaging
or product redesign. Larger package sizes increase
the amount of product consumers use at one time.
• New Ways to Use the Brand: The second approach
to increasing frequency of consumption is to identify
completely new and different applications. Food
product companies have long advertised recipes that
use their branded products in different ways. After
discovering that some
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Protect Current Market Share
Responsible Strategy
Creative Marketing
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Anticipative Strategy
Marketing Strategy
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Protect Current Market Share
• PROACTIVE MARKETING: In satisfying customer needs, we
can draw a distinction between responsive marketing,
anticipative marketing, and creative marketing.
• A responsive marketer finds a stated need and fills it.
• An anticipative marketer looks ahead to needs customers
may have in the near future.
• A creative marketer discovers solutions customers did not ask
for but to which they enthusiastically respond. Creative
marketers are proactive market-driving firms, not just marketdriven ones.
• Proactive companies create new offers to serve unmet—and
maybe even unknown—consumer
• Proactive companies may redesign relationships within an
industry, like Toyota did with its relationship to its suppliers.
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Six Types of Defensive Marketing
Strategy
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Six Types of Defensive Marketing Strategy
• Position defense. Position defense means
occupying the most desirable position in consumers’
minds, making the brand almost impregnable.
• Flank defense. The market leader should erect
outposts to protect a weak front or support a possible
counterattack.
• Preemptive defense. A more aggressive maneuver
is to attack first, perhaps with guerrilla action across
the market—hitting one competitor here, another
there—and keeping everyone off balance. Another is
to achieve broad market
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Six Types of Defensive Marketing Strategy
• Counteroffensive defense. In a counteroffensive, the market
leader can meet the attacker frontally and hit its flank or launch
a pincer movement so the attacker will have to pull back to
defend itself.
• Mobile defense. In mobile defense, the leader stretches its
domain over new territories through market broadening and
market diversification. Market broadening shifts the company’s
focus from the current product to the underlying generic needs.
• Contraction defense. Sometimes large companies can no
longer defend all their territory. In planned contraction ( also
called strategic withdrawal ), they give up weaker markets and
reassign resources to stronger ones.
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Increase Market Share
Antitrust action
Decreased profitability
Lower overall quality
“Actual” quality
Pursue wrong
marketing activity
“Perceived” quality
2012
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2013
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Optimal Market Share
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Other Competitive Strategies
Market-challenger
Market-nicher
Market-follower
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Market-Challenger Strategies
Define objectives and opponent(s)
Choose general attack strategy
Choose Specific attack strategy
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Market-Challenger Strategies
Objectives and Opponents
Attack:
Market leader
Weaker, similar size firms
Smaller local or regional firms
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General attack strategies
Frontal attack
Flank attack
Encirclement attack
Bypass attack
Guerrilla attack
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Market-Follower Strategies
Counterfeiter
Adapter
Imitator
Cloner
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Market-Nicher Strategies
Nichers Task
Create niches
Expand niches
Protect niches
Target small, profitable segments
Achieve higher margins
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