Chapter 9

Dealing with the 
Competition

Group# 2
Abdul Latif Nagaria 2257
Anas Ahmed 2258
Owais Tahir
Mohammad Azeem
Shakir Hassan
 Objectives

• Understand how a company

identifies its primary competitors
and ascertains their strategies.

• Review how companies design

competitive intelligence systems.
 Objectives

• Learn how a company decides

whether to position itself as a
market leader, a challenger, a
follower, or a nicher.

• Identify how a company can balance a

customer vs. competitor orientation.
 Competitive Markets

• Porter’s Five Forces that Determine

Market Attractiveness:
– Threat of intense segment rivalry
– Threat of new entrants
– Threat of substitute products
– Threat of buyers’ growing bargaining
power
– Threat of suppliers’ growing bargaining
power
 Competitive Markets

• Failing to identify competitors can lead

to extinction
• Internet businesses have led to
disintermediation of middlemen
• Competition can be identified using the
industry or market approach
 Competitive Markets

Industries Can Be Classified By:

• Number of sellers • Entry, mobility and exit
and degree of barriers
differentiation • Degree of vertical
• Cost structure integration

Degree of globalization
 Competitive Markets

Industry Structures • Only one firm offers an

undifferentiated product
• Pure Monopoly or service in an area
• Pure Oligopoly – Unregulated
• Differentiated Oligopoly – Regulated

• Monopolistic • Example: Most utility

Competition companies
• Pure Competition
 Competitive Markets

Industry Structures • A few firms produce

essentially identical
• Pure Monopoly commodities and little
• Pure Oligopoly differentiation exists
• Differentiated Oligopoly • Lower costs are the key
• Monopolistic to higher profits
Competition • Example: oil
• Pure Competition
 Competitive Markets

Industry Structures • A few firms produce

partially differentiated
• Pure Monopoly items
• Pure Oligopoly • Differentiation is by key
• Differentiated Oligopoly attributes
• Monopolistic • Premium price may be
Competition charged
• Pure Competition • Example: Luxury autos
 Competitive Markets

Industry Structures • Many firms differentiate

items in whole or part
• Pure Monopoly • Appropriate market
• Pure Oligopoly segmentation is key to
• Differentiated Oligopoly success
• Monopolistic • Example: beer,
Competition restaurants
• Pure Competition
 Competitive Markets

Industry Structures • Many competitors offer

the same product
• Pure Monopoly • Price is the same due
• Pure Oligopoly to lack of differentiation
• Differentiated Oligopoly • Example: farmers
• Monopolistic selling milk, crops
Competition
• Pure Competition
 Competitive Markets

• A broader group of competitors will be

identified using the market approach

• Competitor maps plot buying steps in

purchasing and using the product, as well as
direct and indirect competitors
 Competitor Analysis

• Key characteristics of the competition must

be identified:
– Strategies
– Objectives
– Strengths and Weaknesses
• Effect a firm’s competitive position in the target market
– Reaction Patterns
 Competitor Analysis

Competitive Positions in
the Target Market

• Dominant • Tenable
• Strong • Weak
• Favorable • Nonviable
 Competitive Intelligence Systems

• Designing the system involves:

– Setting up the system

– Collecting the data
– Evaluating and analyzing the data
– Disseminating information and responding
to queries
 Competitive Intelligence Systems

• Value analysis helps firms to select

competitors to attack and to avoid
– Customers identify and rate attributes important
in the purchase decision for the company and
competition

• Attacking strong, close, and bad competitors

will be most beneficial
 Designing Competitive Strategies

Major Strategies • Expanding the total

market
• Defending market
• Market-Leader share
• Market-Challenger • Expanding market
• Market-Follower share
• Market-Nicher
 Designing Competitive Strategies

• Expanding the Total Market:

– Targeting Product to New Users
• Market-penetration strategy
• New-market strategy
• Geographical-expansion strategy
– Promoting New Uses of Product
– Encouraging Greater Product Use
Designing Competitive Strategies

Defending Market Share

• Position • Counteroffensive
defense defense
• Flank defense • Mobile defense
• Preemptive • Contraction
defense defense
 Designing Competitive Strategies

• Before Attempting to Expand Market

Share, Consider:
– Probability of invoking antitrust action
– Economic costs involved
– Likelihood that marketing mix decisions will
increase profits
 Designing Competitive Strategies

Major Strategies • First define the

strategic goals and
• Market-Leader opponent(s)
• Market-Challenger • Choose general attack
• Market-Follower strategy
• Market-Nicher • Choose specific attack
strategy
 Designing Competitive Strategies

• General Attack Strategies:

– Frontal attacks match competition
– Flank attacks serve unmet market needs or
underserved areas
– Encirclement “blitzes” opponent
– Bypassing opponent and attacking easier
markets is also an option
 Competitive Markets

Specific Attack Strategies Include:

• Price-discount • Product
• Lower-price goods innovation
• Prestige goods • Distribution
innovation
• Improved services
• Manufacturing
• Product proliferation
cost reduction
 Designing Competitive Strategies

Major Strategies • Imitation may be more

profitable than
• Market-Leader innovation
• Market-Challenger • Four broad strategies:
• Market-Follower – Counterfeiter
– Cloner
• Market-Nicher
– Imitator
– Adapter
 Designing Competitive Strategies

Major Strategies • Niche specialties:

– End-user
• Market-Leader – Vertical-level
• Market-Challenger – Customer-size
• Market-Follower – Specific customer
• Market-Nicher – Geographic
– Product/product line
– Product feature
– Job-shop
– Quality-price
– Service
– Channel
 Balancing Customer and
Competitor Orientations
• Competitor-centered companies evaluate
what competitors are doing, then formulate
competitive reactions

• Customer-centered companies focus on

customer developments when formulating
strategy