Competitive Strategies

Competitive advantage
A companys ability to perform in one or
more ways that competitors cannot or
will not match. (Kotler)
Sustainable Competitive Advantage
Hypothetical Market
Structure
Market Leader Strategies
 Expand Total Market
New Users
Perfume
Non users (market penetration)
Men (new market segment)
Other countries (geographical expansion strategy)
New Uses
Du Pont nylons
Parachute> apparels>auto tires>seat belts>carpeting
More Usage
Michelin tyre
Want French drive more>Rate best restaurants>publish
guidebooks with maps and sights
Six Types of Defense
Strategies
 1.Position Defense
This involves occupying the most
desirable market space in the minds
of the consumers, making the brand
almost impregnable.
Setting up barriers to market entry
around a product, brand, product
line, market segment etc.
 Google Brand Extension
Search engine -> Internet Service Co.
Google search engine
Gmail
G talk
Google docs
YouTube, Android, Gizmo5 (Google voice)
Google+ (social media)
Google Earth
Google Glass
Google TV
 2. Flanking Defense
Market leader tries to protect a unguarded
or weakly guarded front (market)
Product flanking
Different combinations of core product at
different size and price, to cover as many
market segments as possible.
Vicks: small containers, inhalers, cough drops,
medicine
Shampoo sachets were initially launched to
guard the main brand.
 Multiband Strategy-Soaps &
Detergents
Premium
 3.Preemptive Defense
Detect potential attacks and attack
the enemies first.
Product/brand proliferation to signal
not to attack
SBI: a network of 17,000 branches and
43,515 ATMs
Vaporware
IBM System/360 Model91 computer
Microsoft Xenix O/S
4.Counteroffensive Defense
Responding to competitors head-on attack
by identifying the attackers weakness and
then launch a counter attack.
P&Gs Oral B toothpaste launch and
Colgates response (2013)
Buying more shelf space and offering discounts
and BOGO in 4.5 million outlets
Pushing premium range to improve profitability
Colgate hiked advertising and promotion spends
by 31% during the first half of the calendar year
 5.Mobile Defense
The leader stretches its domain over
new territories through
Market broadening
Petroleum companies get involved into oil,
coal, nuclear, hydroelectric industries
Market diversification
Shifting into unrelated industries
ITC: cigarette to FMCG and food business
 6.Contraction Defense
Withdraw from the most vulnerable
segments and redirect resources to
those that are more defendable.
Planned contraction or strategic withdrawal.
TATA group sold TOMCO, Lakme Ltd to
Unilever. In 1990s.
Airtel Tower business to Indus Towers
(vodafone+airtel+idea)
Market Challenger
Strategies
 1.Challenger-Frontal Attack
Challenger has to be rich both in
resources and capabilities.
Pure frontal attack
Limited frontal attack
Price based frontal attack
R&D based frontal attack
 Frontal Attack
Challenger has to
be rich both in
resources and
capabilities.
Pepsi Challenge
The cola giants
have been battling
on all marketing
fronts to dominate
the carbonated soft
drink market.
 Ujala dislodged
Robin Blue from its
market leader
position in
whitener segment
by launching a
liquid version of
the product.
 Frontal Attack
Nirma exploited
the entry level
washing powder
market, a gap not
addressed by HUL
then.
 2.Challenger-Flanking
Attack
Challenger attacks the leader at his
weak point or blind spot.
Geographical flanking
Spot underperforming areas
Segmented flanking
Challenger attacks market segment/areas
of technology neglected by leaders
Canon vs. Xerox (attacked in small
photocopier segment)
 3.Challenger-Encirclement
Attack
Involves surrounding a competitor with
several brands and forcing it to defend
itself on many fronts at the same time.
Type
Product encirclement- introduces products with
many different qualities, styles, and features
that overwhelm the competition's product line.
Seikos global strategy
2300 models worldwide & 400 for US market
Attributes attacked: fashion, features, user
preference, price
 4.Challenger-Bypass Attack
Bypassing the leader to attack easier markets.
Indirect attack.
Diversifying into unrelated products
Diversifying into new geographical markets
Regional brands: Wagh Bakri
Leapfrogging into new technologies
Google vs. Yahoo
Pepsi
Aquafina bottled water launch before Coke (1997)
Purchasing Tropicana (Coke Minute Maid)
Purchasing the Quaker Oats Co., owner of market
leader Gatorade sports drink.
5.Challenger-Guerrilla Attack

Made up of series of small,

intermittent hit-and-run attacks by a
challenger to harass and destabilize
the market defender.
Objective
Keep the leader busy inputting out small
bush fires so that overall strategic focus
wanes
Not a long term strategy
Specific Attack Strategies
Drastic short-term price cuts (especially
during a competitors product
testing/launch)
Sudden and intensive bursts of
advertising
Product comparison
Damaging PR activity
Poaching a competitors key staff
Legislative moves
Geographically concentrated campaigns
Guerrilla Attack
 Market Follower Strategies
1. Counterfeiter
Copies leaders product and packages and sells it on
the black market. e.g.pirated music/ movie CDs
2. Cloner
Copies the leaders products as it is as well as name,
packaging with slight variations
Rado Rada, Gucci - Gucca
3. Imitator
Copies some things from leader but differentiated on
packaging, advertising, pricing or location
Tata Sky Videocon, Airtel, Reliance. Naukri - Timesjobs
4. Adapter
Takes leaders products and adapts or improves them
Automobile industry, IT industry, Mobile handset indusrty
 Market-Nicher Strategies
End-user specialist
Customer size specialist
Specific customer specialist
Geographic specialist
Product or Product line specialist
Job-shop specialist
Quality-Price specialist
Service specialist
Channel specialist