Phillip Kevin Lane

Kotler Keller
Marketing Management 14e
 1 1
e r
p t
ha
C Competiti
ve
Dynamics
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?
4. What marketing strategies are appropriate
at each stage of the PLC?
5. How should marketers adjust their strategies
and tactics for an economic downturn or
recession?

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Market Members

Market
Market leader
challenger

Market follower
Market
nichers

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 re
g u Hypothetical Market
Fi 1.1
1 Structure

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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

New product
uses

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Protect Current Market
Share
Offensive Defensive
Strategy Strategy
Proactive
Marketing

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 re
g u
Fi 1.2
1 Six Types of Defense
Strategy

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Defensive Strategies
Primary Purpose is to make possible attacks unattractive or
discourage competitors.

It is a developed to protect market share, position and

profitability.

It is a strategy that can be used to keep up top position in

local and existing market.

This strategy is most successful to keep up the customers

confidence which no new competitor can disturb.

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1. Position Defense
The position defense is the simplest defensive strategy &
involves trying to hold your current position in the market.

It involves occupying the most desirable market space in the

minds of the consumers, making the brand almost
impregnable.

Example Colgate toothpaste with 24-hour protection,

Pampers diapers with dryness.

Only negative aspect of this strategy is that it can make you

a target for new entrants to the market.

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2. Flanking Defense
Flank defense is a defensive strategy used by established
companies to counterattack competitor or new company
moves that aim attargeting their weaknesses or strengths

Defending the market share by entering new market and

diversification.

Negative aspect is that there are chances of losing main

focus.

For example, Nokia Asha

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3. Preemptive Defense
In general terms, preemptive defense is attacking an enemy

before the enemy could attack you.

A company can launch a preemptive defense by several

ways. It can wage guerrilla action across the market- hitting

one competitor here, another there and keep every one off

balance; or it can try to achieve grand market envelopment.

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4. Counter-Offensive
Defense
The counter-offensive defense is a retaliatory strategy

When a competitor attacks your business, you strike back

with your own attack

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5. Mobile Defense
Making constant changes in the business.

Involves new product introduction, entering new market or

simply making changes in existing products.

Business must be flexible enough to adapt new

environment.

Example - ITC

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6. Contraction Defense

Least desirable defense because it involves retreating from

markets.

This allows you to redeploy your resources into other areas.

Example TATA selling its soap making company to

Unilever

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Why Defensive Strategies?
Retention of market share

Raising the barriers of entry

Long term contracts

Intact reputation

Market leadership

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 Increased Market Share

Antitrust
action

Decreased
profitability
Lower overall
Actual quality
quality
Pursue wrong Perceived
marketing quality
activity

2012 2013
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 re
g u Optimal Market Share
Fi 1.3
1

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Factors Relevant to Pursuing
Increased Market Share
Possibility of provoking antitrust
action
Economic cost
Pursuing the wrong marketing-mix
strategy
The effect of increased market
share on actual and perceived
quality
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 3 Type 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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 Define objectives and opponent(s)

A market challenger must first define

its strategic objective, usually to
increase market share. The challenger
must decide whom to attack:
It can attack the market leader.
It can attack firms its own size
that are not doing the job and are
underfinanced.
It can attack small local and
regional firms.
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 Choose general attack strategy

Frontal Attack Flank Attack

Encirclement
Bypass Attack
Attack

Guerrilla Warfare

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1. Frontal Attack

Attacking a competitor head-on

Attacking with similar products, price, quality, promotion &

distribution.

Highly risky unless attacker has a clear advantage

Focused on competitors strength rather than weakness

Example: Chiness Sports Brand

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2. Flank Attack

Attacking the competitor at the weak point or blind spot

Less risky when compared with frontal attack

Follows the path of least resistance where competitor is

incapable of defending

Example Auto-industry in 1970, when Japanese car-

makers exploited the weakness of US car-makers in small,

fuel-efficient car segment

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3. Encirclement Attack

Combination of frontal & flank attack.

Attacker must have superior resources.

Surrounding with various brands so as to

make competitor difficult to defend

Defenders attention gets spread across

various products making him harder to

defend

Example Lenovo
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4. Bypass Attack

Also called leapfrog strategy

Overtake the competitors by introducing new technologies

Diversifying the products

Example - Haeir

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5. Guerilla Attack

Small hit-and-run attacks to destabilize the competitor

Attacks take several forms

Example MacDonald,Kitkat etc

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 Choose Specific attack strategy

Any aspect of the marketing program

can serve as the basis for attack, such as
lower-priced or discounted products, new
or improved products and services, a
wider variety of offerings, and innovative
distribution strategies. A challengers
success depends on combining several,
more specific, strategies to improve its
position over time.

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Market-Follower Strategies
Counterfeit Adapte
er r

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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Product Life-Cycle
Strategies
Products have a
limited life
Sales pass through
stages
Profits rise, then
fall
Different strategies
needed
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 re
g u
Fi 1.4
1 Sales and Profit Life
Cycles

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Product Life-Cycle Stages

Introduct
ion

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 re
g u
Fi 1.5 Common Product Life-
1
Cycle Patterns

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 re
u
g
Fi 1.6 Style, Fashion, and Fad
1
Life Cycles

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 PLC: Introduction Stage
Slow sales growth, negative
profits
Marketing
Strategies:
1.Create awareness Speed to
Market
2.Induce product trial
3.Secure retail
distribution.
Which is more profitable over
5 years?
6 months late, but on budget?
On time, but 50% over
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 Order of Market Entry
Pioneer Advantage
Inventor
Product
pioneer
First Mover Market
Advantage
pioneer
Brand name
association
Define product
class
Customer inertia
Producer
advantages
Imitator Advantage
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 re
g u
Fi 1.7 Long-Range Product
1
Market Expansion
Strategy

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 PLC: Growth Stage
Rapid sales growth; New
competitors
Marketing Strategies:
1.Improve product quality; add new
features
2.Add new models and flanker
products
3.Enter new market segments
4.Focus advertising on preferences
5.Increase distribution coverage
6.Lower price; Attract price-sensitive
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 PLC: Maturity Stage
Growth slows; Weak
competitors exit
Marketing Objectives:
1.Maximize profit
2.Defend market share

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PLC: Decline Stage
Slow sales growth, negative
profits

Product
Options:
1.Rejuvenate
2.Harvest
3.Divest

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 .2
11
l e
ab
T
Characteristics of the PLC
Introducti Growth Maturity Decline
on
CHARACTERISTI
CS
Rapidly
Sales Low Peak Declining
rising
Costs/customer High Average Low Low
Profits Negative Rising High Declining
Early Middle
Customers Innovators Laggards
Adopters majority
Stable
Competitors Few Increasing Declining
number

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 .2
11
l e
b
Ta PLCObjectives and
Strategies
Introducti Growth Maturity Decline
on
MARKETING OBJECTIVES
Maximize
Awareness Maximize Milk the
profits;
and trial market share brand
Defend share
STRATEGIES
Extend; Diversify
Phase out
Product Basic Service, brands and
the weak
warranty models
Charge Price to Price to
Price Cut price
cost-plus penetrate match
More Go
Distribution Selective Intensive
intensive selective
Awareness
Communicatio Awareness w/ Stress brand
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Slide 46
Marketing in an Economic
Downturn
More Compelling Value
Proposition
Review Budget Allocations

Get Closer to
Customers
Increasing
Investments

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