24. Dealing with Competition Noel C. Cruz, M.D. Ateneo Graduate School of Business May 8, 2010 drnoelcruz.com Marketing Concepts
Editor's Notes
Building strong brands requires a keen understanding of competitors and competitions grows more intense every year. New competition is coming from all directions – from global competitors eager to grow sales, from online competitors seeking cost-efficient ways to expand distribution, from private-label and store brands One good way to start to deal with competition is through creatively designed and well-executed marketing programs
Effective marketing strategies involve studying competitors and competitive forces. A segment is unattractive if it already contains numerous, strong, or aggressive competitors
The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter the industry and poorly performing firms can easily exit.
A segment is unattractive when there are actual or potential substitutes for the product. Substitutes place a limit on prices and on profits.
A segment is unattractive if buyers possess strong or growing bargaining power. Kotler: Wal-mart, local: SM hypermart/Save More
A segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied. Kotler: Oil companies. Local: china products
A company should identify competitors by using both industry and market-based analyses, It would seem a simple tack for a company to identify its competitors. Kotler: Pepsi-Coca-Cola/Citigroup vs Bank of America. However the range of a company’s actual and potential competitors can be much broader than the obvious. And a company is more likely
An industry is a group of firms that offer a product or class of products that are close substitutes for one another
Broader set of actual and potential competitors than competition defined in just product category terms. Kotler: Coca-cola
Group competitors into their strategic grouping What is each competitor seeking in the marketplace A company should monitor three variable when analyzing competitions: share of market, share of mind, share of heart
Share of the market
Firms that occupy second, third and lower ranks in an industry are considered market challenger. These firms can attack the leader and other competitors in an aggressive bid for further market share
In frontal attack, the attacker matches its opponents product, advertising, price and distribution. The principle of force says that the side with the greater resources will win. Flank attack to an enemy’s weak spots Encirclement to capture a wide slice of enemy’s territory, launching a grand offensive on several fronts Guerilla warfare consists of waging small, intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds
A market follower is a runner-up firm willing to maintain its market share and not rock the boat. A follower can play the role of counterfeiter, cloner, imitator, or adapter
A market nicher serves small market segments not being served by larger firms, The key to nichemanship is specialization. Nichers develop offerings to fully meet a certain group of customer’s need, commanding a premium price in the process.
In today’s global market, the companies should not overdo the emphasis on competitors. They should maintain a good balance of consumer and competitor monitoring Competitor-centered companies should be based on competitor’s marketing mix strategy and benchmarking and reacts these matters with company’s strong resources Customer-centered companies should be based on customer needs and thus company will find out the target market to serve, quality-sensitive segment