8

Competitive Dynamics
Competitive Dynamics
 Chapter Questions
 How can market leaders expand the total
market and defend market share?
 How should market challengers attack market
leaders?
 How can market followers or nichers compete
effectively?
 What marketing strategies are appropriate at
each stage of the product life cycle?
 How should marketers adjust their strategies
and tactics for an economic downturn or
recession?
Figure 8.1
Hypothetical
Market Structure
Expanding the Total Market

 New customers
 More usage
More Usage

 Additional opportunities to use the brand

 New ways to use a brand
Protecting Market Share

Responsive anticipation

Creative anticipation
Figure 8.2 Types of
Defense Strategies
Figure 8.3 The Concept of Optimal
Market Share
 Market Challenger Strategies

 Define the strategic objective and opponents

 Choose a general attack strategy
 Choose a specific attack strategy
 General Attack Strategies

 Frontal attack
 Flank attack
 Encirclement attack
 Bypass attack
 Guerilla warfare
 Attack from regional champions
 Specific Attack Strategies

 Price discounts  Improved services

 Lower-priced  Distribution
goods innovation
 Value-priced goods  Manufacturing-cost
 Prestige goods reduction
 Product  Intensive
proliferation advertising
 Product innovation promotion
Market Follower Strategies

 Counterfeiter
 Cloner
 Imitator
 Adapter
 Market Nicher Strategies
Nichers have three tasks:
 Creating niches
 Expanding niches
 Protecting niches
 Niche Specialist Roles

 End-User Specialist  Product-Line

 Vertical-Level Specialist
Specialist  Job-Shop
 Customer-Size Specialist
Specialist  Quality-Price
 Specific-Customer Specialist
Specialist  Service-Specialist
 Geographic  Channel Specialist
Specialist
Product Life Cycles
1. Products have a limited life.
2. Product sales pass through distinct stages,
each posing different challenges,
opportunities, and problems to the seller.
3. Profits rise and fall at different stages of
the product life cycle.
4. Products require different marketing,
financial, manufacturing, purchasing, and
human resource strategies in each life-
cycle stage.
Figure 8.4 Sales and
Profit Life Cycles
Figure 8.5a
Common PLC Patterns:
Growth-Slump-Maturity
Figure 8.5b
Common PLC Patterns:
Cycle-Recycle
Figure 8.5c
Common PLC Patterns:
Scalloped
Figure 8.6 Style, Fashion, and Fad
Life Cycles
 Maintaining a Market Advantage
Factors underpinning long-term market
leadership:
 Vision of a mass market
 Persistence
 Relentless innovation
 Financial commitment
 Asset leverage
 Novelty
Strategies for Developing a
Pioneer Advantage
Growth-Stage Strategies
 Maturity-Stage Strategies

 Growth stage: sales growth starts to slow; no new

distribution channels to fill; new competitive forces
emerge
 Stable stage: sales per capita flatten because of
market saturation; future sales depend on population
growth and replacement demand
 Decaying maturity: the absolute level of sales starts
to decline; customers begin switching to other
products
Changing Brand Course

Market Modification

Product Modification

Marketing Program
Modification
 Decline

 Declining sales
 Low cost per customer
 Declining profits
 Laggards
 Marketing in an
Economic Downturn
 Invest
 Get close to
customers
 Review budgets
 Use a compelling
value proposition
 Fine-tune offerings
 A Compelling Value Proposition
During a recession, a marketer should:
 avoid being overly focused on price reductions
and discounts
 increase—and clearly communicate—the value
their brands offer, making sure consumers
appreciate all the financial, logistical, and
psychological benefits compared with the
competition
 review pricing to ensure it has not crept up over
time and no longer reflects good value
 For Review
 How can market leaders expand the total
market and defend market share?
 How should market challengers attack market
leaders?
 How can market followers or nichers compete
effectively?
 What marketing strategies are appropriate at
each stage of the product life cycle?
 How should marketers adjust their strategies
and tactics for an economic downturn or
recession?