CHAPTER 09 Competitor Analysis and Competitor Marketing Strategy.

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CHAPTER 09 Competitor Analysis and Competitor Marketing Strategy

Transcript of CHAPTER 09 Competitor Analysis and Competitor Marketing Strategy.

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CHAPTER 09Competitor Analysis and Competitor

Marketing Strategy

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Introduction and Agenda of the Chapter

• Understanding customers through customer analysis is very crucial but it is not enough in marketing.

• Strategic marketing is all about having a game plan to outperform competitors by providing better customer value and satisfaction in the process of gaining a competitive advantage.

• In this chapter I will teach you first how to analyze (understand) competitors (competitor analysis) and then I will teach you how to formulate a strategy to outperform competitors in the marketplace in order to create a competitive advantage (competitive marketing strategies).

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Presentation Outline

• Competitor Analysis

• Competitive Marketing Strategies

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Competitor Analysis

• In order to win in the marketplace, and create a competitive advantage, a company needs to know everything about its competitors.

• Competitor analysis is the process of identifying, assessing, and selecting key competitors.

Identifying assessing selecting

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Competitor Analysis – Identifying Competitors

• Direct Competitors: comprises of all the brands within the same product category addressing the same need.

• Indirect Competitors: for example the indirect competition for shaving cream is shaving foam and shaving gel (substitute products). The trick to understand indirect competition is to find out all the products/services from different categories addressing the same need.

• Strategic group is composed of firms within an industry following similar strategies aimed at similar customers or customer groups. Example1: Rolls Royce, Aston Martin, Lamborghini fall under the same strategic group. Competitors in a strategic group are the closest rivals that fall under direct competitors. Example2: Kool Body Spray does not belong to the same strategic group as AXE.

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• For more than 200 years, Encyclopedia Britannica saw itself as competing with other publishers of printed reference books and encyclopedia sets selling for as much as $2,200 per set. However, it learned a hard lesson when the world went digital in the 1990s. Microsoft introduced Encarta, a CD-ROM encyclopedia that sold for only $50. Encarta and other digital encyclopedias took the market by storm, followed quickly by web based encyclopedias and reference resources. As a result, Britannica’s sales plunged 50% during the next seven years.

• Hence, Britannica’s real competitors were not only the other print publishers, they were the internet, computer, and other digital contents. Britannica still publishes its flagship 32 volume Britannica Encyclopedia. However, it also offers popular DVD and web versions of its information services. Britannica recognizes its competitors ranging from World Book to Microsoft, to Wikipedia.

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7A presentation by Varqa Shamsi Bahar

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Competitor Analysis – Assessing Competitors

• While assessing competitors, a company needs to analyze the following parameters of a competitor:

1. Competitor’s target market2. Competitor’s strategy(cost leadership, differentiation

or focus)3. Marketing mix strategy analysis (strengths,

weaknesses, and gaps). 4. Competitors strengths and weaknesses.

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Competitor Analysis – Selecting Competitors

• Customer value analysis is conducted to determine what benefits target customers value and how they rate the relative value of various competitor’s offers – this concept is similar to multi-attribute approach.

• In performing customer value analysis, a company first identifies the major attributes that customers value and the importance the customers places on these attributes. Next, it assesses the company’s and competitor’s performance on the valued attributes.

• Hence, a comparative analysis is done through this process. • A company needs to score higher than competitors on these

important attributes in order to have a competitive advantage. However, if the company’s performance is lower, then it must invest in strengthening those attributes in order to survive in the marketplace.

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Furthermore, a company has to provide a benefit that addresses the customer’s needs in a way that rivals cannot deliver. Also terms as the “strategic sweet spot” which is also referred to as a benefit which is completely unique.

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Competitor Analysis – finding untapped market spaces

• Rather than competing head to head with established competitors, many companies seek out markets where they create products or services where there exists no close rivals. Called Blue Ocean Strategy, the goal is to make competition irrelevant.

• In most cases, Innovation is at the heart of blue ocean strategy.• Example1: the manufacture of mobile phones, made lan phones

obsolete. • Example2: the manufacture of digital cameras made camera

films obsolete. • Example3: Home delivery in Dhaka.

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Competitive Marketing Strategies

10% Market Nichers

20% Market Follower

30% Market Challenger

40% Market Leader

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Competitive Marketing Strategies – For Market Leaders (Expanding Total Market)

• A market leader should strive to Expand the total market demand. As a result when the total market expands, the dominant firm usually gains the most.

• A market can be expanded by finding new customers to use the product: through new market segment strategy (attracting consumers who have never used the product before example: Meril Shiter Champion Campaign) and geographical expansion strategy (consumers who live elsewhere).

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Competitive Marketing Strategies – For Market Leaders (Expanding Total Market)

• A market can be expanded by finding new opportunities to use the brand to enhance consumption rate:

• By tieing a brand to a specific event: Example 1: the repainting of houses (berger), Example 2: watch brand.

• By reminding consumers that they need to replace their current product: Example 1: Gillette, Batteries.

• By finding more ways to use the product: example 1: Meril, Example 2 cheese. Example 3: Spring.

• By making consumers increase the frequency of usage: Example 1: brush your teeth twice a day, Example 2: use Harpic everyday.

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Competitive Marketing Strategies – For Market Leaders (Protecting Market Share)

• While trying to expand total market size, the leading firm also must protect its current business against competitor’s attacks.

• First it must fix weaknesses that provide opportunities for competitors.• Its must always fulfill its value promise in order to cultivate satisfaction.• Its price must be consistent with the value that customers see in the

brand. • It must work tirelessly to keep strong relationships with valued

customers. • It must continuously GET BETTER when it comes down to product

quality, new product launches, customer services, distribution effectiveness, cost cutting, promotional effectiveness.

• If the aforementioned parameters are not addressed, consumers will eventually switch to competing brands.

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Competitive Marketing Strategies – For Market Leaders (Protecting Market Share)

• Staying the market leader through defensive marketing strategies:

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Competitive Marketing Strategies – For Market Leaders (Protecting Market Share through defensive marketing strategies)

• Position defense strategy signifies owning the category in the customer mindset. If not, then owning a specific benefit. Example 1: Fair and lovely owns fairness benefit, Example 2: Colgate owns the benefit protection. Example 3: Bkash owns the category mobile money transfer Example 4: Kool owns shaving cream category.

• Flank defense strategy is when you strategize to protect your flagship profitable brand by launching fighter brands to compete with low priced competitors. Example 1: Kool shaving cream losing market share because of low priced competitors in the saloon market. Kohinoor launched a fighter brand Genstar to protect Tibet Lather Shaving Cream. Example 2: Gold Leaf is a fighter brand of B & H. Example 3: Luvs is a fighter brand of Pampers.

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Competitive Marketing Strategies – For Market Leaders (Protecting Market Share through defensive marketing strategies)

• Preemptive Defense strategy signifies attacking the competitors before they start their offense on the market leader. Example 1: State Bank of India’s focus on expanding their network in the vast rural market of over 100,000 villages by setting up ATMs in these areas provide steep competition for regional banks and large commercial banks who mostly focus on urban areas. Example 2: Introduce new services, new products which are better than competitors and by the time they launch a new product/service to match yours, you have already launched another new product. Hence, you are always ahead in the game.

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Competitive Marketing Strategies – For Market Leaders (Protecting Market Share through defensive marketing strategies)

• Counter Offensive Defense strategy: when attacked, respond with a counterattack directly OR hit the attacker's weakness with a separate strategy.

• Example of direct counter attack: price changes, 1 minute pulse, 3G. Basically, you neutralize the attacker’s benefits.

• Example of hitting the attacker’s weakness: GP investing in better network coverage, LUX soap capitalizing on competitor’s weak supply chain management.

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Competitive Marketing Strategies – For Market Leaders (Protecting Market Share through defensive marketing strategies)

• Mobile Defense Strategy, the leader stretches its domain over new territories through market broadening and market diversification.– Market broadening shifts the company’s focus from the

current product to the underlying generic need. This strategy is close to product development strategy and focuses on the launch of new products addressing the same generic need. Example 1: A company manufacturing cars, also starts manufacturing buses and trucks.

– Market diversification shifts the company’s focus into unrelated industries addressing different need. Example 1: if BAT also starts selling fast moving consumer goods.

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Competitive Marketing Strategies – For Market Leaders (Protecting Market Share through defensive marketing strategies)

• Contraction Defense Strategy, is pursued when large companies can no longer defend all their territories. As a result they pursue a strategic withdrawal by giving up their weaker markets and re-assigning resources to stronger ones.

• For Example: If ROBI fails in operating business here, they can pursue a contraction defense strategy by strategically withdrawing their resources here and re-assigning these resources in markets where they are stronger like in Malaysia and Thailand.

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Competitive Marketing Strategies – For Market Challengers

• Defining Strategic Objectives and Opponents:• A market challenger must first define its strategic objective,

usually to increase market share. And then the challenger must decide whom to attack:

1. It can attack the market leader: This is a high risk but potentially high payoff strategy and makes good sense if the leader is not serving the market well. Hence, a challenger can capitalize on the leader’s weaknesses.

2. It can attack firms its own size that are underperforming and are underfinanced: firms whose customer service quality has declined, whose price is high, whose products are not new or innovative.

3. It can attack small local and regional firms: for example TESCO attacked local grocery stores by opening up new outlets in almost every street/neighborhood in the UK.

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Competitive Marketing Strategies – For Market Challengers

• Choosing a General Attack Strategy

Frontal Attack

Encirclement Attack

Bypass Attack

Side Attack

Guerrilla Warfare

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Competitive Marketing Strategies – For Market Challengers

• Frontal Attack is an attack strategy where the attacker matches its opponent’s marketing mix. Example 1: Jui going for a frontal attack against Parachute however, failing because of distribution and product fragrance drawbacks.

• Side Attack is an attack strategy the challenger first identifies weaknesses of the opponent and capitalizes on those weaknesses. Side attack is particularly attractive to a challenger with fewer resources and can be more likely to succeed than frontal attack.

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Competitive Marketing Strategies – For Market Challengers

• Encirclement Attack is an attack strategy where a challenger attempts to capture a wide slice of territory by launching a grand offense on several fronts.

• Discussion: If you are working for a radio network. Come up with an encirclement attack strategy to be the market leader.

• Sports, rock music, pop music, bangla music, news radio.

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Competitive Marketing Strategies – For Market Challengers

• Bypass Attack is an attack strategy where the challenger bypasses the enemy altogether to attack easier markets instead. This can be done by i) entering new sub-categories, ii) entering new geographical markets, and iii) leapfrogging into new technologies.

• For example:• i) Pepsi used a bypass strategy against Coke by launching

Aquafina bottled water nationally before Coke launched Dasani, • ii) Pepsi purchased Tropicana, which owned almost twice the

market share of coca cola’s MINUTE MAID (horizontal integration).

• iii) Pepsi purchased Gatorade sports drink which was the market leader (horizontal integration).

• Iv) Google used technological leapfrogging to overtake Yahoo! And become the market leader in search.

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Competitive Marketing Strategies – For Market Challengers

• Guerrilla Attacks comprises of small, irregular attacks such as selective price cuts, promotional offers to harass the opponent and eventually secure a better foothold in the marketplace.

• The trick here is to make consumers purchase the product for the first time. And if satisfaction is achieved through that first experience, loyalty can be created.

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Competitive Marketing Strategies – For Market Followers

Counterfeiter

Imitator Adapter

Cloner

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Competitive Marketing Strategies – For Market Followers

• Counterfeit strategy duplicates the leader’s product and packages and sells it on the black market or through disreputable retailers.

• For example in most Asian countries you can find GOOD duplicates of renowned brands: LV bags, Rolex watches, Apple Iphone.

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Competitive Marketing Strategies – For Market Followers

• Cloner strategy imitates/copies the leader’s product, brand name, and packaging, with slight variations.

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Competitive Marketing Strategies – For Market Followers

• Imitator strategy is when a company copies some things from the leader but differentiates on packaging, advertising, pricing, and location.

• For example, many coffee shops pursue an imitation strategy by providing an exquisite coffee experience just like starbucks. However, they have different brand names, different promotions, different pricing plan, different location, etc.

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Competitive Marketing Strategies – For Market Followers

• Adapter strategy is when a company takes the leader’s products and improves it.

• For example, taking the leading body spray brand and improving its “longetivity” attribute and selling it under a new brand name.

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Competitive Marketing Strategies – For Market Nichers

• Niche strategy signifies targeting a relatively small but profitable group of consumers and addressing their need through a separate marketing mix. Niche markets are usually overlooked by larger firms.

• Hence, usually small firms with limited resources utilize this strategy. Example 1: Mediplus.

• However, larger firms also find niche markets lucrative. Example 2: Pepsodent Sensitive expert, Pepsodent Gum Care.

• Remember: premium and luxury brands utilize niche strategy.

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Any Questions?

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“A horse never runs so fast as when he has other horses to catch up and outpace” - Ovid, The Art of Love

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“If you know your enemy as you know yourself, you need not fear the result of a hundred battles. If you know yourself

but not the enemy, for every victory you gain you will suffer a defeat. If you know neither the enemy nor

yourself, you will succumb in every battle” – Sun Tzu.