Lectures Marketing management: Chapter 11 - ThS. Nguyễn Tiến Dũng

CHAPTER 11
DEALING WITH COMPETITION

Nguyen Tien Dung, MBA
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Chapter Questions
1. How do marketers identify primary competitors?
2. How should we analyze competitors’ strategies,

objectives, strengths, and weaknesses?
3. How can market leaders expand the total
market and defend market share?
4. How should market challengers attack market
leaders?
5. How can market followers or nichers compete
effectively?

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Main Contents
1. Industry Analysis
2. Competitor Analysis
3. Competitive Strategies by Market Position
4. Product Life Cycle Strategies

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1. Industry Analysis
● To identify opportunities and threats

associated with the doing business in the
industry
● To determine profitability and risks when
doing business in the industry
● Tool: Five-force model by Michael Porter

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Five-Force Model by Michael Porter

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Five Forces Determining Segment Structural
Attractiveness
● Industry competitors
● Potential entrant
● Suppliers

● Buyers
● Substitutes

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Industry Concept of Competition
● Number of sellers and degree of

differentiation
● Entry, mobility, and exit barriers
● Cost structure
● Degree of vertical integration
● Degree of globalization

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Strengths and Weaknesses
● Share of market
● Share of mind
● Share of heart

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Steps in Benchmarking
● Determine which functions or processes to

benchmark
● Identify the key performance variables to
measure
● Identify the best-in-class companies
● Measure the performance of best-in-class
companies
● Measure the company’s performance
● Specify programs and actions to close the gap
● Implement and monitor results
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2. Competitor Analysis
● 2.1 Identifying competitors
● 2.2 Identifying competitors’ strategies and

objectives
● 2.3 Evaluating competitors’ strengths and
weaknesses
● 2.4 Selecting competitors to attack and avoid

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2.1 Identify Competitors
● Industry concept of competitors:

● Market concept of competitors

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Industry Concept of Competitors
● Industry concept of competitors:
● An industry is a group of firms that offer a product or class of
products that are close substitutes for one another.
● Competitors are the companies who belong to the same
industry.

● Characteristics of an industry:
● Number of sellers and degree of differetiation
● Entry barrier
● Exit barrier
● Cost structure
● Degree of vertical integration
● Degree of globalization
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Number of sellers and degree of differentiation
● Monopoly
● Oligopoly
● Monopolistic competition
● Pure competition

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Market Concept of Competitors
● Brand competitors: Lead versus Attila
● Product-form competitors: scooter

motorbikes versus “Honda Cub” motorbikes
● Generic competitors (product-category
competitors): motorbikes versus cars
● Need competitors: transportation needs
versus other needs

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2.2 Identifying Competitors’ Strategies and Objectives
● Strategies:

● Few market segments or many market

segments?
● Type of competitive advantages used: low cost or
differentiation?
● Vertical integration: low, medium or high level?
● Objectives:
● Market share first or profit first?
● Which market segments?
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Key Principles in “Blue Ocean Strategy”
FORMULATION PRINCIPLES
● a. Reconstruct market boundaries
●
●
●
●

Look across alternative industries
Look across strategic groups within industries II Look across chain of buyers
Look across complementary product and service offerings
Look across functional or emotional appeal to buyers Look across time

● b. Focus on the big picture not the numbers
● c. Reach beyond existing demand
● d. Get the strategic sequence right

● Is there buyer utility?
● Is the price acceptable?
● Can we attain target cost?
● What are the adoption challenges?

EXECUTION PRINCIPLES
● a. Overcome key organizational hurdles
●
●
●
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Cognitive hurdle
Resource hurdle
Motivational hurdle
Political hurdle

● b. Build execution into strategy

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2.3 Evaluating Competitors’ Strengths and Weaknesses

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Share of mind, Share of heart, and
Share of market

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2.4 Selecting Competitors to Attack and to Avoid
● Strong versus weak
● Close versus Distant
● Good versus Bad

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3. Competitive Strategies
● Market leaders
● Market challengers
● Market followers
● Market nichers

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3.1. Competitive Strategies for Market Leaders
● Expanding the total market
● New customers
● More usage
● Defending market share: continuous innovation
● Position defense
● Flank defense
● Preemptive defense
● Counteroffensive defense: FedEx vs. UPS
● Mobile defense
● Contraction defense
● Expanding market share
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Six Types of Defense Strategies

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Counter-offensive Strategy: FedEx vs. UPS

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Market Leaders: Ariat
Combining comfort with
rugged wear, Ariat is taking on
the market leaders in the
cowboy boot market.

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Leaders’ Strategies: When Your Competitors Delivers
More for Less, p. 300
● Identify market leaders
● K-Mart >< Walmart & Target
● Boots, Sainbury > < ASDA & Tesco
● British Airways > < EasyJet

● What are their strategies to defense their

market position?
● Differentiation: product types, features
● Diversification
● Reduce production costs for easier competition

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