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8

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
Lower-priced goods
Value-priced goods
Prestige goods
Product
proliferation
Product innovation

Improved services
Distribution
innovation
Manufacturing-cost
reduction
Intensive
advertising
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
Vertical-Level
Specialist
Customer-Size
Specialist
Specific-Customer
Specialist
Geographic
Specialist

Product-Line
Specialist
Job-Shop
Specialist
Quality-Price
Specialist
Service-Specialist
Channel 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 lifecycle 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
increaseand clearly communicatethe 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?

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