SESSION - 5SESSION - 5SESSION - 5SESSION - 5

DEALING DEALING

WITH THEWITH THE

COMPETITIONCOMPETITION

DEALING DEALING

WITH THEWITH THE

COMPETITIONCOMPETITION

$7.1billion (1996)$7.1billion (1996) US Sales US Sales $4 billion (2003)$4 billion (2003)$7.1billion (1996)$7.1billion (1996) US Sales US Sales $4 billion (2003)$4 billion (2003)

Levi Levi

StraussStrauss

Classic Classic

501501

Trendy & high end Trendy & high end designer lines :designer lines :

Calvin Klein, Tommy Hilfiger &

GAP

Trendy & high end Trendy & high end designer lines :designer lines :

Calvin Klein, Tommy Hilfiger &

GAP

Popular & lower-priced Popular & lower-priced private labels:private labels:

JC Penney’s ‘Arizona’ &

Sears’ Canyon River Blues

Traditional brands:Traditional brands:

Western ‘Wranglers’ &

Urban ‘Lee cooper’

Hip/ youthful lines:Hip/ youthful lines:

American Eagle, Bugle Boy, JNCO, Lucky & Diesel

‘‘Signature’ brand – Signature’ brand –

discount stores like discount stores like Wal-MartWal-Mart

Redesigned Redesigned strategystrategy

Premium ‘Red Tab’ line – Premium ‘Red Tab’ line – upscale department upscale department stores like Nordstrom & stores like Nordstrom & Neiman MarcusNeiman Marcus

New EntrantsNew Entrants

BuyersBuyersSuppliersSuppliers

SubstitutesSubstitutes

IndustryIndustry

CompetitorsCompetitors

IntensityIntensity

of Rivalryof Rivalry

Threat ofThreat of

SubstitutesSubstitutes

Threat ofThreat of

New EntrantsNew Entrants

Bargaining PowerBargaining Power

of Suppliersof Suppliers

Bargaining PowerBargaining Power

of Buyersof Buyers

Determinants of Buyer PowerDeterminants of Buyer Power

Bargaining LeverageBargaining Leverage

Buyer concentration vs. Buyer concentration vs.

firm concentrationfirm concentration

Buyer volumeBuyer volume

Buyer switching costsBuyer switching costs

Buyer informationBuyer information

Price SensitivityPrice Sensitivity

Price/total purchasesPrice/total purchases

Product differencesProduct differences

Brand identityBrand identity

Impact on quality/Impact on quality/

performanceperformance

Determinants of Substitution ThreatDeterminants of Substitution Threat

Relative price performance of substitutesRelative price performance of substitutes

Switching costsSwitching costs

Buyer propensity to substituteBuyer propensity to substitute

Rivalry DeterminantsRivalry Determinants

Industry growthIndustry growth

Product differencesProduct differences

Brand identityBrand identity

Switching costsSwitching costs

Informational complexityInformational complexity

Diversity of competitorsDiversity of competitors

Corporate stakesCorporate stakes

Exit barriersExit barriers

Entry BarriersEntry Barriers

Economies of scaleEconomies of scale

product differencesproduct differences

Brand identityBrand identity

Switching costsSwitching costs

Capital requirementsCapital requirements

Access to distributionAccess to distribution

Absolute cost advantagesAbsolute cost advantages

Proprietary learning curveProprietary learning curve

Access to necessary inputsAccess to necessary inputs

Proprietary low-cost product designProprietary low-cost product design

Determinants of Supplier PowerDeterminants of Supplier Power

Differentiation of inputsDifferentiation of inputs

Switching costs of suppliers and firms in the industrySwitching costs of suppliers and firms in the industry

Presence of substitute inputsPresence of substitute inputs

Supplier concentrationSupplier concentration

Cost relative to total purchases in the industryCost relative to total purchases in the industry

Impact of inputs on cost or differentiationImpact of inputs on cost or differentiation

Threat of forward integration relative to threat of Threat of forward integration relative to threat of

backward integration by firms in the industrybackward integration by firms in the industry

Source: Porter's 5 Forces - Source: Porter's 5 Forces -

Elements of Industry Structure Elements of Industry Structure

(source: Porter, 1985, p.6)(source: Porter, 1985, p.6)

Substitute Substitute productsproducts

Porter’s 5 Forces model:Porter’s 5 Forces model:Buyers bargaining powerBuyers bargaining power

Buyers are Powerful if: Example

Buyers are concentrated - there are a few buyers with significant market share

Ministry of Defense purchases from defense contractors

Buyers purchase a significant proportion of output - distribution of purchases or if the product is standardized

Wal-Mart and Sears' large retail market provides power over manufacturers

Buyers possess a backward integration threat - can threaten to buy producing firm or rival

Large auto manufacturers' purchases of tires

Buyers are Weak if: Example

Producers threaten forward integration - producer can take over own distribution/retailing

Movie-producing companies have integrated forward to acquire theaters like Rajshree, PVRs.

Significant buyer switching costs - products not standardized and buyer cannot easily switch to another product

Buying of Medicines.

Buyers are fragmented (many, different) - no buyer has any particular influence on product or price

Confectioneries

Producers supply critical portions of buyers' input - distribution of purchases

Intel's relationship with PC manufacturers

Porter’s 5 Forces model:Porter’s 5 Forces model:Suppliers bargaining powerSuppliers bargaining power

Suppliers are Powerful if: Example

Forward integration threat by suppliers

Chemical manufacturers started producing pharmaceutical products

Suppliers concentratedDrug industry's relationship to hospitals

e.g. high cost surgical items

Significant cost to switch suppliers

Microsoft's relationship with PC manufacturers

Suppliers are Weak if: Example

Many competitive suppliers - product is standardized

Confectionery products like cookies, breads etc.

Purchase commodity products Grocery store brand label products

Backward integration threat by purchasers

Tea producers relationship to Tea estate companies

Concentrated purchasersGarment industry relationship to major

retail stores like Wal-Mart

Porter’s 5 Forces model:Porter’s 5 Forces model:Barrier/ Threat to entryBarrier/ Threat to entry

Easy to Enter if there is:

- Common technology

- Little brand loyalty

- Access to distribution

channels

- Low scale threshold

(break even) e.g.

Confectionery.

Difficult to Enter if there

is:

- Patented or proprietary

know-how

- Difficulty in brand

switching

- Restricted distribution

channels- High scale threshold - e.g. knowledge based

industries.

Easy to Exit if there are:

- Salable assets- Low exit costs- Independent businesses e.g. exclusive

distributors, ancillary

manufacturers.

Difficult to Exit if there are:

- Specialized assets- High exit costs- Interrelated businesses e.g. Capital intensive

industries.

Competitive analysis of Global Airline Competitive analysis of Global Airline IndustryIndustry

• Rivalry within Airline Industry:– Competition is intenseCompetition is intense– Several airlines are operating on the same route.Several airlines are operating on the same route.– Compete aggressively on offering like fares, frequent flyer Compete aggressively on offering like fares, frequent flyer

membership privileges etc.membership privileges etc.

• Threat of New EntrantsThreat of New Entrants::– Require capital investment but due to offerings like long-term bank Require capital investment but due to offerings like long-term bank

loans on less interest to business sectors, increased the threat of loans on less interest to business sectors, increased the threat of new entrants.new entrants.

• Threat of SubstitutesThreat of Substitutes::– Options of cheaper travel means like trains etc.Options of cheaper travel means like trains etc.– Domestic airlines have greater threats than the international Domestic airlines have greater threats than the international

carriers.carriers.

• Bargaining power of SuppliersBargaining power of Suppliers::– Limited suppliers i.e. Boeing and Airbus.Limited suppliers i.e. Boeing and Airbus.

• Bargaining power of BuyersBargaining power of Buyers::– Customers have higher bargaining power in the domestic airlines Customers have higher bargaining power in the domestic airlines

compared to the international routes.compared to the international routes.

Driving forces in the Porter’s 5 Driving forces in the Porter’s 5 Forces ModelForces Model

Directions of New Directions of New CompetitionCompetition

Global competitors Global competitors entering in new entering in new markets/ categoriesmarkets/ categories

Global competitors Global competitors entering in new entering in new markets/ categoriesmarkets/ categories

Online competitors Online competitors seeking cost-effective seeking cost-effective ways to expand ways to expand distributiondistribution

Online competitors Online competitors seeking cost-effective seeking cost-effective ways to expand ways to expand distributiondistribution

Private labeling and Private labeling and

store brands store brands

designed to provide designed to provide

low-priced low-priced

alternativesalternatives

Private labeling and Private labeling and

store brands store brands

designed to provide designed to provide

low-priced low-priced

alternativesalternatives

Brand extensions from Brand extensions from

strong mega brands strong mega brands

leveraging their leveraging their

strengths to move into strengths to move into

new categoriesnew categories

Brand extensions from Brand extensions from

strong mega brands strong mega brands

leveraging their leveraging their

strengths to move into strengths to move into

new categoriesnew categories

Intensity of Intensity of

new new

competitive competitive

forcesforces

Intensity of Intensity of

new new

competitive competitive

forcesforces

Analyzing CompetitorsAnalyzing Competitors

CompetitorCompetitorActionsActions

CompetitorCompetitorActionsActions

ObjectivesObjectivesObjectivesObjectives

Strengths &Strengths &WeaknessesWeaknessesStrengths &Strengths &WeaknessesWeaknesses

ReactionReactionPatternsPatternsReactionReactionPatternsPatterns

StrategiesStrategiesStrategiesStrategies

Analyzing Competitors cont…Analyzing Competitors cont…

Company need to gather information about competitor’s strengths and weaknesses on three parameters:

– Share of marketShare of market: competitors share of the target market.

– Share of mindShare of mind: percentage of customers remember competitors features.

– Share of heartShare of heart: percentage of customers prefer competitors features.

Identifying CompetitorsIdentifying CompetitorsIdentifying CompetitorsIdentifying Competitors

Assessing CompetitorsAssessing CompetitorsAssessing CompetitorsAssessing Competitors

Determining ObjectivesDetermining ObjectivesDetermining ObjectivesDetermining Objectives

Selecting Competitors toSelecting Competitors toAttack and to AvoidAttack and to Avoid

Selecting Competitors toSelecting Competitors toAttack and to AvoidAttack and to Avoid

Competitor AnalysisCompetitor Analysis

Identifying StrategiesIdentifying StrategiesIdentifying StrategiesIdentifying Strategies

Assessing Strengths andAssessing Strengths andWeaknessesWeaknesses

Assessing Strengths andAssessing Strengths andWeaknessesWeaknesses

Estimating ReactionEstimating ReactionPatternsPatterns

Estimating ReactionEstimating ReactionPatternsPatterns

Competitor AnalysisCompetitor AnalysisThe The Strength of Strength of the the CompetitorCompetitor’s ’s positioningpositioning

• What market share does each competitor have? (secondary sources)• How strong is each competitor’s image? (primary sources- highly sensitivity)• how is the financial performance of each competitor? (secondary sources)• Is there any focus or areas of concentration of competitors? (published & primary sources – highly sensitive data)

The The Strength of Strength of the the CompetitorCompetitor’s offerings’s offerings

• How is each element of marketing mix deployed by competitors? (secondary & primary sources)• How satisfied is competitor’s customer base? (primary sources- highly sensitive data)• What are the loyalty levels exists for competitors? (primary sources- highly sensitive data)• How satisfied are each distribution channels with the competitors (primary sources- moderately sensitive data)

The The Strength of Strength of the the CompetitorCompetitor’s ’s resourcesresources

• Size of the resource base.• Level of efficiency of production base• Effectiveness of product development process – support of R&D.

UnderstandUnderstanding the ing the competitor’competitor’s strategiess strategies

• What is the competitor’s strategic motive?• What are their moves and reactions?

Competitive environmentCompetitive environment for for Eastman Kodak products in 1970sEastman Kodak products in 1970s

Kodak’s Kodak’s productproductss

Principal Principal competitocompetitorsrs

Kodak’s market Kodak’s market positionposition

Intensity and Intensity and bases of bases of competitioncompetition

LikelihooLikelihood of new d of new entrantsentrants

Kodak’s core Kodak’s core strategystrategy

Instant

camera

s &

instant

film

PolaroidChallenger to

a well-

established

leader

High &

increasing

with greater

emphasis on

innovation

High Penetration

pricing to

sell cameras

faster than

competitors

Photog

raphic

paper

Fuji Photo Film Co.

Leader but

being

threatened by

Fuji & other

Japanese

companies

High – the

attack is due

to stress on

lower prices &

quality

Medium Sustaining share by emphasizing quality of Kodak paper & educating consumers

Office

copiers

Xerox, IBM, 3M Late entrant

to highly

competitive

market- Xerox

held 75%

share

Very high –

due to greater

emphasis to

innovation,

cost & service

Very

high

(from

Japanes

e firms)

Separate sales & service network- leveraging firm’s image and marketing capabilities in microfilm equipment area

Industry CompetitionIndustry Competition

•Number of Sellers & Degree Number of Sellers & Degree

of Differentiationof Differentiation

•Entry, Mobility, Exit barriersEntry, Mobility, Exit barriers

•Cost StructureCost Structure

•Degree of Vertical IntegrationDegree of Vertical Integration

•Degree of GlobalizationDegree of Globalization

Industry Structure typesIndustry Structure types• Absolute Monopoly: Absolute Monopoly: Due to patent protection, license, economies-of-scale: Due to patent protection, license, economies-of-scale:

only one firm provides the product or service. (e.g. only one firm provides the product or service. (e.g. Pharmaceutical Co.s Pharmaceutical Co.s formulationsformulations))

• Differentiated Oligopoly: Differentiated Oligopoly: few firms produce specialized products- few firms produce specialized products- partially differentiated. (e.g. partially differentiated. (e.g. Zhandu & Dabur ChawanprashZhandu & Dabur Chawanprash))

• Pure Oligopoly: Pure Oligopoly: few firms produce the same product (e.g. few firms produce the same product (e.g. BHEL & BHEL & Crompton’s - Switchgears divisionCrompton’s - Switchgears division))

• OligopolisticOligopolistic: : Small number of producers who often act together to Small number of producers who often act together to

control the supply of a particular good and its market pricecontrol the supply of a particular good and its market price It is It is

dominated by a dominated by a few large suppliers who are interdependent on each few large suppliers who are interdependent on each otherother, before making any pricing and investment decisions. e.g. , before making any pricing and investment decisions. e.g. OPEC OPEC (The (The Organization of the Petroleum Exporting Countries, twelve countriesOrganization of the Petroleum Exporting Countries, twelve countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria,

Qatar, Saudi Arabia, UAE and Venezuela) is an example of Oligopolistic is an example of Oligopolistic

since few countries control the production of oilsince few countries control the production of oil.. • Monopolistic competition: Monopolistic competition: many firms offer differentiated product/ many firms offer differentiated product/

service. (e.g. Banking, Insurance, Mutual Fund Companies)service. (e.g. Banking, Insurance, Mutual Fund Companies)

• Pure competition: Pure competition: numerous firms offer the same product/ service. (e.g. numerous firms offer the same product/ service. (e.g. reaching a stage similar to reaching a stage similar to pani-puri wallaspani-puri wallas))

Number of Sellers Number of Sellers && Degree of Degree of DifferentiationDifferentiation

• Pure MonopolyPure Monopoly: local cable network• OligopolyOligopoly: Pure oligopolyPure oligopoly like Oil, steel –

lower prices can only sustain market pie for lower prices can only sustain market pie for long runlong run; Differentiated oligopolyDifferentiated oligopoly like autos, camera – partially differentiated in quality, partially differentiated in quality, features, style & servicesfeatures, style & services.

• MonopolisticMonopolistic: Many competitors differentiate clearly on offers, concentrate on specific market segments and charge customized prices like restaurants, ethical drug manufacturers etc.

• Pure competitionPure competition: Many competitors offers the same product/service to many customers like commodity markets.

Five Industry Five Industry Structure typesStructure types

1. Pure Monopoly1. Pure Monopoly2. 2. DifferentiatDifferentiateded

OligopolyOligopoly

3. Pure 3. Pure

OligopolyOligopoly

4. 4. MonopolistiMonopolistic c

CompetitionCompetition

5. Pure 5. Pure

CompetitioCompetitionn

ONEONE

FEWFEW

MANMANYY

Differentiated product Differentiated product Undifferentiated productUndifferentiated product

Nu

mb

er

of

Nu

mb

er

of

Sell

ers

Sell

ers

Nu

mb

er

of

Nu

mb

er

of

Sell

ers

Sell

ers

Entry, Mobility Entry, Mobility && Exit Exit barriersbarriers

• Entry BarriersEntry Barriers:– High capital requirements

– Economies-of-scale

– Patents & license requirements

– Scarce locations & raw materials

– Scarce distributors/ channels

– Reputation & ‘trust’ factor

• Mobility BarriersMobility Barriers: heavy investment industries (infrastructure) are location specific – mobility is difficult compare to other industries.

• Exit BarriersExit Barriers:– Legal obligations

– Capital blockage/ investment

– Government restrictions

– Lack of alternative opportunities

Low, stableLow, stablereturnsreturnsLowLow

High, stableHigh, stablereturnsreturnsHighHigh

LowLow

Low, riskyLow, riskyreturnsreturns

High, riskyHigh, riskyreturnsreturns

HighHigh

E

ntr

y B

arr

iers

En

try

Barr

iers

Exit barriersExit barriers

Barriers and ProfitabilityBarriers and Profitability

Cost StructureCost StructureCost StructureCost Structure

• Heavy manufacturing – high – high

raw material costs.raw material costs.

• Confectionery & FMCG – high – high

distribution & marketing costs.distribution & marketing costs.

• Heavy manufacturing – high – high

raw material costs.raw material costs.

• Confectionery & FMCG – high – high

distribution & marketing costs.distribution & marketing costs.

Degree of Vertical Degree of Vertical IntegrationIntegration

Degree of Vertical Degree of Vertical IntegrationIntegration

Backward – or – Forward

integration:

Oil companies (Reliance Industries Oil companies (Reliance Industries

Ltd, RIL) – Oil exploration, Oil Ltd, RIL) – Oil exploration, Oil

drilling, Oil refining, Chemical drilling, Oil refining, Chemical

manufacturer & service stations.manufacturer & service stations.

Backward – or – Forward

integration:

Oil companies (Reliance Industries Oil companies (Reliance Industries

Ltd, RIL) – Oil exploration, Oil Ltd, RIL) – Oil exploration, Oil

drilling, Oil refining, Chemical drilling, Oil refining, Chemical

manufacturer & service stations.manufacturer & service stations.

Degree of GlobalizationDegree of GlobalizationDegree of GlobalizationDegree of Globalization

Nature of business like Oil, Oil,

Aircrafts, Cameras, Steel Aircrafts, Cameras, Steel

companiescompanies etc – need to grow fast

across geographies – to share risk

and achieve economies-of-scale

across markets – maintain the

pace of technological

inducements.

Nature of business like Oil, Oil,

Aircrafts, Cameras, Steel Aircrafts, Cameras, Steel

companiescompanies etc – need to grow fast

across geographies – to share risk

and achieve economies-of-scale

across markets – maintain the

pace of technological

inducements.

HighHigh

LowLowHighHigh

LowLow

Qu

ali

tyQ

uali

ty

Vertical IntegrationVertical Integration

Analyzing competitors: Strategic Analyzing competitors: Strategic GroupsGroups

Analyzing competitors: Strategic Analyzing competitors: Strategic GroupsGroups

Group AGroup A•Narrow lineNarrow line•Lower mfg. costLower mfg. cost•Very high serviceVery high service•High priceHigh price

Group DGroup D•Broad lineBroad line•Medium mfg. costMedium mfg. cost•Low serviceLow service•Low priceLow price

Group CGroup C•Moderate lineModerate line•Medium mfg. costMedium mfg. cost•Medium serviceMedium service•Medium priceMedium priceGroup BGroup B

•Full lineFull line•Low mfg. costLow mfg. cost•Good serviceGood service•Medium priceMedium price

Planet Health, Dialforhealth (Zydus), Planet Health, Dialforhealth (Zydus), Apollo chains/ GM & Ford Apollo chains/ GM & Ford (Automobiles)/ Haldiram (Mixtures)(Automobiles)/ Haldiram (Mixtures)

Planet Health, Dialforhealth (Zydus), Planet Health, Dialforhealth (Zydus), Apollo chains/ GM & Ford Apollo chains/ GM & Ford (Automobiles)/ Haldiram (Mixtures)(Automobiles)/ Haldiram (Mixtures)

GE, Whirlpool & GE, Whirlpool & SearsSears

GE, Whirlpool & GE, Whirlpool & SearsSears

ConfectionConfectionery shops ery shops (local), (local), Mother Mother Dairy (Milk Dairy (Milk variants)variants)

ConfectionConfectionery shops ery shops (local), (local), Mother Mother Dairy (Milk Dairy (Milk variants)variants)

V-mart, V-mart, Big Big BazarBazar

V-mart, V-mart, Big Big BazarBazar

Blue Line StrategyBlue Line Strategy****Prof. Chan Kim & Prof. Renee MouborgneProf. Chan Kim & Prof. Renee Mouborgne

Example: A highly competitive Example: A highly competitive

IndustryIndustry

The American The American Wine Industry Wine Industry

What the industry offers?What the industry offers?

Premium WinesPremium WinesPremium WinesPremium Wines Budget WinesBudget WinesBudget WinesBudget Wines

Massive ChoiceMassive ChoiceMassive ChoiceMassive Choice

Strategic GroupsStrategic Groups

American Wine American Wine IndustryIndustry

• 33rdrd largest in world: worth $20 billion largest in world: worth $20 billion

• Californian makes 66% - the rest is from Italy, Californian makes 66% - the rest is from Italy,

France, Spain, Chile, Argentina, AustraliaFrance, Spain, Chile, Argentina, Australia

• Exploding number of new wines – new Exploding number of new wines – new

vineyards in Oregon, Washington, New Yorkvineyards in Oregon, Washington, New York

• Customer base stagnantCustomer base stagnant

• 31st in the world in per capita consumption!31st in the world in per capita consumption!

American Wine American Wine IndustryIndustry

• Top 8 producers had 75% of the Top 8 producers had 75% of the market; 1600 had the remaining 25%market; 1600 had the remaining 25%

• $ millions spent in marketing – intense $ millions spent in marketing – intense competitioncompetition

• Sever price pressureSever price pressure

• The dominant growth strategy was The dominant growth strategy was towards premium wines – more towards premium wines – more complexity, better image, more complexity, better image, more prestigious vineyards, number of prestigious vineyards, number of medals won at wine festivals.medals won at wine festivals.

Very high

Off

eri

ng

Leve

l vs

. W

ine

Off

eri

ng

Leve

l vs

. W

ine

Dri

nkers

’ E

xp

ecta

tion

sD

rin

kers

’ E

xp

ecta

tion

s

High

Normal

Low

Very low

Non-existent

Abo

ve-t

he-li

ne-

mar

ketin

gA

ging

qua

lity

Vin

eyar

d pr

estig

e

and

lega

cyW

ine

com

plex

ity

Use

of c

ompl

ex

term

inol

ogy

and

dist

inct

ions

in w

ine

com

mun

icat

ion

Win

e ra

nge

Premium and Budget Premium and Budget WinesWines

Pri

ce

What people said …What people said …• “It is too confusing and complexIt is too confusing and complex”

– Wine descriptions and terminology

– The shopping experience (lack of ‘fun’)

– The lack of clear guidance on what to buy and drink

• Thus, non-influential for ‘non non-influential for ‘non customers’customers’ (the large majority of the US population who were not wine drinkers)

Yellow Tail created a Blue Yellow Tail created a Blue OceanOcean

PremiumPremium BudgetBudgetCreatingCreating

a Blue Oceana Blue Ocean

Yellow Tail StrategyYellow Tail Strategy• EliminatedEliminated:: Complex terminology and

distinctions, Above the line marketing

• ReducedReduced:: Wine complexity and Wine range

• RaisedRaised:: Price versus Budget Wines, Simplicity of retail store environment, Enthusiasm of Sales People

• CreatedCreated:: Easy drinking, Ease of selection, Sense of fun and adventure

Fun

and

adve

ntur

ous

Very high

High

Normal

Low

Very low

Non-existent

Abo

ve-t

he-li

ne-

mar

ketin

gA

ging

qua

lity

Eas

e of

sel

ectio

n

Eas

y dr

inki

ng

Vin

eyar

d pr

estig

e

and

lega

cyW

ine

com

plex

ity

Use

of c

ompl

ex

term

inol

ogy

and

dist

inct

ions

in w

ine

com

mun

icat

ion

Win

e ra

nge

Yellow Tail Value Yellow Tail Value CurveCurve

Pri

ce

Casella WinesCasella Wines: How they applied Blue Ocean How they applied Blue Ocean

Strategy?Strategy?• Casella Wines, an Australian wineryCasella Wines, an Australian winery, looked at the demand from drinkers of beer, spirits and ready-to-drink cocktails (3 times the US consumers of Wine)

• Redefined the wine industry with fun and adventure, nontraditional wine that is easy to drink.

• Offered and positioned as ‘Social drinkSocial drink’ accessible to everyone i.e. beer, cocktail and other drinkers of non-wine beverages.

• In 2 years, the fun and social drink (Yellow tail) emerged as the In 2 years, the fun and social drink (Yellow tail) emerged as the fastest growing brand in the history of Australian and US Wine fastest growing brand in the history of Australian and US Wine industries.industries.

• By Aug 2003, it was number 1 Red Wine in 730 ml bottle sold in US By Aug 2003, it was number 1 Red Wine in 730 ml bottle sold in US ahead of all the California labels with average annual sales of 4.5 ahead of all the California labels with average annual sales of 4.5 million cases.million cases.

• Company found that, US drinkers reject wine because of complicated US drinkers reject wine because of complicated taste and is difficult to appreciate. Beer and ready-to-drink cocktails taste and is difficult to appreciate. Beer and ready-to-drink cocktails were much sweeterwere much sweeter.

• They offered wine which was soft in taste and easily available like beer wine which was soft in taste and easily available like beer

and ready-to-drink cocktailsand ready-to-drink cocktails. They introduced primary flavors and primary flavors and

fruits flavors which provide sweet taste and customer feel fresher and fruits flavors which provide sweet taste and customer feel fresher and

would like to enjoy another glass of wine without thinkingwould like to enjoy another glass of wine without thinking.

ResultsResults• No 1 imported wine (outsells France

and Italy)

• Fastest growing wine in the history of the USA industry:

– New consumers of wine

– Jug drinkers trade up

– Premium wine drinkers trade down

• Industry criticizes them at first

• New wine gives it a “best buy” for value; New wine gives it a “best buy” for value; winning wine awards.winning wine awards.

Conventional LogicConventional Logic Blue Ocean LogicBlue Ocean Logic

IndustryIndustryAssumptionAssumption

Industry conditions are Industry conditions are givengiven

Industry condition can be Industry condition can be shaped.shaped.

SummarySummary

Strategic Strategic FocusFocus

Build competitive Build competitive advantages to beat the advantages to beat the competition.competition.

Create an Create an equity and

buyer value to dominate to dominate

and sustain the market.and sustain the market.CustomersCustomers

• Retain and expand the Retain and expand the

customer base through customer base through

further segmentation and further segmentation and

customization.customization.

• Focus on existing Focus on existing

customer differences.customer differences.

• Go for the mass of Go for the mass of

buyers buyers

• Focus onFocus on key customer key customer

valuevalue

Conventional LogicConventional Logic Blue Ocean LogicBlue Ocean Logic

SummarySummary

Assets &Assets &CapabilitiesCapabilities

Think in terms of a Think in terms of a

company’s existing company’s existing

assets and capabilities.assets and capabilities.

Build on what it has.Build on what it has.

Think free from a Think free from a

company’s existing assets company’s existing assets

and capabilities.and capabilities.

Ask, what if we start Ask, what if we start

anew?anew?Product/Product/ServiceServiceofferingsofferings

Think in terms of Think in terms of

products/services offered products/services offered

by the industry. Seek to by the industry. Seek to

maximize the value out maximize the value out

of these offerings.of these offerings.

Think in terms of buyers’ Think in terms of buyers’

solution even if that solution even if that

overrule the industry.overrule the industry. Seek Seek

to solve buyers’ major to solve buyers’ major

problems/compromises in problems/compromises in

using the products/services using the products/services

of the industry.of the industry.

What factors should What factors should be eliminated that be eliminated that

the industry has the industry has taken for granted?taken for granted?

EliminateEliminate

What factors should What factors should be reduced well be reduced well

below the industry below the industry standard?standard?

ReduceReduce

What factors should What factors should be created that the be created that the industry has never industry has never

offered?offered?

CreateCreate

What factors should What factors should be raised well beyond be raised well beyond

the industry the industry standard?standard?

RaiseRaise

Four Actions to create a Blue Four Actions to create a Blue OceanOcean

Market Structure & Market Structure &

StrategiesStrategies

MarketMarketLeaderLeader

MarketMarketChallengerChallenger

MarketMarketFollowerFollower

• Expand MarketExpand Market• Expand MarketExpand Market

• Defend Market Defend Market ShareShare

• Defend Market Defend Market ShareShare• Expand Market Expand Market ShareShare

• Expand Market Expand Market ShareShare

Attack Attack leaderleaderAttack Attack leaderleader

ImitatImitateeImitatImitatee

MarketMarketnichernicher

SpecialSpecial

izeize

SpecialSpecial

izeize

Microsoft Microsoft (softwares), Gillette (softwares), Gillette (razor blades), (razor blades), LG (consumer LG (consumer electronics)electronics)

Microsoft Microsoft (softwares), Gillette (softwares), Gillette (razor blades), (razor blades), LG (consumer LG (consumer electronics)electronics)

Kmart – Wal-Kmart – Wal-Mart, Nokia – Mart, Nokia – Motorola, Pepsi - Motorola, Pepsi - Coca-ColaCoca-Cola

Kmart – Wal-Kmart – Wal-Mart, Nokia – Mart, Nokia – Motorola, Pepsi - Motorola, Pepsi - Coca-ColaCoca-Cola

BMW, BMW, Tanisq, Tanisq, Kingfisher Kingfisher AirlinesAirlines

BMW, BMW, Tanisq, Tanisq, Kingfisher Kingfisher AirlinesAirlines

Bigbazar – Bigbazar – Superbazar Superbazar (Retail), (Retail), Godrej-Godrej-Whirlpool Whirlpool (refrigerator), (refrigerator), HMT-Titan HMT-Titan

Bigbazar – Bigbazar – Superbazar Superbazar (Retail), (Retail), Godrej-Godrej-Whirlpool Whirlpool (refrigerator), (refrigerator), HMT-Titan HMT-Titan

Market LeaderFirm with the Largest Firm with the Largest

Market ShareMarket Share

Market LeaderFirm with the Largest Firm with the Largest

Market ShareMarket Share

• Expand Total MarketExpand Total Market• Protect Market ShareProtect Market Share• Expand Market ShareExpand Market Share

• Expand Total MarketExpand Total Market• Protect Market ShareProtect Market Share• Expand Market ShareExpand Market Share

Competitive PositionsCompetitive PositionsCompetitive PositionsCompetitive Positions

Market ChallengerRunner-Up Firms thatRunner-Up Firms that

Fight Hard to Increase Fight Hard to Increase Market ShareMarket Share

Market ChallengerRunner-Up Firms thatRunner-Up Firms that

Fight Hard to Increase Fight Hard to Increase Market ShareMarket Share

Market FollowersRunner-Up Firms that WantRunner-Up Firms that Wantto Hold Their Share Withoutto Hold Their Share Without

Rocking the BoatRocking the Boat

Market FollowersRunner-Up Firms that WantRunner-Up Firms that Wantto Hold Their Share Withoutto Hold Their Share Without

Rocking the BoatRocking the Boat

Market NichersFirms that Serve SmallFirms that Serve SmallSegments Not BeingSegments Not Being

Pursued by Other FirmsPursued by Other Firms

Market NichersFirms that Serve SmallFirms that Serve SmallSegments Not BeingSegments Not Being

Pursued by Other FirmsPursued by Other Firms

Follow CloselyFollow CloselyFollow at a DistanceFollow at a Distance

Follow CloselyFollow CloselyFollow at a DistanceFollow at a Distance

By Customer, Market,By Customer, Market,Quality-Price, ServiceQuality-Price, Service

Multiple NichingMultiple Niching

By Customer, Market,By Customer, Market,Quality-Price, ServiceQuality-Price, Service

Multiple NichingMultiple Niching

Full Frontal AttackFull Frontal AttackIndirect AttackIndirect Attack

Competitive Competitive PositionsPositions

Competitive Competitive StrategiesStrategies

Strategies for Market LeadersStrategies for Market Leaders

Market Market LeadershipLeadershipMarket Market

LeadershipLeadership

Expansion of theExpansion of the Overall marketOverall market

Expansion of theExpansion of the Overall marketOverall market

Defending theDefending theExisting Existing

market sharemarket share

Defending theDefending theExisting Existing

market sharemarket share

Expansion of theExpansion of theCurrent Current

market sharemarket share

Expansion of theExpansion of theCurrent Current

market sharemarket share

• Targeting customer groups

that currently are non-users

• Identifying new uses for

product/service

• Increasing usage rates

• Targeting customer groups

that currently are non-users

• Identifying new uses for

product/service

• Increasing usage rates

• Strong market positioning• Development & refinement of competitive advantages• Continuous product & process innovation• proactive• Heavy promotions• Strong customer relations• Strong channel relations

• Strong market positioning• Development & refinement of competitive advantages• Continuous product & process innovation• proactive• Heavy promotions• Strong customer relations• Strong channel relations

• Heavy promotions• Improved distribution• Price incentives• product portfolio expansion• Mergers & Takeovers• Geographic expansion• Distribution expansion

• Heavy promotions• Improved distribution• Price incentives• product portfolio expansion• Mergers & Takeovers• Geographic expansion• Distribution expansion

Stage 1: Expansion of Overall Stage 1: Expansion of Overall MarketMarket• Strategy: Search for new usersSearch for new users

HONDA’s Strategies for Indian MarketsHONDA’s Strategies for Indian MarketsYear Year & & StrategyStrategy

Target Target CustomersCustomers

Offer Offer && promotional promotional

emphasisemphasis

1960s-1970s:1960s-1970s:Developed range of Developed range of small-economic-small-economic-light weight light weight motorcyclesmotorcycles

Honda increased its Honda increased its sales by targeting sales by targeting groups that groups that traditionally had traditionally had never bought never bought motorcyclesmotorcycles..

heavy advertising heavy advertising giving emphasis to giving emphasis to – – ‘convenience’ ‘convenience’ andand ‘style’‘style’

1980s:1980s:

identified potential identified potential

for selling for selling

motorcycles – motorcycles –

delivering a fashion delivering a fashion

symbol – ‘styling’ symbol – ‘styling’

become relevant – become relevant –

repositioning.repositioning.

middle-aged middle-aged

executive marketexecutive market

• Offer: Series of Offer: Series of

larger motorcycle. larger motorcycle.

• Supported by Supported by

heavy advertising – heavy advertising –

emphasis on emphasis on

youthful valuesyouthful values..

Stage 2: Expansion of Overall Stage 2: Expansion of Overall MarketMarket

• Strategy: Strategy: New UsesNew Uses

Company Initial uses Reformulated/ redefined uses

Du Pont’s-

Nylon

used as synthetic used as synthetic

fibre for fibre for

parachutesparachutes

used for shirts, used for shirts,

tyres, carpets, tyres, carpets,

various industrial various industrial

and engineering and engineering

usesuses

Teflon –

lubricants

and Oils

used as high used as high

performance performance

lubricant for lubricant for

American space American space

programmeprogramme

•for applications for applications

in cooking and in cooking and

motor oils; motor oils;

•protection for protection for

fabrics, cloths and fabrics, cloths and

carpets.carpets.

Stage 3: Expansion of Overall Stage 3: Expansion of Overall MarketMarket

• Strategies: Greater usage levelsGreater usage levels

(existing users – increasing usage rates)(existing users – increasing usage rates)* Procter & Gamble (P&G) – * Procter & Gamble (P&G) –

Head & ShouldersHead & Shoulders Shampoo Shampoo

• Basis of promotion: Basis of promotion: two applicationstwo applications

were more effective than were more effective than oneone..

• Preity Zinta – Brand AmbassadorPreity Zinta – Brand Ambassador

• 9 billion – shampoo market9 billion – shampoo market

Procter & Gamble (P&G) – Procter & Gamble (P&G) – Head & Shoulders Head & Shoulders ShampooShampoo

1. The ad opens with a 1. The ad opens with a product shot of a Head product shot of a Head & Shoulders shampoo & Shoulders shampoo bottle.bottle.

1. The ad opens with a 1. The ad opens with a product shot of a Head product shot of a Head & Shoulders shampoo & Shoulders shampoo bottle.bottle.

2. In the next scene, Preity Zinta 2. In the next scene, Preity Zinta is shown washing her hair with is shown washing her hair with the shampoo.the shampoo.

2. In the next scene, Preity Zinta 2. In the next scene, Preity Zinta is shown washing her hair with is shown washing her hair with the shampoo.the shampoo.

3. Feeling 3. Feeling her freshly her freshly washed hair washed hair Preity Preity comments, comments, ""ItneItne soft soft baalbaal, , kya aap kya aap nahin chahte nahin chahte yeh ehsas yeh ehsas din bhar din bhar raherahe?"?"

3. Feeling 3. Feeling her freshly her freshly washed hair washed hair Preity Preity comments, comments, ""ItneItne soft soft baalbaal, , kya aap kya aap nahin chahte nahin chahte yeh ehsas yeh ehsas din bhar din bhar raherahe?"?"

4. Walking before the 4. Walking before the photographers, the actress photographers, the actress showing off her hair. showing off her hair. ""PaaiyePaaiye dandruff free soft dandruff free soft baalbaal, , dono ek saathdono ek saath......

4. Walking before the 4. Walking before the photographers, the actress photographers, the actress showing off her hair. showing off her hair. ""PaaiyePaaiye dandruff free soft dandruff free soft baalbaal, , dono ek saathdono ek saath......

5. ...Head & 5. ...Head & Shoulders Shoulders smooth and smooth and silky silky sese. . YehYeh dandruff dandruff hundred hundred percent percent hataye hataye auraur moisturise moisturise bhi karenbhi karen, , baal rahebaal rahe soft soft subah se raat subah se raat taktak."."

5. ...Head & 5. ...Head & Shoulders Shoulders smooth and smooth and silky silky sese. . YehYeh dandruff dandruff hundred hundred percent percent hataye hataye auraur moisturise moisturise bhi karenbhi karen, , baal rahebaal rahe soft soft subah se raat subah se raat taktak."." 6. It is work 6. It is work

time and the time and the

star's co-actor star's co-actor

too busy too busy

admiring the admiring the

former's hair, former's hair,

fails to hear fails to hear

the director the director

saying, "Cut."saying, "Cut."

6. It is work 6. It is work

time and the time and the

star's co-actor star's co-actor

too busy too busy

admiring the admiring the

former's hair, former's hair,

fails to hear fails to hear

the director the director

saying, "Cut."saying, "Cut."

7. Seeing the two actors 7. Seeing the two actors carrying carrying on with the scene, the on with the scene, the director director has to once again has to once again scream, "Cut" and give scream, "Cut" and give them a jolt.them a jolt.

7. Seeing the two actors 7. Seeing the two actors carrying carrying on with the scene, the on with the scene, the director director has to once again has to once again scream, "Cut" and give scream, "Cut" and give them a jolt.them a jolt.

8. At this the 8. At this the two suddenly two suddenly wake up and wake up and smile smile sheepishly - sheepishly - "Head & "Head & Shoulders Shoulders smooth and smooth and silky, dandruff silky, dandruff free soft free soft baalbaal, , subah se raat subah se raat taktak."."

8. At this the 8. At this the two suddenly two suddenly wake up and wake up and smile smile sheepishly - sheepishly - "Head & "Head & Shoulders Shoulders smooth and smooth and silky, dandruff silky, dandruff free soft free soft baalbaal, , subah se raat subah se raat taktak."."

Strategies of Market Leader: 1. Expanding the total market1. Expanding the total market

• New customers: New customers: those who might have use those who might have use

it but occassionally (it but occassionally (market-penetration market-penetration

strategy – chocolatesstrategy – chocolates); those who had never ); those who had never

used it (used it (new market segment strategy – new market segment strategy –

filtered vs. instant coffee ‘Nescafe’filtered vs. instant coffee ‘Nescafe’); or ); or

new geographical locations (new geographical locations (geographical-geographical-

expansion strategy- McDonald’sexpansion strategy- McDonald’s).).

• More or additional usage: More or additional usage: soft drinks and soft drinks and

snacks markets – snacks markets – identify opportunities/ identify opportunities/

‘gaps’‘gaps’ in HHs schedule. in HHs schedule.

Strategies of Market Leader: 2. Defending the Market Share2. Defending the Market Share Caterpillar Caterpillar become leader in the construction-equipment become leader in the construction-equipment

market by wider service, consistent performance and market by wider service, consistent performance and premium pricing being challenged by players like Komatsu, premium pricing being challenged by players like Komatsu, Hitachi and many others. Co. adopted following strategiesHitachi and many others. Co. adopted following strategies::

• Consistent performanceConsistent performance: high quality outputs every time, : high quality outputs every time, reliability & durability, identifying buyer considerations/ reliability & durability, identifying buyer considerations/ preferences etc.preferences etc.

• Extensive Extensive && efficient dealership network efficient dealership network: larger : larger penetration to serve buyer at all possible market points.penetration to serve buyer at all possible market points.

• Superior serviceSuperior service: enhancing the concept of product/service : enhancing the concept of product/service over time both by capturing the market expectations and over time both by capturing the market expectations and analyzing the market trends.analyzing the market trends.

• Full-line strategyFull-line strategy: provide wide range of products/ services : provide wide range of products/ services to provide a one-stop shopping.to provide a one-stop shopping.

• FeedbacksFeedbacks: prompt responses at regular intervals to gauge : prompt responses at regular intervals to gauge the direction of performance.the direction of performance.

Strategies of Market Leader: 2. Defending the Market Share2. Defending the Market Share

cont… cont…

Strategies of Market Leader: 2. Defending the Market Share2. Defending the Market Share

cont… cont…

Satisfying Satisfying

customer customer needsneeds

Satisfying Satisfying

customer customer needsneeds

Defending market shareDefending market shareDefending market shareDefending market share

RESPONSIVRESPONSIV

E E

MARKETINMARKETIN

GG

Concentrate Concentrate on on Stated/expliciStated/explicit needs and t needs and serve serve accordinglyaccordingly

RESPONSIVRESPONSIV

E E

MARKETINMARKETIN

GG

Concentrate Concentrate on on Stated/expliciStated/explicit needs and t needs and serve serve accordinglyaccordingly

ANTICIPATED ANTICIPATED MARKETINGMARKETING

Predicting the Predicting the future probable future probable needs of the needs of the customerscustomers

ANTICIPATED ANTICIPATED MARKETINGMARKETING

Predicting the Predicting the future probable future probable needs of the needs of the customerscustomers

CREATIVECREATIVEMARKETINGMARKETING

Discovers Discovers && produces pdt./ produces pdt./ service service solutions, to solutions, to which which customer customer likely to likely to response response positivelypositively

CREATIVECREATIVEMARKETINGMARKETING

Discovers Discovers && produces pdt./ produces pdt./ service service solutions, to solutions, to which which customer customer likely to likely to response response positivelypositively

e.g. Sony e.g. Sony introduced introduced many pdts. likemany pdts. like Walkmans, VCRs, Videocameras, and CDs.

e.g. Sony e.g. Sony introduced introduced many pdts. likemany pdts. like Walkmans, VCRs, Videocameras, and CDs.

e.g. HLLs toothpastes based on e.g. HLLs toothpastes based on research on research on herbal, salts and other natural ingredients, & , & Nokia Nokia mobile phones etc.

e.g. HLLs toothpastes based on e.g. HLLs toothpastes based on research on research on herbal, salts and other natural ingredients, & , & Nokia Nokia mobile phones etc.

e.g. pdt. e.g. pdt. categories like categories like milk, commodities like commodities like sugar, salt etc.

e.g. pdt. e.g. pdt. categories like categories like milk, commodities like commodities like sugar, salt etc.

Defense StrategiesDefense Strategies Market leader uses the strategies to:

• reduce the probability of present or reduce the probability of present or

future attack.future attack.

• divert attacks to less threatening divert attacks to less threatening

areas.areas.

• lessen the intensity of competition.lessen the intensity of competition.

Defense Strategies

AttackerAttacker

(3)(3) PreemptivePreemptivedefensedefense

(4)(4) Counter-Counter-offensiveoffensivedefensedefense Defender

(1)Positiondefense

(5)Mobiledefense

(2) Flank defense

(6) Contraction(6) Contractiondefensedefense

Six Defensive StrategiesSix Defensive Strategies• Position Defense: building superior brand power and building superior brand power and

making the name unique in the market. making the name unique in the market. e.g. Nescafé.• Flank Defense: to protect a weak front or use as to protect a weak front or use as

counterattack. counterattack. e.g. HLL’s Surf Excel powder – price hike

from Rs. 19 to Rs. 20 to consolidate the position in detergent market specially against small players in the Indian market- protect and leverage brand identity.

• Preemptive Defense: Attack before the competitor Attack before the competitor starts its offense. starts its offense. e.g. ICICI Bank’s ATM networks and core banking across branches keep their local and regional banks competition on check, and , and Microsoft’s ‘preannouncementpreannouncement’ approach on new software launch in future – force smaller firms to concentrate on other segments.

Six Defensive StrategiesSix Defensive Strategies cont…cont…

• Counter-offensive Defense: Attack the competitor from Attack the competitor from front or protect the weak front (Flank attack). front or protect the weak front (Flank attack). e.g. US Automobile companies often launch a counteroffensive attack against Japanese counterparts in their markets for the disturbances that had been created by them in US market.

• Mobile Defense: Market leader stretches/ leverage its Market leader stretches/ leverage its strengths into new sales territories – can serve for future strengths into new sales territories – can serve for future centers for defense & offense – centers for defense & offense – market broadeningmarket broadening like Reliance from Petroleum into Energy (using R&D for Oil, coal, hydroelectric and chemicals), and and market market diversificationdiversification like ITC from Cigarettes into e-choupals, garments etc.

• Contraction Defense: When it is difficult to defend the old When it is difficult to defend the old territories, leader go for ‘territories, leader go for ‘planned contractionplanned contraction’ (’ (strategic withdrawal) – ) – giving up weaker/ unprofitable territories and giving up weaker/ unprofitable territories and reassigning resources to stronger territoriesreassigning resources to stronger territories - like US companies relocating their operations from Europe to emerging economies like India & China.

Major Strategic Objectives- Major Strategic Objectives- Market Challenger Market Challenger

•Firms attack the leader to grab Firms attack the leader to grab further market sharefurther market share - South Korean companies like LGLG (TV and (TV and AC markets), AC markets), HyundaiHyundai, , SamsungSamsung etc.etc.

•Out-innovate the leader across Out-innovate the leader across the segmentsthe segments - XeroxXerox took copier took copier market from market from 3M3M by providing better by providing better copier solutions, later copier solutions, later CanonCanon grab grab share of Xerox by introducing desk share of Xerox by introducing desk copiers.copiers.

Attack StrategiesAttack Strategies

AttackerAttackerDefenderDefender

(3) Encirclement Encirclement attackattack

(4) Bypass attackBypass attack

(2) Flank Flank attackattack

(5) Guerilla Guerilla attackattack

(1) Frontal Frontal attackattack

Attacking StrategiesAttacking Strategies• Frontal Attack: attacker concentrate on attacker concentrate on

leader’s product ranges, advertising, price & leader’s product ranges, advertising, price &

distribution like distribution like Pepsi-Coca Cola, HLL-P&G..

• Flank Attack: Hit competitor’s weak front Hit competitor’s weak front

at two strategic dimensions – at two strategic dimensions – geographic

and and segmental. Geographical like like IBM’s rival Honeywell set-up sales branches in smaller cities, that were not targeted by IBM. Segmental like like Japanese automobile co.s did against US auto makers by developing fuel-efficient cars.

Attacking StrategiesAttacking Strategies cont… cont…• Bypass Attack: Indirect assault strategy – Indirect assault strategy – bypass bypass

the rival and attack the easier markets to the rival and attack the easier markets to broaden the resource base and share the riskbroaden the resource base and share the risk. . Can be done through:Can be done through:– Diversifying into unrelated product categories– Diversifying into new geographical areas– Launch new technologies to enhance existing products

e.g. e.g. Pepsi used bypass strategy against Coke by:by:– Purchasing the Purchasing the Orange juice giant ‘ ‘TropicanaTropicana’ for ’ for

$3.3 billion in 1998$3.3 billion in 1998 which is double the market which is double the market share of share of Coca Cola’s ‘ ‘Minute MaidMinute Maid’.’.

– Acquired Acquired The Quaker Oats Co. for for $14 billion in $14 billion in 20002000 – ‘ – ‘GatoradeGatorade’ thirst quenchers (health drink) ’ thirst quenchers (health drink) captured huge share from captured huge share from Coca Cola’s ‘ ‘PoweradePowerade’.’.

Attacking Strategies Attacking Strategies cont…cont…

• Encirclement Attack: Capture large proportion Capture large proportion

of leader’s share by launching massive of leader’s share by launching massive

offensive attack on several frontsoffensive attack on several fronts. Use when . Use when

challenger commands superior resources/ coverage. challenger commands superior resources/ coverage. Mohan’s against Kelloggs Cornflakes in India based on price points and distribution coverage – from groceries to organised chains.

• Guerrilla Attack: Launching small and irregular Launching small and irregular attacks to make competitor tired – to secure attacks to make competitor tired – to secure permanent foothold in the marketpermanent foothold in the market – by both – by both conventional & unconventional means like price conventional & unconventional means like price cuts, intensive promotions etc. cuts, intensive promotions etc. e.g. small Generic players against the Ethical drug manufacturers.

Specific Attack StrategiesSpecific Attack Strategies• Price-discount Price-discount – – Super Bazar vs. Big Bazar daily Super Bazar vs. Big Bazar daily

price offers across categories.price offers across categories.• Cheaper goods/ services Cheaper goods/ services (low quality) – Nirma, (low quality) – Nirma,

SpiceJet & IndiGo. SpiceJet & IndiGo. • Value priced goods/services Value priced goods/services – Nirma’s Nima – Nirma’s Nima

soap, Subhiksha, Air Deccan.soap, Subhiksha, Air Deccan.• Prestige goodsPrestige goods – (high quality-premium price) – – (high quality-premium price) –

Samsung India launch Plasma TVs to attack the Samsung India launch Plasma TVs to attack the Sony’s markets.Sony’s markets.

• Product proliferation Product proliferation (large pdt. variety – more (large pdt. variety – more choice) - Asian Paints against ICI paints.choice) - Asian Paints against ICI paints.

• Product innovation Product innovation – 3M entered new markets – 3M entered new markets through breakthrough technologies into their through breakthrough technologies into their product ranges.product ranges.

Specific Attack StrategiesSpecific Attack Strategies cont…cont…

• Improved servicesImproved services – ICICI Bank offers better – ICICI Bank offers better

ATM and core Banking coverage against HSBC ATM and core Banking coverage against HSBC

in India.in India.

• Distribution innovationDistribution innovation – Dell vs. other – Dell vs. other

traditional rivals like Compaq, HP, and IBM.traditional rivals like Compaq, HP, and IBM.

• Reduced Manufacturing costReduced Manufacturing cost – US – US

automobile co.s operations in India to sustain automobile co.s operations in India to sustain

their share in developed markets like US, their share in developed markets like US,

Europe.Europe.

• Intensive advertising promotionIntensive advertising promotion – Pepsi & – Pepsi &

Coca Cola wars.Coca Cola wars.

Market Follower StrategiesMarket Follower StrategiesFour broad strategies adopted are:

• Counterfeiter:Counterfeiter: Duplicated leader’s products and sell in the ‘parallel’ or grey market like general like general generic drugs, China’s toy manufacturersgeneric drugs, China’s toy manufacturers.

• Cloner:Cloner: Use the leader’s products, name, packaging with slight variations like electric fittings, pipe like electric fittings, pipe fittings at local markets.fittings at local markets.

• Imitator:Imitator: copy few things but also maintains differentiation in packaging, promotions, & pricing like Domino Pizza vs. Pizza Hut.like Domino Pizza vs. Pizza Hut.

• Adapter:Adapter: Adapt with better offer or improved version of leader’s products – launch in the same or different markets – Kissan vs. Maggi’s Tomato Kissan vs. Maggi’s Tomato KetchupKetchup.

““Nichemanship”Nichemanship”• End-userEnd-user specialist specialist (price premiums (price premiums

earned by retailers like Pantaloons and earned by retailers like Pantaloons and similar others)similar others)

• Vertical-level Vertical-level specialist specialist (chemical or (chemical or drug companies)drug companies)

• Customer-sizeCustomer-size specialist specialist (M80 mopeds (M80 mopeds in rural India being neglected by big in rural India being neglected by big players)players)

• Specific-customerSpecific-customer specialist specialist (BHEL, (BHEL, Crompton Ltd)Crompton Ltd)

• GeographicGeographic specialist specialist (Wagh Wakri tea (Wagh Wakri tea in Gujarat)in Gujarat)

“ “Nichemanship”Nichemanship”

cont… cont…• Product or product-lineProduct or product-line specialist specialist (Levi’s, Peter (Levi’s, Peter

England, Parker)England, Parker)

• Product-feature Product-feature specialistspecialist (few Insurance Co. only (few Insurance Co. only

cover Marine insurance)cover Marine insurance)

• Job-shopJob-shop specialist (customised) specialist (customised) (Dell, 7-Eleven’s)(Dell, 7-Eleven’s)

• Quality-price Quality-price specialistspecialist (HP, Apple – high quality & (HP, Apple – high quality &

high price computer systems & peripherals)high price computer systems & peripherals)

• ServiceService specialist specialist (Banks having -evening branches)(Banks having -evening branches)

• ChannelChannel specialist specialist (Nike’s & Addidas exclusive (Nike’s & Addidas exclusive

outlets)outlets)

Balance b/w Balance b/w Customers Customers && CompetitorsCompetitors

CompetitionCompetitionCustomerCustomer

+ Fighter + Fighter orientationorientation+ Alert against + Alert against future movesfuture moves+ Exploit + Exploit weaknessesweaknesses - - ReactivReactivee

+ Identify opportunities+ Identify opportunities+ Long-run profit+ Long-run profit

+ Emerging needs & groups+ Emerging needs & groups

Developing Competitive Marketing Strategies

Overall CostOverall CostLeadershipLeadership

Overall CostOverall CostLeadershipLeadership

DifferentiationDifferentiationDifferentiationDifferentiation

FocusFocusFocusFocus

Middle ofMiddle ofthe Roadthe RoadMiddle ofMiddle ofthe Roadthe Road

Basic Competitive StrategiesBasic Competitive StrategiesBasic Competitive StrategiesBasic Competitive Strategies

Developing Competitive Marketing Developing Competitive Marketing StrategiesStrategies

Balancing Customer and Balancing Customer and Competitor OrientationsCompetitor Orientations

Balancing Customer and Balancing Customer and Competitor OrientationsCompetitor Orientations

ProductProductOrientationOrientation

ProductProductOrientationOrientation

CompetitorCompetitorOrientationOrientationCompetitorCompetitorOrientationOrientation

CustomerCustomerOrientationOrientationCustomerCustomer

OrientationOrientation

MarketMarketOrientationOrientation

MarketMarketOrientationOrientation

Com

peti

tion

-Cen

tere

dC

om

peti

tion

-Cen

tere

dC

om

peti

tion

-Cen

tere

dC

om

peti

tion

-Cen

tere

d NoNoNoNo YesYesYesYes

Customer-CenteredCustomer-CenteredCustomer-CenteredCustomer-Centered

NoNoNoNo

YesYesYesYes

SWOT ANALYSISSWOT ANALYSIS