Strategic Planning Chapters 8: Competition
Dec 24, 2015
Strategic Planning
Chapters 8: Competition
The Marketing Plan
Marketing Strategy
Product
Promotion
Distribution
Price
Marketing Mix
Business Mission Statement
Objectives
Situation or SWOT Analysis
Target Market Strategy
ImplementationEvaluation
Control
Strategy Formulation - Competitive Advantage
• The set of unique features of a company and its
products that are perceived by the target market
as significant and superior to the competition.• Types:
– Cost Competitive Advantage (bottom line)– Differential (remember differentiation? Must be
relative to the competition)– Niche (doing one thing well – concentrated approach
Cost Competitive Advantage
Experience CurvesExperience Curves
Efficient LaborEfficient Labor
No-frills ProductsNo-frills Products
Government SubsidiesGovernment Subsidies
Product DesignProduct Design
ReengineeringReengineering
Production InnovationsProduction Innovations
New Delivery MethodsNew Delivery Methods
Differentiation (product/service) Competitive Advantage
• Advantage achieved when a firm provides
something that is unique and valuable to
buyers beyond simply offering a lower price
than the competition.• Brand name, dealer network, product
reliability, service, image are all possibilities
Niche Competitive Advantage
• Advantage achieved when a firm seeks to
target and effectively serve a small segment
of the market.– Used by small companies with limited resources
– May be used in a limited geographic market
– Product line may be focused on a specific product line
Strategic Alternatives
Present Product New Product
New Market
MarketPenetration
MarketDevelopment
ProductDevelopment
Diversification
Present Market
Market Penetration
• Seeks a larger market share in a market in which the organization already has an offering
• Increase buyers usage or consumption rates
• Attract the competition’s buyers
• Stimulating product trial
Market Development
• Introducing its existing offerings to markets other than those that the organization is currently serving
• Competitor SW and retaliation potential• Modification of basic offer• Different distribution outlets• Exporting, licensing, joint venture,
alliances and direct investments
Product Development
• Creating new offerings for existing markets
• Product innovation (gillette)
• Product augmentation (internet access)
• Product line extension (lite beer, low carb)
Diversification
• Development or acquisition of offerings new to the organization and introducing those offerings to publics not previously served by the organization
(consolidation in financial services)
Porter’s Five Forces(Group exercise: Analyze for plan after next slide)
Potential Entrants(Threat ofMobility)
Buyers(Buyer power)
IndustryCompetitors
(Segment rivalry)
Suppliers(Supplier power)
Substitutes(Threats ofsubstitutes)
The Industry Concept
• Number of sellers & degree of differentiation– Pure monopoly, oligopoly, monopolistic
competition (restaurant), pure competition (airline?)
• Entry, mobility and exist barriers (patents, tariffs, labeling)
• Costs• Degree of vertical integration (Good or bad?)• Degree of globalization
Analyzing Competitors: Things to consider
• Strategies – the strategic group (similarities in prod lines and attributes)
• Objectives (short or long term player)• Strengths and Weaknesses (p. 155)
– Dominant, strong, favorable, tenable, weak, nonviable
– GROUP EXERCISE: ID in your plan
• Reaction Patterns: Price Wars
If you are a market leader…
• Expand the total market– New users, new uses, more usage
• Defend the market share – the art of war• Defense strategies
– Position defense (brand power), flank defense (new products/advert), preemptive defense (envelop), counteroffensive defense (subsidize products), mobile defense (diversify)
• Expand market share
If you are a market challenger…
• Who are you targeting and what do you want to accomplish?
• Strategies– Frontal attack (matching), flank attack
(geography/micropolis), encirclement attack, bypass attack (buy big), guerrilla attack (internet)
• Specific strategies p.163– Price discount, cheaper goods, prestige goods,
product proliferation, product innovation, improved service, distribution innovation, cost reductions, promotion
If you are the market follower…
• Strategies– Counterfeiter, cloner, imitator, adapter
If you are the market niche(166)• End user specialist• Vertical level specialist• Customer size specialist• Specific customer specialist• Geographic specialist• Product/Product line specialist• Product feature specialist• Quality price specialist• Service specialist• Channel specialist
Final Group exercise
• Identify your place in the market (leader, challenger, follower)
• Match specific strategies to– Your organization as a whole.– Your specific product lines or business units.