Marketing Management Theocharis Katranis Fall Semester 2014 1
Today s Lecture 1. We will discuss the competitive forces in a market 2. We will identify and analyse competitors 3. We will elaborate different competitive Strategies 4. We will explain the levels of market segmentation 5. We will describe market targeting 6. We will discuss differentiation and positioning strategies 7. We will explain repositioning 8. We will discuss differentiation strategies and the purpose of positioning 2
Dealing with competition The FIVE Competitive Forces 1. Industry Competitors (Many competitors in a market segment) 2. Potential Entrants (High Entry Barriers & Low Exit Barriers) 3. Substitutes (Potential Substitutes) 4. Buyers (Strong and/or growing bargaining power) 5. Suppliers (Raise Prices or Reduce quantity Supplied i.e. Oil Co) Marketing Management Theocharis Katranis, MBA, Fall Semester 2014 3
Dealing with competition Identifying Competitors 1. Identifying Competitors within an Industry (An industry is a group of firms that offer a product or class of products which are close substitutes for one another) 2. Identifying Competitors within a market (We define competitors as companies that satisfy the same customer need i.e. Word processing package Vs Pencils, Pens, Typewriters) Marketing Management Theocharis Katranis, MBA, Fall Semester 2014 4
Dealing with competition Analysing Competitors 1. Competitors Strategies 2. Competitors Objectives (What is each competitor seeking in the market place? / What drives each competitor s behaviour?) 3. Competitors Strengths and Weaknesses (Market Share, Quality of Products, Pricing, Distribution, Product Availability, Technical Assistance, Selling Staff) 4. Selecting Competitors (Strong Vs Weak, Close Vs Distant, Good Vs Bad play with the industry s rules) 5. Selecting Customers (Which to lose and which to retain) Marketing Management Theocharis Katranis, MBA, Fall Semester 2014 5
Competitive Strategies FOR: 1. Market Leaders 2. Market Challenger 3. Market Follower 4. Market Nichers Marketing Management Theocharis Katranis, MBA, Fall Semester 2014 6
Competitive Strategies for Market Leaders 1.1 First Strategy to expand Total Market Demand 1.2 Second Strategy to Protect its current market share through good defensive and offensive actions. 1.3 Third Strategy to increase its market share Marketing Management Theocharis Katranis, MBA, Fall Semester 2014 7
Competitive Strategies for Market Leaders 1.1 First Strategy to expand Total Market Demand 1.1.1 New Customers i.e New Users, New Areas 1.1.2 More Usage i.e. Kellogg s Corn Flakes Marketing Management Theocharis Katranis, MBA, Fall Semester 2014 8
Competitive Strategies for Market Leaders 1.2 Second Strategy to Protect its current market share through good defensive and offensive actions 1.2.1. Continuous Innovation i.e. To recognise future needs of its customers and create appropriate products before its competitors 1.2.2. Strong Product Positioning in its customers minds 1.2.3. Flank Defence Strategy i.e. To introduce New products or brands, to Reposition Existing Products, to Launch promotional activities Marketing Management Theocharis Katranis, MBA, Fall Semester 2014 9
Competitive Strategies for Market Leaders 1.2.4. Pre-emptive defence i.e. Hitting one competitor here, another there keep everyone off balance. 1.2.5. Counteroffensive defence i.e. The market leader fight back an attack with low prices, Product Innovation, and may impose Laws and Regulations through politicians to make it difficult for potential competitors to enter the market. 10
Competitive Strategies for Market Leaders 1.2.6. A mobile defense is intended to create a moving target that is hard to successfully attack by other competitors i.e. moving from one area to another 1.2.7. Contraction Defense i.e. giving up weaker territories and reassigning resources to stronger territories. 11
Competitive Strategies for Market Challenger Main aim of the Market Challenger is to increase its Market Share. The Market Challenger must decide whom to attack 1. Attack the Market Leader 2. Attack firms of its own size that are not doing the job and are underfinanced (have high prices) 3. Attack small local and regional firms 12
Competitive Strategies for Market Challenger 1. Frontal Attack 2. Flank Attack 3. Encirclement Attack 4. Bypass Attack 5. Guerrilla Attack 13
Competitive Strategies for Market Challenger 1. Frontal Attack The attacker matches its opponent s product, advertising, price and distribution. 14
Competitive Strategies for Market Challenger 2. Flank Attack The Challenger attacks areas that a opponent is underperforming The Challenger serves uncovered market needs 15
Competitive Strategies for Market Challenger 3. Encirclement Attack The Challenger makes an attempt to capture a wide slice of the enemy s territory through launching attractive product offers in many market segments simultaneously. 16
Competitive Strategies for Market Challenger 4. Bypass Attack 4.1 The Challenger diversifies into unrelated products 4.2 The Challenger diversifies into new geographical markets 4.3 The Challenger diversifies into New Technologies to supplant existing products 17
Competitive Strategies for Market Challenger 5. Guerrilla Attack The Challenger makes small attacks in different locations whilst remaining mobile. The aim is to destabilize the competitor. 18
Competitive Strategies for Market Follower A Market Follower must know how to hold current customers and win a fair share of new ones. 1. Counterfeiter Strategy 2. Cloner Strategy 3. Imitator Strategy 4. Adapter Strategy 19
Competitive Strategies for Market Follower 1. Counterfeiter Strategy The Market Follower duplicates leader s products and packages and sells it on the black market or through disreputable dealers i.e. Music firms 20
Competitive Strategies for Market Follower 2. Cloner Strategy The Market Follower emulates the leader s products, name and packaging, with slight variations i.e. Lookalike bottles 21
Competitive Strategies for Market Follower 3. Imitator Strategy The Market follower copies some things from the leader but maintains differentiation in terms of packing, advertising, pricing and location. 22
Competitive Strategies for Market Follower 4. Adapter Strategy The Market Follower takes the leader s products and adapts or improve them. 23
Competitive Strategies for Market Nichers Firms target small markets of little or no interests to the larger firms. Market Nichers end up to know their target customers very well, satisfying their needs better than other firms achieving also high margins and henceforth good profits. 24
Balancing Customer and Competitor Orientations Companies should never spend all their time focusing on competitors. They should concentrated also in their customers and try to offer the best customer satisfaction by fulfilling their needs and wants better than their competitors. 25
Identifying, analysing and creating target market differentiating and Positioning Strategies Levels of Market Segmentation Mass Marketing In Mass Marketing, the seller engages in the mass production, mass distribution and mass promotion of one item for all buyers i.e. Coca Cola when sold only one kind of coke and in a standard bottle. 26
1. Segment Marketing 2. Niche Marketing 27 3. Local Marketing The FOUR Levels of Mass Marketing Group of customers who share a similar set of needs and wants. Group of customers who are seeking a distinctive mix of benefits or values. Marketing Programmes tailored to the needs and wants of local customer groups in trading areas and or neighbourhoods. 4. Individual Marketing Segment of One / One-to-one marketing / It seeks to develop long-term relationships with individual customers to tailor responses to their needs.
Bases for Segmenting Consumer Markets 1. Geographic Segmentation 2. Demographic Segmentation 3. Psychographic Segmentation 4. Behavioural Segmentation 28
Bases for Segmenting Consumer Markets 1. Geographic Segmentation 1.1 Nations 1.2 States 1.3 Regions 1.4 Counties 1.5 Cities 1.6 Neighbourhoods 29
Bases for Segmenting Consumer Markets 2. Demographic Segmentation 2.1 Age 2.2 Family Size 2.3 Family Life Cycle 2.4 Gender 2.5 Income 2.6 Occupation 2.7 Education 2.8 Religion 2.9 Race 2.10 Generation 2.11 Nationality 2.12 Social Class 30
Bases for Segmenting Consumer Markets 3. Psychographic Segmentation 3.1 Personality Traits 3.2 Lifestyle (Activities, Interests, Opinions) 3.3 Values 31
Bases for Segmenting Consumer Markets 4. Behavioural Segmentation 4.1 Knowledge of a product 4.2 Attitude towards a product 4.3 Use of a product 4.4 Response to a product 32
Bases for Segmenting Consumer Markets Behavioural Variables 1. Occasions 4. Usage Rate 2. Benefits 5. Loyalty Status 3. User Status 6. Attitude 33
Bases for Segmenting Business Markets 34
Market Targeting 35
Effective Criteria for Market Segmentation 36
Five Patterns of Target Market Selection 37
Creating Differentiation and Positioning Strategies Differentiation Differentiation in company s offerings Positioning Positioning is the act of designing the company s offering and image to occupy a distinctive place in the minds of the target market. 38
Perceptual or Positioning Mapping Perceptual or Positioning mapping enables marketers to plot the position of their offering against those of the competition. A company s positioning strategy depends on the existing strength or weakness of their brand and their competitive intent. 39
Perceptual or Positioning Mapping 40
Repositioning Reasons for Repositioning 1. Competitors launch better market offering New Chocolate with superior specifications. 2. Consumer change Preferences 3. New Market categories i.e. New Energy drinks & Lucozade 4. An initial launching error 5. Need to change the perception of the firm in the eyes of existing and potential customers. 41
Developing and Communicating a differentiation strategy Cost Leadership The Company controls costs, minimize expenses Able to offer lower prices. Distinctive Superior Quality The Company offers the right quality attributes (performance, reliability, design, novelty). Cost Leadership and Differentiation The Company combines both cost reduction and quality advantages. 42
Differentiation Strategies 1. Create Competitive Advantage 2. Better train personnel 3. Design more effectively and more efficiently their distribution channels coverage, expertise and performance. 4. Image Differentiation i.e. Prestige, Luxury, 43
The purpose of Positioning Positioning enables a company to invest its resources and skills in the right marketplace. 44
Summary Lecture 5 1. We discussed the competitive forces in a market 2. We identified and analysed competitors 3. We elaborated different competitive Strategies 4. We explained the levels of market segmentation 5. We described market targeting 6. We discussed differentiation and positioning strategies 7. We explained repositioning 8. We discussed differentiation strategies and the purpose of positioning 45
Chapters 9 and 10 END of Lecture 5 Thank you for your attention 46