Introducing Competitive Strategies

Lecture Outline

1. SETTING THE SCENE

2. EVALUATING OFFENSIVE STRATEGIES

3. EVALUATING DEFENSIVE STRATEGIES

4. SUMMARY

Indicative Reading

Hooley, G. J., et al, 2008 Marketing Strategy & Competitive Positioning, Chapter 11

Jean, S., 2011. Brand parody: a communication strategy to attack a competitor, Journal of Consumer Marketing, Vol. 28 Iss: 1, pp.19 – 26

Kotler, P., and Singh, R., 1981. Marketing Warfare in the 1980’s. The Journal of Business Strategy, Vol. 1, No.3, Winter

Stalk, G., and Lachenauer, R., (2004). Five Killer Strategies For Trouncing The Competition. Harvard Business Review. April

“Companies fail in the market place because their strategies are ill-conceived, poorly prepared and badly executed in relation to

those of their competitors” James (1984)

“Flabby rivals will sometimes gasp that hardball players are playing too hard, that their

advantages are unfair or anti-competitive”Stalk and Lachenauer (2004:64)

1. Setting the Scene

“Successful competitive strategy amounts to combining

attacking and defensive moves to build a stronger position in the market place”

Hooley et al (2011:319)

The view of Nike

“Business is war without bullets”

Phil Knight (Nike, Founder and former CEO)

Offensive & Defensive Marketing Strategies for SBUs

Stars Question Marks

Cash Cows Dogs

Market Share

LowHigh

Mark

et Growt

h

High

Low

10%

20%

0%10x 1x 0.1

x

2. Evaluating Offensive Strategies

Involves a pre-determined objective (eg.market penetration, market development, market share). The underlying principles of these ‘build’ strategies are;

To improve performance through expansion Focus on gaining market share Used in high, low, non growth markets Assess competitor strengths Find a weakness in the competitor Consider attacking on a narrow front Launch attack quickly

Attack Strategies

Source: Kotler and Singh (1981)

Frontal Attack

Aggressive, normally hostile, unsolicited

Superior resources needed as competitor has a strong market position

Target competitor Strength/weakness

Usually expensive

Not always successful

Flanking Attack

Concentrate aggressors strengths on competitor weaknesses

Could be shareholder discontentment, new market segments, market channels, product range, geographic coverage

Aims for long term growth

Virgin Media attack BT, BSkyB, Carphone Warehouse over broadband speeds using ADSL copper coated wires compared to their fibre optic cable

Encirclement Attack

Enveloping the enemy

Cutting off supply

Isolating competitor from raw materials or customers

Creating niche markets (TV channels) to gain overall market share

Subtle and long-term strategy

The launch of easyCinema failed due to film distributors

By-Pass Attack

Changing the battleground

Creating new technologies or business models

Avoid competitor strongholds

Normally achieved by a technological breakthrough/diversification

Guerilla Attack

Used by large and small companies

Unconventional tactics

Intended to spoil the tactics of competitors

Fast response and rapid withdrawal

Don’t stand and fighthttp://www.hotcow.co.uk/

Dutch models were arrested during the World Cup match between Netherlands-

Denmark forpromoting Bavaria (a Dutch beer company)

Facebook's Anti-Google Fiasco

“It’s a sneaky attack that invites a harmful government

response on Google…”

These defensive strategies can be used in various situations, but the key is to maintain market share, for example where;

the market is mature or declining competition is low the business/product is a cash cow as it generates investment monies for elsewhere

there are obvious weaknesses or threats

3. Evaluating Defensive Strategies

Defensive Strategies

Source: Kotler and Singh (1981)

Position Defense

Defenders view of the encirclement

Raise barriers around company to shut out the competition

Ensure products are non-copyable

Increase product quality/diversification

Sky and Apple invest in non-copyable technology

Flanking Defence

Seek to strengthen flanks without weakening other areas

Indication of attacker strategy required

May need to reposition the company/product

MTV launches a digital strategy to get back in touch with its audience

Pre-emptive Defence

 The best offense is a good defense

A strike at the aggressive competitor before they mount their attack

The objective is to demoralise or prevent the aggressor gaining momentum before the strike

Subdue the enemy without fighting

Counter Offensive Defence

An aggressive attack has been made

Ideal defence is to counter-attack quickly

Negate the impact of the aggressive strike

Hit the aggressor at its most vulnerable spot and strike hard

Mobile Defence

Create a flexible response capability

Be ready to defend against competitive threats

Often seen in sales promotion as offers and discounts

Companies fail in the market place because their strategies are ill-conceived, poorly prepared and badly executed in relation to those of their competitors.

Successful strategy amounts to combining attacking and defensive moves to build a stronger position in the market place

Ethical business behaviour and social responsibility are becoming increasingly important.

4. Summary