MARKETING STRATEGY
11
Dealing with Competition
Internal Analysis
1. Analysis of Organizational Strengths and
Weaknesses

To understand the capabilities of a firm, its
internal resources should be analysed in relation
to the value they offer to customers. Such an
analysis can indicate the areas of strength and
weakness of the company and permit the
decision makers to take corrective actions in
order to protect and maintain the strengths,
while trying to reduce weaknesses.
11-2
External Analysis
1. Market Threats and Opportunities
Possible Threats:




new competitors
A change in consumption patterns
the evolution of technology
New governmental regulations
Possible Opportunities:
 The development of a new market niche
 Governmental intervention for business development in
specific industrial sectors
 Changes in consumption patterns of the evolution of
technology
11-3
Porter analysis
11-4
Figure 1.1 Five Forces Determining
Segment Structural Attractiveness





Potential entrants: High / low entry / exit barriers
Suppliers
Buyers
Industry competitors: aggressive competition –
unattractive – barrier of entry
Substitutes: segment is unattractive when there
are actual and potential substitutes
11-5
Industry Concept of Competition
Number of sellers and degree of
differentiation
 Entry, mobility, and exit barriers restaurant
/ airline
 Cost structure
 Degree of vertical integration
 Degree of globalization

11-6
Industry Concept of Competition




Pure monopoly: only one firm provides a certain
product (e.g. EAC)
Oligopoly: small number of usually large firms
Monopolistic competition: many sellers of
differentiated product (e.g. technology)
Pure competition: many competitors offer the
same / similar product or service
11-7
Analyzing Competitors
Share of market: competitor’s share of
target market
 Share of mind: percentage of customers
who named the competitors – Company
that comes to mind
 Share of heart: name the company from
which you would prefer to buy a product

11-8
Other Competitive Strategies
Market challengers: being the leader in the
market (e.g. Toyota, Airbus)
 Market followers
 Market nichers

11-9
Competitive Strategies - Market
Challenger Strategies
Define the strategic objective and
opponents: whom to attack to increase
market share
 Choose an attack strategy

11-10
Competitive Strategies - 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
11-11
Competitive Strategies

Market followers: Product differentiation
and image are low, service quality is
comparable, price sensitivity is high.
Companies should try to keep current
customers, keep low manufacturing costs,
increase product quality and service
11-12
Competitive Strategies

Market nichers: be a leader in a small
market. Avoid competing with larger firms
by targeting smaller market segments
which are of no interest of the larger firms
11-13