An Asian Perspective,
6th Edition
Instructor Supplements
Created by Geoffrey da Silva
Competitive Dynamics
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Learning Issues for Chapter Eleven
1. How can market leaders expand the total market and defend
market share?
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Chapter Outline
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Chapter Outline
For these reasons and more, product and brand fortunes change
over time, and marketers must respond accordingly.
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Competitive Strategies for Market Leaders
A market leader has the largest market share and usually leads in price
changes, new-product introductions, distribution coverage, and promotional
intensity.
We can gain further insight by classifying firms by the roles they play in the
target market (see Figure 11.1):
a. Leader
b. Challenger
c. Follower
d. Nicher
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Figure 11.1: Hypothetical Market Structure
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Maintaining Vigilance in the Competitive
Marketplace
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Marketing Insight: When Your Competitor Delivers
More for Less
Too many companies search within the conventional
boundaries of industry competition (do battle) instead of
finding unoccupied market positions that represent real
value innovation.
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Marketing Insight: When Your Competitor Delivers
More for Less
In the airline industry,
budget airlines have debuted
in Asia and have proven to
give full-service airlines a run
for their money. AirAsia,
Jetstar Asia, Tiger Airways,
and Bangkok Air are
transforming the way
consumers fly.
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Marketing Insight: When Your Competitor Delivers
More for Less
Differentiation
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Marketing Insight: When Your Competitor Delivers
More for Less
Execution
To stay number one, the firm must first find ways to expand
total market demand. Second, it must protect its current
share through good defensive and offensive actions. Third, it
should increase market share, even if market size remains
constant.
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Expanding Total Market Demand
When the total market expands, the dominant firm usually gains
the most.
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New Customers
Every product class has the potential to attract buyers who are
unaware of the product or are resisting it because of price or
lack of certain features. A company can search for new users
among three groups:
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Finding New Users
Japans Video-Game
IndustryThe traditionally
male-dominated video-game
market in Japan is seeing
increased patronage from
female gamers who are
interested in otome-romance
games.
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More Usage
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More Usage
Increasing Frequency
Increasing frequency of consumption, on the other hand,
requires either
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Additional Opportunities to Use the Brand
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What happens when consumers perceptions of their
usage differs from reality?
For many products with relatively short lifespans, consumers may
fail to replace the product in a timely manner because of a tendency
to overestimate the length of productive usage.
An Example of Gillette.
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New Ways to Use the Brand
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Protecting Market Share
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Proactive Marketing
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Proactive Marketing Skills
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Proactive Marketing Companies
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Proactive Marketing Companies
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Proactive Marketing Companies
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Uncertainty Management
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Marketing Insight
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Defensive Marketing
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Figure 11.2: Six Types of Defense Strategies
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Six Defensive Strategies
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Six Defensive Strategies
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Example of Position Defense Strategy
Uni-President Taiwanese
leading retail company, Uni-
President, through its chain of
7-Eleven convenience stores,
sells its own brand of frozen
foods, milk, hot dogs, cooking
oil, and just about every major
food group to make itself a
complete food retailer. Further,
it regularly introduces new
products.
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Example of Flank Defense Strategy
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Example of Pre-emptive Defense Strategy
Singapore Airlines To fortify its position as the premier Asian airline, SIA was the first airline to fly
the double-decker super-jumbo Airbus aircraft known as A380. The 555-seat juggernaut jet enables
the airline to take a larger number of passengers on long-haul routes at a lower operating cost per
seat. The services that SIA offers on these jets are aimed to give an unprecedented flying
experience, setting new standards for the airline industry.
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Pre-emptive Defense Strategy
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Counteroffensive Defense Strategy
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Mobile Defense Strategy
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Market Diversification
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Contraction Defense Strategy
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Increasing Market Share
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Factors Involved in Increasing Market Share
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Factors Involved in Increasing Market Share
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Figure 11.3: The Concept of Optimal Market Share
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Other Competitive Strategies
Each can attack the leader and others in an aggressive bid for
further market share (market challengers), or they can play
ball and not rock the boat (market followers).
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Market Challenger Strategy
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Defining the Strategic Objective and Opponents(s)
b. It can attack firms of its own size that are not doing the job and
are underfinanced
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Choosing a General Attack Strategy
1. Frontal
2. Flank
3. Encirclement
4. Bypass
a. Diversifying into unrelated products.
b. Diversifying into new geographical markets.
c. Technological leapfrogging into new technologies.
5. Guerrilla Warfare
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Attack Strategies in Marketing
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Frontal Attack Strategy
The principle of force says that the side with the greater
manpower (resources) will win.
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Example of Frontal Attack Marketing Strategies
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Example of Frontal Attack Marketing Strategies
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Flanking Attack Strategy
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Example of Flanking Attack Strategy
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Flanking Strategy
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Encirclement Attack
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Bypass Attack
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Haier Marketing Strategy in the US
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Haier Marketing Strategy in the US
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Haier Marketing Strategy in the US
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Bypass Attack Strategy Technological
Leapfrogging
In technological leapfrogging, a challenger patiently researches
and develops the next technology and launches an attack, shifting
the battleground to its territory, where it has an advantage.
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Guerrilla Attacks
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Choosing a Specific Attack Strategy
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Market- Follower Strategies
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Market- Follower Strategies
The reward for all this work and risk is normally market
leadership.
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Market- Follower Strategies
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Strategies Used by Market-Followers
The follower has to define a growth path, but one that does not
invite competitive retaliation.
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Four Broad Strategies
1. Counterfeiter:
The counterfeiter duplicates the leaders product and package
and sells it on the black market or through disreputable dealers.
2. Cloner:
The cloner emulates the leaders products, name, and
packaging, with slight variations.
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Four Broad Strategies
3. Imitator:
The imitator copies some things from the leader but maintains
differentiation in terms of packaging, advertising, pricing, or
location. The leader does not mind the imitator as long as the
imitator does not attack the leader aggressively.
4. Adapter:
The adapter takes the leaders products and adapts or improves
them. The adapter may choose to sell to different markets, but
often the adapter grows into the future challenger.
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Counterfeiting Problems in Asia
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Market-Nicher Strategies
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Why is Niching so Profitable?
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Niche Marketing
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Marketing Memo: Niche Specialist Roles
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Product Life-Cycle Marketing Strategies
A companys positioning and differentiation strategy must change
as the product, market, and competitors change over the product
life cycle (PLC).
Profits rise and fall at different stages of the product life cycle.
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Product Life Cycles (PLC)
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Figure 11.4: Sales and Profit Life Cycles
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Product Life Cycles (PLC)
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Figure 11.5: Common Product Life-Cycle Patterns
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Growth-Slump-Maturity Pattern
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Cycle-Recycle Pattern
Later, sales start declining and the company gives the drug
another promotion push, which produces a second cycle
(usually of smaller magnitude and duration).
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The Scalloped Pattern
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Styles, Fashions and Fads
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Styles, Fashions and Fads
Fads are fashions that come quickly into public view, are
adopted with great zeal, peak early, and decline very fast.
Their acceptance cycle is short, and they tend to attract only
a limited following of those who are searching for excitement
or want to distinguish themselves from others.
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Figure 11.6: Style, Fashion, and Fad Life Cycles
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Fads: Angry Birds
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Marketing Strategies:
Introduction and Pioneering Stage
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Marketing Strategies: Introduction Stage and
Pioneer Advantage
Because it takes time to roll out a new product, work out the
technical problems, fill dealer pipelines, and gain consumer
acceptance, sales growth tends to be slow at this stage.
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Marketing Strategies: Introduction Stage and
Pioneer Advantage
Companies that plan to introduce a new product must decide when
to enter the market.
Most studies indicate that the market pioneer gains the most
advantage.
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What are the sources of the pioneers advantage?
i. Early users will recall the pioneers brand name if the product satisfies
them.
ii. The pioneers brand also establishes the attributes the product class
should possess.
iii. The pioneers brand normally aims at the middle of the market and so
captures more users.
iv. Customer inertia also plays a role; and there are producer advantages:
economies of scale, technological leadership, patents, ownership of scarce
assets, and other barriers to entry.
v. Pioneers can have more effective marketing spending and enjoy higher
rates of consumer repeat purchases.
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Pioneering Strategy in Asia
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Pioneer Brands in China Automotive Industry
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Producer Advantages
a. Economies of scale
b. Technological leadership
c. Patents
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Limitations of Pioneer Advantages
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Limitations of Pioneer Advantages
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Factors Affecting Market Leadership
2. Persistence
3. Relentless innovation
4. Financial commitment
5. Asset leverage
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Long-Range Product Market Expansion
Suppose market-
segmentation analysis
reveals the product market
segments shown in Figure
11.7.
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Long-Range Product Market Expansion
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Long-Range Product Market Expansion
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Long-Range Product Market Expansion
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Marketing Strategies Growth Stage
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Marketing Strategies: Growth Stage
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Marketing Fast Food in ChinaA Growth Market
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Marketing Strategies: Growth Stage
Profits increase.
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Strategies to Sustain Rapid Market Growth
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Marketing Strategies: Growth Stage
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Marketing Strategies Maturity Stage
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Marketing Strategies: Maturity Stage
At some point, the rate of sales growth will slow, and the
product will enter a stage of relative maturity.
This stage normally lasts longer than the previous stages and
poses big challenges to marketing management.
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Marketing Strategies: Maturity Stage
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Marketing Strategies: Maturity Stage
Dominating the industry are a few giant firms that serve the whole
market and make their profits mainly through high volume
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Marketing in the Maturity Stage
Korean TV Shopping
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Marketing Strategies: Maturity Stage
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Electroluxs Targeting Strategy in a Mature Market
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Marketing Strategies: Maturity Stage
Yet many mature markets and old products may still have potential.
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Tiger Balm
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Tiger Balm
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Market Modification
The company might try to expand the market for its mature
brand by working with the two factors that make up sales
volume:
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Market Modification
It can also try to expand the number of brand users by entering new
market segments.
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Table 11.1: Alternate Ways to Increase Sales
Volume
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Product Modification
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Advantages and Limitation of Product Modification
ii. Wins the loyalty of market segments that value these features.
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Marketing Program Modification
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Marketing Strategies Decline Stage
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Marketing Strategies: Decline Stage
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Marketing Strategies: Decline Stage
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Marketing Strategies: Decline Stage
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Harvesting Strategies
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Companies that successfully restage or rejuvenate a
mature product often do so by adding value to the
original product:
Yamaha closely examined the market and found that the
majority of pianos purchased sit around idle and neglected,
without being tuned regularly.
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Companies that successfully restage or rejuvenate a
mature product often do so by adding value to the
original product:
Yamaha then decided to develop a sophisticated combination
of digital and optical technology that can play performance
pieces just like the way professional pianists do.
The advent of the digital piano has revived the piano industry
and increased the market for piano maintenance as well.
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Divesting Decisions
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Evidence for the Product Life-cycle Concept
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Evidence for the Product Life-cycle Concept
The growth stage lasts a little over eight years and does not
seem to shorten over time.
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Table 11.2: Summary of Product Life-Cycle
Characteristics, Objectives, and Strategies (A)
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Table 11.2: Summary of Product Life-Cycle
Characteristics, Objectives, and Strategies (B)
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Critique of the Product Life-Cycle Concept
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Market Evolution
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Marketing in an Economic Downturn
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Five Guidelines To Improve The Odds For Success
During An Economic Downturn
1. Explore the Upside of Increasing Investment
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Schema for Chapter Eleven
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Thank you