A FRAMEWORK for MARKETING MANAGEMENT

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A FRAMEWORK for MARKETING MANAGEMENT
Chapter 9 Creating Positioning and Dealing
with Competition
Kotler Keller
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Chapter Questions

• How can a firm choose and communicate an
  effective position?
• How are brands differentiated?
• How do marketers identify primary competitors and
  analyze their strategies, objectives, strengths,
  and weaknesses?
• Should a company compete as a market leader,
  challenger, follower, or nicher?

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Positioning
Positioning designing the companys offering and
image to occupy a distinctive place in the mind
of the target market
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Value Propositions

• Perdue Chicken
• More tender golden chicken at a moderate premium
  price
• Dominos
• A good hot pizza, delivered to your door within
  30 minutes of ordering, at a moderate price

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Defining Associations

• Points-of-difference (PODs)
• Strong, positive associations with a brand that
  consumers believe they could not find to the same
  extent with a competitive brand

• Points-of-parity (POPs)
• Associations that are not necessarily unique to
  the brand but may be shared with other brands

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Conveying Category Membership

• Announcing category benefits
• Comparing to exemplars
• Relying on the product descriptor

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PODs

• Desirability Criteria
• Relevance
• Distinctiveness
• Believability

• Deliverability Criteria
• Feasibility
• Communicability
• Sustainability

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Differentiation Strategies

• Product
• Personnel
• Channel
• Image

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Product Differentiation

• Form
• Features
• Conformance
• Durability
• Disposability

• Reliability
• Repairability
• Style
• Design
• Quality

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Services Differentiation

• Ordering ease
• Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance and repair

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Personnel Differentiation

• Competence
• Courtesy
• Credibility
• Reliability
• Responsiveness
• Communication

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Channel Differentiation

• Coverage
• Expertise
• Performance

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Image Differentiation

• Symbols, colors, slogans
• Atmosphere
• Events
• Brand contacts

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Identity and Image
Image How the public perceives the company or
its products
Identity How a company aims to identify or
position itself
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Industry Concepts of Competition

• Pure monopoly
• Oligopoly
• Monopolistic competition
• Pure competition

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Competitive Markets
Industries Can Be Classified By
Number of sellers and degree of
differentiation
Entry barriers, mobility and exit barriers
Industry Characteristics
Degree of vertical integration
Degree of globalization
Cost structure
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Porters five-forces model of market
attractiveness
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Porters five-forces model (2)
Threat of new entrants
Bargaining power of suppliers
Bargaining power of buyers
Competitive rivalry
Numerous or equally balanced competitors, slow
industry growth, lack of differentiation, low
buyer switching costs, high fixed costs,
overcapacity, perishable products (and services)
and high exit barriers.
Threat of substitutes
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Porters five-forces model (3)
Threat of new entrants
Bargaining power of buyers
Bargaining power of suppliers
Competitive rivalry

• a few large buyers in the market
• buying volume is large,
• low differentiation between competitive
  products,
• value of the industry product is low,
• low switching costs for the buyer or high
  switching costs for the seller,
• buyer has access to full market information,
• buying company could forward integrate and become
  a competitor.

Threat of substitutes
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Porters five-forces model (4)

• Barriers to entry are low
• no cost advantages for existing competitors
• a lack of product differentiation
• low capital costs for market entry
• relatively easy access to distribution channels.

Threat of new entrants
Bargaining power of suppliers
Competitive rivalry
Bargaining power of buyers
Threat of substitutes
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Porters five-forces model (5)
Only a few large suppliers, suppliers product is
highly differentiated or unique, supplier sells
the same product to other industries or a
supplier could forward-integrate and enter the
market as a competitor.
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Porters five-forces model (6)
Threat of new entrants
Bargaining power of suppliers
Competitive rivalry
Bargaining power of buyers
Substitute products are close in performance and
price to the industrys product, low switching
costs and switching is common.
Threat of substitutes
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Analyzing Competitors
Strategies
Objectives
Strengths
Weaknesses
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Strengths and Weaknesses

• Share of market
• Share of mind
• Share of heart

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Competitive Review

• ID all possible competitors
• Rate all possible competitors
• Analyse most threatening competitors
• Benchmarking
• Where will you get competitive intelligence?

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Competitive review

• Profile of each direct competitor showing
• current market performance
• competitive position
• corporate and marketing objectives and strategies
• likely future goals and strategies
• markets they compete in
• capabilities
• vulnerabilities
• likely retaliation to competitive moves.

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A typology of competitors
Prospector a first-mover in launching new
products and entering new markets. Analyser
intermediate type that makes fewer and slower
product-market changes than prospectors. Reactor
a competitor who lacks any well-defined
competitive strategy. Responses dictated by
environmental pressures. Defender competitor
that attempts to locate and maintain a secure
position in a stable product. Based on R.E.
Miles and C.C. Snow, 1978.
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Six Types of Defense Strategies

• Position
• Flank
• Preemptive
• Counteroffensive
• Mobile
• Contraction
• Expansion
• Market share protection
• Reactive strategies

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Other Competitive Strategies
Market Challengers
Market Nichers
Market Followers
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Market Challenger Strategies

• Define the strategic objective and opponents
• Decide who to attack
• Market leader
• Market equals that are underperforming
• Small firms
• Strong versus weak
• Close versus distant
• Good versus bad

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General Attack Strategies

• Frontal attack
• Flank attack
• Encirclement attack
• Bypass attack
• Guerilla warfare

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Market Follower Strategies

• Counterfeiter
• Cloner
• Imitator
• Adapter

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Table 9.4 Market Niche Roles

• End-user specialist
• Vertical-level specialist
• Customer-size specialist
• Specific-customer specialist
• Geographic specialist

• Product specialist
• Product-feature specialist
• Job-shop specialist
• Quality-price specialist
• Service specialist
• Channel specialist

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Balancing Orientations
Competitor- centered
Customer- centered
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Designing Competitive Strategies
Productproliferation
Manufacturing cost reduction
Specific Attack Strategies
Prestige goods
Price-discount
Improved services
Product innovation
Distribution innovation
Lower-price goods
Intensive advertising promotion
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Repositioning

• away from the attacker (defenders strength)
  will improve defensive profits
• to counter the attack (attackers strength) may
  or may not improve profits.
• Hauser (2004)

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When a Competitor is in Trouble

• Laying off staff
• Reducing advertising
• Price increases without justification
• Cutting RD
• Taking on more debt
• Tightening payment conditions
• Cutting recruitment
• Debt collection

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Competitors without Market Focus

• Frequent changes in advertising/agencies
• Frequent new product failures
• Vague value proposition
• Frequent price cutting
• Frequent changes in management

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How to identify your enemies

• Rafii Kampas (2002)
• Stages of market displacement
• Foothold market, main market, customer
  attraction, customer switching, incumbent
  retaliation, and incumbent displacement
• Enabling and disabling factors for disruption
• Prevention
• Identify and describe potential threats, enlist
  an executive champion, train team in identifying
  contributing factors (CFs), list CFs, score CFs,
  interpret the data

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Stop fighting fires

• Bohn (2000)
• Strong problem-solving culture not fire
  fighting
• Tactical methods
• Add temporary problem solvers
• Shut down operations
• Perform triage (cant solve all problems)
• Strategic methods
• Change design strategies
• Outsource some parts of the design
• Solve classes of problems, not individual
  problems
• Cultural methods
• No patching
• Be flexible with deadlines
• Dont reward fire fighting

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Defensive Marketing

• Roberts, 2005
• Weapons brand, product mix, commns
• Perceptions of incumbent inflexible
• Incumbent has more resources for advertising
• Incumbents strategic options
• Retention strategies through leveraging strengths
  or matching entrants offerings
• Delay strategies by enhancing products or
  suggesting benefits of switching wont match the
  costs
• Assess customers value and vulnerability to
  determine appropriate option

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In Closing.

• Thank-you
• Forthcoming
• Marketing tools essay (8 Feb)
• Project presentations (10 Feb)