Hypothetical market
structure
Market leader- 40%
Market challenger- 30%
Market follower-20 %
Market nichers 10%
Five Forces Determining Segment
Structural Attractiveness
Industry competitors- size of the industry
Potential entrant- existing and new comers
Suppliers- no. of suppliers of the products in
the market
Buyers- no. of customers
Substitutes- no. of similar products available
for consumers.
Industry Concept of Competition
Number of sellers and degree of
differentiation
Entry, mobility, and exit barriers
Cost structure
Degree of vertical integration- the degree
to which a firm owns its upstream suppliers
and its downstream buyers
Degree of globalization
Strengths and Weaknesses for
players in the market
Share of market
Share of mind
Share of heart
Steps in Benchmarking the
performance of various players in
Determine
which functions or processes to
the
market
benchmark
Identify the key performance variables to
measure
Identify the best-in-class companies
Measure the performance of best-in-class
companies
Measure the companys performance
Specify programs and actions to close the gap
Implement and monitor results
1.Competitive strategies for
market
leaders
To stay no one,
the firm must find
1. Ways to expand market
2. Protect its current share through good defensive and
offensive actions
3. It shd increase mkt share even if mkt size remains constant
Expanding the total market- when the total market expands, the
dominant firms usually gains the most.
1. New customers
2. More usage-(package redesigning and product redesign)
Additional opportunities to use the brand
New ways to use the brand(eg honey)
1.Competitive strategies for market
Protect its current share
leaders
Proactive mktng or offensive marketing
A pro active firms are:1. Ready to take risks and make mistakes
2. Have a vision of the future and of investing in it
3. Have the capabilities to innovate
4. Are flexible and non bureaucratic
5. Have many managers who think proactively.
Defensive marketing
1. Position defense
2. Flank defense
3. Pre emptive defense or guerella defense
4. Counteroffensive defense
5. Mobile defense
1.Competitive strategies for market
leaders
Increasing market share.
The possibility of attracting legal action for violating the
competition act or antitrust law.
Economic cost
The danger of pursuing the wrong marketing activities
The effect of increased mkt share on actual and perceived
quality
2.Market Challenger Strategies
Define the strategic objective and opponents1. It can attack the mkt leader
2. It can attack firmss its own size that are not doing the job
and are underfinanced
3. It can attack small local and regional firms.
Choose a general attack strategy
1. Frontal attack
2. Flank attack
3. Encirclement attack
4. Bypass attack-1. diversifying into unrelated products
2. diversifying into new geographical
markets
1.
3.leapfrogging into new technologies
2. Guerrila attack
Choose a specific attack strategy-
Market Challenger strategies Specific
Attack Strategies
Price discounts
Lower-priced goods
Value-priced goods
Prestige goods
Product innovation
Improved services
Distribution
innovation
Manufacturing-cost
reduction
Intensive
advertising
promotion
Market Follower Strategies
Counterfeiter- they duplicates the leaders
product and packages and sell it on the black mkt
or through disreputable dealers
Cloner- they emulate the leaders products, name
and packaging with slight variations
Imitator- copies some things from the leader but
differentiates on packaging, advertising ,pricing or
location.
Adapter- they takes the leaders products and
adapts or improves them
Niche Specialist Roles
End-User Specialist
Vertical-Level
Specialist
Customer-Size
Specialist
Specific-Customer
Specialist
Geographic
Specialist
Product-Line
Specialist
Job-Shop Specialist
Quality-Price
Specialist
Service-Specialist
Channel Specialist
Sales and
Profits
Sales
Profits
Product
Development
Introduction
Growth
Maturity
Time
Decline
Sales and Profits Over the Products
Lifetime
PLC characteristics
A product has a life cycle is to assert four things
1. Product have a ltd life
2. Product sales pass through distinct stages, each posing
different challenges, opportunities and problems to the seller
3. Profits rise and fall at different stages of the PLC
4. Products require different mktng,f financial, purchasing and
HR strategies in each life cycle stage
Product life cycles stages
1. Introduction
2. Growth
3. Maturity
4. decline
Summary of Characteristics, Objectives, &
Strategies
Sales
Low
Sales
Low
Costs
Costs
High
High cost
cost per
per customer
customer
Profits
Profits
Negative
Negative
Marketing
Marketing Objectives
Objectives
Create
Create product
product awareness
awareness and
and trial
trial
Product
Product
Offer
Offer aa basic
basic product
product
Price
Price
Use
Use cost-plus
cost-plus formula
formula
Distribution
Distribution
Build
Build selective
selective distribution
distribution
Promotion
Promotion
Heavy
Heavy to
to entice
entice product
product trial
trial
Summary of Characteristics, Objectives, &
Strategies
Sales
Rapidly
Sales
Rapidly rising
rising
Costs
Costs
Average
Average cost
cost per
per customer
customer
Profits
Profits
Rising
Rising
Marketing
Marketing Objectives
Objectives
Maximize
Maximize market
market share
share
Product
Product
Offer
Offer extension,
extension, service,
service, warranty
warranty
Price
Price
Penetration
Penetration strategy
strategy
Distribution
Distribution
Build
Build intensive
intensive distribution
distribution
Promotion
Promotion
Reduce
Reduce to
to take
take advantage
advantage of
of demand
demand
Summary of Characteristics, Objectives, &
Strategies
Sales
Peak
Sales
Peak
Costs
Costs
Low
Low cost
cost per
per customer
customer
Profits
Profits
Marketing
Marketing Objectives
Objectives
High
High
Maximize
Maximize profits
profits while
while defending
defending market
market share
share
Product
Product
Diversify
Diversify brand
brand and
and models
models
Price
Price
Match
Match or
or best
best competitors
competitors
Distribution
Distribution
Build
Build more
more intensive
intensive distribution
distribution
Promotion
Promotion
Increase
Increase to
to encourage
encourage brand
brand switching
switching
Summary of Characteristics, Objectives, &
Strategies
Sales
Declining
Sales
Declining
Costs
Costs
Low
Low cost
cost per
per customer
customer
Profits
Profits
Declining
Declining
Marketing
Marketing Objectives
Objectives
Reduce
Reduce expenditures
expenditures and
and milk
milk the
the brand
brand
Product
Product
Phase
Phase out
out weak
weak items
items
Price
Price
Cut
Cut price
price
Distribution
Distribution
Selective:
Selective: phase
phase out
out unprofitable
unprofitable outlets
outlets
Promotion
Promotion
Reduce
Reduce to
to minimum
minimum level
level
Mktng Strategies :introduction
As this stage is the stage where the new product is rolled out, so sales
stage
are slow in this stage.
Strategies for this stage are:1. Inform potential customers
2. Induce product trial
3. Secure distribution in retail outlets
4. Focus on buyers who are more ready to buy
5. Prices tend to be higher bcoz cost are high.
6. They shd decide when to enter the market.
7. High expenditures on IMC programme
Companies that plan to introduce their product first can be rewarding ,
and expensive
To enter little late is profitable if the firm brings in superior technology ,
quality, brand strength.
The pioneer has the advantage of brand recall if they satisfies he
customers.
Pioneers can enjoy higher rates of repeat purchase
Marketing strategies for Growth
stage
During the growth stage, the firm uses several
strategies to sustain rapid market growth.
Improves product quality and adds new
features and improved styling.
Adds new models and flanker products(i.e.,
products of different sizes, flavors, and so forth
that protect the main product).
It enters new market segments
It increases its distribution coverage and enters
new distribution channels.
It shifts from product- awareness advertising to
product- preference advertising.
It lowers price to attract the next layer of price
sensitive buyers.
Marketing strategies for
Maturity
stage
Three
potentially useful
ways to change the course for a
brand are market, product, and marketing program
modification.
Market Modification
Sales volume = no. of brand users * usage rate per user.
Expand the no. of brand users
Convert nonusers
Enter new market segments
Attract competitors customers Increase the usage
rate
among users
Have consumers use the product on more occasions.
Have consumers use more of the product on each
occasion
Have consumers use the product in new ways.
Product modification
Trying to stimulate sales by modifying the products
characteristics through
Marketing strategies for
Maturity stage contd.
Quality improvement:
Aims at increasing the products functional performance.
Eg: Aashirvaad, Annapoorna, Pillsbury, Naturefresh
Feature improvement
Aims at adding new features, such as size, weight, materials,
additives, and accessories, that expand the products
performance, versatility, safety, or convenience.
Style improvement
Aims at increasing the products esthetics appeal.
Eg; New car models, New Coke
Decline Stage
Increase investment
Resolve uncertainties - stable investment
Selective niches
Divesting
To establish a system for identifying weak
products.
Some firms abandon declining markets earlier
than others.
