Chapter 11 - Competitive dynamics. In this chapter, we will address the following questions: How can market leaders expand the total market and defend market share? How should market challengers attack market leaders? How can market followers or niche compete effectively? What marketing strategies are appropriate at each stage of the PLC? How should marketers adjust their strategies and tactics for an economic downturn or recession?
Phillip Kevin Lane Kotler • Keller Marketing Management • 14e Ch 1 r e t p a Competitive Dynamics Discussion Questions How can market leaders expand the total market and defend market share? How should market challengers attack market leaders? How can market followers or niche compete effectively? What marketing strategies are appropriate at each stage of the PLC? How should marketers adjust their strategies and tactics for an economic downturn or recession? Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 31 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 31 Market Members Market challenger Market nichers Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Market leader Market follower Slide of 31 e r u g Fi 1.1 Hypothetical Market Structure Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 31 Staying Number One Expand total market demand Protect current market share Increase market share Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 31 Expanding Total Market Demand New Customers More Usage Replacement rate New product uses Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 31 Protect Current Market Share Offensive Strategy Defensive Strategy Proactive Marketing Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide of 31 e r u g Fi 1.2 Six Types of Defense Strategy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 10 of 31 Market-Nicher Strategies Nichers Task Create niches Expand niches Protect niches Target small, profitable segments Achieve higher margins Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 17 of 31 Product Life-Cycle Strategies • Products have a limited life • Sales pass through stages • Profits rise, then fall • Different strategies needed Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 18 of 31 e r u g Fi 1.4 Sales and Profit Life Cycles Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 19 of 31 e r u g Fi 1.5 Common Product LifeCycle Patterns Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 20 of 31 e r u g Fi 1.6 Style, Fashion, and Fad Life Cycles Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 21 of 31 Product Life-Cycle Stages Introductio n Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 22 of 31 PLC: Introduction Stage Slow sales growth, negative profits Marketing Strategies: 1.Create awareness 2.Induce product trial 3.Secure retail distribution Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Speed to Market Which is more profitable over years? •6 months late, but on budget? •On time, but 50% over budget? Slide 23 of 31 Order of Market Entry Pioneer Advantage Inventor Product pioneer Market pioneer First Mover Advantage • Brand name association • Define product class • Customer inertia ã Producer advantages Imitator Advantage Copyright â 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 24 of 31 e r u g Fi 1.7 Long-Range Product Market Expansion Strategy Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 25 of 31 PLC: Growth Stage Rapid sales growth; New competitors Marketing Strategies: 1.Improve product quality; add new features 2.Add new models and flanker products 3.Enter new market segments 4.Focus advertising on preferences 5.Increase distribution coverage 6.Lower price; Attract price-sensitive buyers Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 26 of 31 PLC: Maturity Stage Growth slows; Weak competitors exit Marketing Objectives: 1.Maximize profit 2.Defend market share Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 27 of 31 PLC: Decline Stage Slow sales growth, negative profits Product Options: 1.Rejuvenate 2.Harvest 3.Divest Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 28 of 31 e l b a T 11 Characteristics of the PLC Introduction Growth Maturity Decline Sales Low Rapidly rising Peak Declining Costs/customer High Average Low Low Profits Negative Rising High Declining Customers Innovators Early Adopters Middle majority Laggards Competitors Few Increasing Stable number CHARACTERISTI CS Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Declining Slide 29 of 31 11 e l b a T PLC Objectives and Strategies Introduction Growth Maturity Decline MARKETING OBJECTIVES Awareness and trial Maximize market share Maximize profits; Defend share Product Basic Extend; Service, warranty Diversify brands Phase out and models the weak Price Charge cost- Price to plus penetrate Price to match Cut price Distribution Selective More intensive Go selective Stress brand benefits Reduce to Slide 30 of 31 minimal Milk the brand STRATEGIES Intensive Awareness Awareness w/ Communications early Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hallmass market Marketing in an Economic Downturn More Compelling Value Proposition Review Budget Allocations Get Closer to Customers Increasing Investments Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 31 of 31 ... Other Competitive Strategies Market-challenger Market-nicher Market-follower Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 13 of 31 Market-Challenger Strategies Define... profitability Pursue wrong marketing activity Lower overall quality “Actual” quality “Perceived” quality 2012 Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall 2013 Slide 11 of 31 e r u... Slide 15 of 31 Market-Follower Strategies Counterfeite r Adapter Imitator Cloner Copyright © 2012 Pearson Education, Inc Publishing as Prentice Hall Slide 16 of 31 Market-Nicher Strategies Nichers