11-1

Chapter Questions

• How do marketers identify primary competitors?

• How should we analyze competition?

– strategies, objectives, strengths, and weaknesses

• How can market leaders expand the total market

and defend market share?

• How should market challengers attack market

leaders?

• How can market followers compete effectively?

11-2

Economic View of Competition

Pure MonopolyPure Monopoly

OligopolyOligopoly

Monopolistic CompetitionMonopolistic Competition

Pure CompetitionPure Competition

11-3

Competition isn’t always bad!

Bill Cade’s cricketsBill Cade’s crickets

Furniture industryFurniture industry

Satellite radioSatellite radio

WHEN?WHEN?

11-4

Forces Determining Segment Attractiveness

11-5

Identifying Competitors

11-6

Analyzing Competitors

Share of marketShare of market

Share of mindShare of mind

Share of heartShare of heart

11-7

Hypothetical Market Structure

10%

Market

Nichers

20%

Market

Follower

30%

Market

Challenger

40%

Market

Leader

11-8

Two ways to expand:

New customersNew customers

More usageMore usage

11-9

Optimal Market Share

11-10

Question

Why do profits often decrease

as market share expands?

11-11

Competitive Players

Market

Challengers

Market

NichersMarket

Followers

11-12

Market Follower

11-13

Market Niche

11-14

Fast Food Study

• McDonald’s is the market leader

• The “lighting rod” of criticism

• 1986 Hardee’s tries lower fat, no one follows.

• April 1991 McDonald’s introduces McLean

• July KFC and Arbys’ low fat products

• 2000 Subway becomes niche player

(sandwiches)

11-15

Balancing Orientations

Competitor-

Centered

Customer-

Centered

11-16

Group Discussion

How do you attack a Category Leader?

Take a position:

1. The best way to challenge a leader is to

attack its strengths.

2. The best way to attack a leader is

to adopt a flanking strategy.