Page 303 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes
Figure 13.7: Defensive Strategies
Strategies Basic Strategy Basic Strategy Basic Strategy
(A) (B) (C)
Protect Position Optimise Position Increase Cash Flow
Harvest, or Divest
Objective Maintain Profit Maximise Profits Cash Flow
Different Protect market share Maximise net profits Manage for cash flow
Strategies Develop customer Reduce market focus Harvest or Divest for
to retention cash flow
Implement
Central Enter new market Improve marketing Enter new emerging
Strategies segment productivity markets

Self Assessment

Fill in the Blanks:
4. …………………… strategies are most likely to be adopted by competing businesses during
growth stage of product-market life cycle.
5. A company is likely to use …………… strategies during the early maturity stages of PLC.

13.3 Choosing Competitors

In an industry there are likely to be several competitors, all with different profiles based on
their size, resources, objectives, strategies, and areas of strengths and weaknesses. The competitor
chosen might be basically either strong, or weak. Some of these competitors might be categorised
as “good” or “bad.” Good ones follow industry rules, develop realistic assumptions about its
future growth, they price their offers reasonably based on lower costs and advocate others to
keep costs low, favour product differentiation, focus on a portion of the industry and favour a
healthy industry. Bad ones ignore these healthy practices and adopt practices that upset the
healthy balance in the industry.
Customer Perceptions of Value: It is believed that customers choose a brand from a set of
available alternatives based on their perceptions of its value. This value is the sum total of
quality, benefits (functional and image), costs, and service. It is believed that the brand that
exceeds all others on the chosen criteria is purchased. The steps involved in assessing customers’
value perception include:

Identify major attributes and their relative importance from customers’ point of view.
Assess consumers’ perceptions of the company’s and competitors’ performance on these
attributes. Evaluate the company’s one or two major competitors in a market on these
attributes.

Deliver customer value, and periodically conduct customers’ value perception studies.
The analysis will reveal four types of competitors in an industry, including the company itself.
Some of the major characteristics of market leader, market follower, market challenger, and niche
marketer are briefly discussed below:
Market Leader: The firm enjoys the largest market share and generally leads others in, new
technology introduction or up-gradation, new product introduction, generally setting the changes
in price, promotional practices, and level of distribution coverage. Such a firm is very likely to
device offensive or defensive strategies to fight tooth-and-nail to maintain its position and stay
the leader.

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