Page 310 - DMGT408DMGT203_Marketing Management

Unit 13: Creating Competitive Advantage

they can offer. While the big players have already scaled up capacities, it amounts to only Notes
a small part of the textile industry. A KSA Technopak study found that in fiscal 2002-03,
organized textile makers produced only 3.6 per cent of all fabric production which accounted
for about 5.5 per cent in terms of value, while the remaining came from the unorganized
sector that mostly used outdated powerlooms or handlooms. On the revenue side, excluding
the output of producers like Reliance Industries, Indorama Synthetics India (Indorama)
and Grasim, total revenues of the top 20 companies associated with textiles and apparels
in India did not exceed US$ 2 billion. No more than 15 apparel exporters have revenues in
excess of US$ 22 million; another 30 between US$ 1 million and US$ 22 million; while none
of the rest touch the million-dollar mark. It has been noted that as there haven’t been
many exporters who can handle large orders, international retailers have been looking at
China and Vietnam. “The $50-billion figure was first mooted by the government five
years ago. But the investments have started flowing in only recently,” said IndoRama
Managing Director O.P. Lohia while speaking about the need to expand and upgrade.
While the average turnover of China’s top 10 textile firms was US$ 600 million in 2004 that
of the top 10 firms in India was around US$ 300 million. “Firms have not achieved much
economies of scale, and their overheads and cost of labour are still high,” said Adil Raza
(Raza), Country Manager, J.C. Penney, (India).
Questions
1. What makes India a strong competition for other countries in the textile industry?
2. How can India challenge and become a leader in the market?
Source: www.icfai.org

Whom to Attack?

It is necessary for a challenger to decide which competitor to attack. There are several options to
choose from. Choosing whom to attack requires careful analysis and comparison of strengths
and weaknesses of different competitors:
1. Attack the market-share leader
2. Attack another follower

3. Attack one or more smaller competitors
4. Avoid direct attacks on any established competitor
Frontal Attack Strategy: In case the market for a product category is relatively homogeneous,
there is an established market leader, few untapped but unattractive segments, then the challenger
has no choice but to go for frontal attack with matching product, price, promotion, and
distribution. This may succeed when most current customers have weak or no brand preferences
or loyalties. In this situation even superior resources are no insurance of success if simply the
challenger imitates the targeted competitor’s offer.

Example: LG and Samsung started their frontal attack, when Videocon and Onida were
hugely popular in India and eventually displaced them to become the top two consumer
electronics brand.
To succeed, attaining lower costs or differentiated position in the market can give a competitive
advantage to a challenger. Sustainable cost advantage can help to cut down prices to attract
target customers of the chosen competitor, or it can maintain prices and go for more extensive
promotion.
To implement these strategies, certain factors must be favourable. Price challenge may work
only if a challenger has one or more sustainable advantages such as superior technology, good

LOVELY PROFESSIONAL UNIVERSITY 303