BUS 620 Week 3 Assignment

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 1/16

Chapter 8

Market Attractiveness and Competitive Strategies

Associated Press

Learning Outcomes

By the end of this chapter, you should:

Understand how Porter's Five Forces impact the a�rac�veness of compe��ve product markets to prospec�ve market entrants and challengers. Recognize that analyzing compe�tors' strategies, goals, strengths, and weaknesses is essen�al to successful brand management in compe��ve markets and iden�fy the four dimensions that should be considered when assessing compe�tors' capabili�es. Understand how a brand's rela�ve market share or degree of market dominance shapes its strategic choices and responses to compe�tors' ac�ons.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 2/16

Ch. 8 Introduction Chapters 6 and 7 explored the three primary elements of strategic market planning: segmenta�on, differen�a�on, and posi�oning. This chapter focuses on the nature of compe��ve markets, compe�tors, and four classes of alterna�ve strategies based on levels of rela�ve market dominance.

To understand the ra�onale and value of each of the alterna�ve market dominance strategies, it is necessary to appreciate the nature and dynamics of the compe��ve environment in which they must be implemented. This is fundamental to evalua�ng the a�rac�veness of market segments and market opportuni�es. One approach to systema�cally inves�ga�ng the structure of compe��ve markets is Porter's Five Forces Model.

This chapter begins with an inves�ga�on of the specific factors that determine the level of compe��ve intensity within any given product market. The sec�ons that follow focus on compe�tor analysis from the perspec�ves of buyers and compe�ng sellers. Par�cular emphasis is placed on understanding compe�tors' brand strategies, strengths, and weaknesses. The chapter concludes with an examina�on of how a brand's rela�ve market dominance shapes its strategic choices and limits the range of responses to compe�tors' ac�ons. Alterna�ve strategies are presented for market leaders, challengers, followers, and niche compe�tors.

***

It is some�mes argued that the analysis of compe��ve strategy and efficient markets should be the exclusive domain of economists rather than allowing marketers to dabble in the field. If you ever find yourself star�ng to agree with that sen�ment, consider the old joke about the two economists walking along a sidewalk together. One of them sees a $20 bill on the ground and exclaims: "Look! There's a $20 bill lying on the sidewalk over there." The other economist replies: "Don't be silly. There can't be a $20 bill over there. If there were, someone would have picked it up by now."

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 3/16

Porter's Five Forces Model provides an industry analysis framework based on five factors that determine compe��ve intensity. Three of these forces relate to direct compe��ve threats. Two stem from the threats posed by the bargaining power of suppliers and customers.

Intense compe��ve rivalry forced Pan Am into bankruptcy in 1991. Can you think of an example, other than airlines, where new entrants have dras�cally shaped a market?

Associated Press

8.1 Porter's Five Forces: Determining Market Attractiveness Porter's Five Forces Model provides a general framework for industry analysis that iden�fies the factors that determine the compe��ve intensity within a product market. Markets that are less compe��ve are usually more a�rac�ve for prospec�ve entrants, since high levels of head-to-head brand compe��on tend to reduce the overall profitability of any given market. Throughout the discussion of this model, shown in Figure 8.1, we will use examples from the airline industry to illustrate each of the five forces.

Figure 8.1: Porter's Five Forces Model

Three of the five forces within the model relate to direct compe��ve threats from established rivals, subs�tute products, and new entrants. The remaining two sources of threats come from the bargaining power of suppliers and the bargaining power of customers. Changes in the circumstances or behavior of any one of these five market forces typically require a re-evalua�on of the firm's compe��ve strategy. Each of the five forces and its significance is described here.

Threat of New Entrants

One of the reliable lessons of economics for marke�ng managers is that profitable markets will a�ract new compe�tors. These challenges may arise from wholly new market entrants or the introduc�on of new brands from current compe�tors. Over �me, the effects of price compe��on for market share will drive down the profitability of the market for all brands. As markets mature and growth slows, condi�ons approxima�ng perfect compe��on will push prices lower and per-unit profits toward zero for many smaller brands.

In defense of profitability and their market share within specific target segments, brands will look for ways to erect barriers to market entry. Barriers to market entry, or barriers to compe��on, are "the economic, legal, technical, psychological, or other factors that reduce compe��ve rivalry below the level that would otherwise occur naturally. Barriers include branding, adver�sing, patents, entry restric�ons, tariffs, and quotas. Product differen�a�on is a barrier to compe��on" (American Marke�ng Associa�on, 2011). As previously described, there are a myriad of ways to differen�ate a brand from compe�tors' products. To construct an obstacle to compe�tors entering the market, however, those that directly strengthen the fit between the brand and its target segment will be the most effec�ve. The objec�ve is to eliminate any distance or gap between buyers' preferences and brand-specific benefits that would create an opportunity for a challenger to squeeze in. Consequently, high levels of brand equity represent a substan�al barrier to entry insofar as they reflect customer sa�sfac�on and the firm's commitment to building brand loyalty over �me.

The arrival of new entrants has drama�cally reshaped the U.S. airline industry over the past few decades. Regula�on had limited the opportunity for new compe�tors to enter the lucra�ve domes�c U.S. airline industry prior to the passage of the Airline Deregula�on Act of 1978. In the 10 years that followed, 22 new domes�c airlines (e.g., People's Express) were formed. Addi�onally, 43 foreign carriers (e.g., Laker Airlines) entered the U.S. market. As a consequence of direct compe��on from more efficient operators, several major airlines filed for

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 4/16

This graph illustrates airline domes�c market share for November 2010–October 2011, with Delta securing the highest total revenue passenger miles and SkyWest earning the lowest.

bankruptcy over the next 20 years. These included Eastern, Midway, Braniff, Pan Am, Con�nental, America West Airlines, and TWA. More than 100 smaller airlines went bankrupt or were acquired by larger compe�tors (U.S. Centennial of Flight Commission, 2003). Over this interval, average paid fare declined approximately 30 percent in infla�on-adjusted terms (Avia�on Magazine, 2012).

Intensity of Competitive Rivalry

One of the most frequently used measures of compe��ve rivalry is industry concentra�on. The Industry Concentra�on Ra�o is calculated by the U.S. Census Bureau for each of the major NAICS classifica�on categories. It iden�fies the aggregate market share for the 4, 8, and 25 largest firms in most product markets. High four-firm concentra�on ra�os indicate that rela�vely few companies within an industry control a large por�on of the market. Consequently, these markets are recognized as being less compe��ve. Conversely, a low concentra�on ra�o indicates that the industry is more likely to be highly compe��ve.

Ba�les of compe��ve rivalry are o�en fought with marke�ng mix weapons. Price wars and aggressive pricing policies are fairly obvious indicators of intensive compe��on. However, price-based compe��on o�en damages the financial outcomes for all of the compe�tors within a given market.

Channels of distribu�on are also used to pursue compe��ve advantage over compe�tors. In pursuit of building sales and market share, one strategic alterna�ve is to expand the scope of distribu�on channels and outlets through which a given brand is sold. However, the costs associated with building and maintaining extensive distribu�on networks o�en exceed the corresponding profit poten�al. If selected without sufficient regard to the image of the brand being distributed, poor channel choices can also inflict damage on the perceived quality or value of the product as well.

Adver�sing and other forms of promo�onal strategy are the most commonly deployed weapons in compe��ve market ba�les. Both the nature of the messages used and the total volume of adver�sing messages are indicators of how intensively brands are working to steal sales away from each other. In no-growth markets, addi�onal sales can be captured only by taking market share away from compe�tors' brands.

The product dimension of the marke�ng mix can also provide clear indica�ons of how compe��ve a given market may be. Mee�ng buyers' changing expecta�ons by providing higher-quality products is evidence of high compe��ve intensity. High levels of product innova�on may also signal aggressive efforts to capture sales in fast-growing markets. This is evident in many technology-intensive markets such as telecommunica�ons, informa�on processing, and medical equipment. In rapidly evolving product and services markets, technological innova�ons may be essen�al to simply maintaining one's compe��ve posi�on.

In the airline industry, the intensity of compe��ve rivalry has always had a direct impact on the profitability of both large and small compe�tors. Although no one firm has been able to dominate the industry in recent history, the eight largest carriers combined account for about 90 percent of total revenue, as illustrated in Figure 8.2 (U.S. Department of Transporta�on, 2011).

Figure 8.2: Airline domes�c market share November 2010–October 2011

U.S. Department of Transporta�on, 2011

Intense compe��ve rivalry is expressed within the industry in se�ng fares, par�cularly for those profitable routes with origins and des�na�ons at the strategic hub airports that account for most passenger miles. Although non-price promo�ons such as frequent flyer rewards programs remain an important dimension for promo�ng airlines, it is clearly a price-driven market. High fixed costs, slack capacity at most �mes of the year, low brand differen�a�on, and the ready availability of pricing informa�on online all fuel the intensity of compe��ve price rivalry between carriers.

Threat of Substitute Products or Services

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 5/16

Subs�tute products represent a different kind of compe��ve threat than is posed by either new entrants or compe��ve rivals. These are alterna�ve products, rather than alterna�ve brands, that are regarded by consumers as acceptable replacements for other products. There are a wide range of subs�tu�on types, each of which makes markets less a�rac�ve opportuni�es.

The appropriateness of one product as a subs�tute for another is most o�en based on the intended use of the product. That is, they possess a shared func�onal equivalence based on the buyer's percep�on of how each can sa�sfy a need in a specific situa�on. For example, airlines may be an acceptable alterna�ve to one's own car if the need is to travel long distances. However, planes have no u�lity if the objec�ve is to travel to the corner convenience store.

In any given situa�on, the value associated with a subs�tute product is a func�on of how well it fits the customer's needs. Buyers are generally more likely to switch if the subs�tute offers be�er value for the price being charged. Consequently, the subs�tute product's value can be impacted by its quality, performance, and the costs associated with switching.

Switching costs refer to any obstacle to a buyer's change of brands, products, or suppliers. These types of barriers can take different forms, depending on the nature of the product market. The costs of �me and frustra�on that buyers might an�cipate in switching from a landline telephone to a cell phone for the first �me will reinforce product-level loyalty for some types of consumers. Poor customer service and low levels of customer sa�sfac�on, however, will necessarily push consumers over the threshold toward alterna�ve solu�ons. O�en the switching cost barriers that keep buyers from trying subs�tute products are �ed to an aversion to new technologies, emo�onal links to exis�ng product types, and the social consequences of change.

The viability of subs�tutes for air travel are dependent on several customer- and situa�on-specific factors. In principle, travel by car, bus, or train should be a close subs�tute for air travel. In fact, the switching costs between air travel and these poten�al subs�tutes are quite low. Consumer preference for one form of transporta�on over any other, however, is necessarily a func�on of distance, �me, and convenience as well as price. Business travel, par�cularly long trips, and emergency travel tend to favor the airlines over ground transporta�on. On the other hand, leisure travelers are generally more price-sensi�ve and more likely to consider subs�tutes to airlines when evalua�ng their transporta�on op�ons. Some forms of preplanned transporta�on such as for family vaca�ons may actually favor ground transporta�on over airlines even when the rela�ve price of each is disregarded.

The Compe��ve Impact of Switching Costs

The significance of switching costs and their impact on brand choice are far from being fully understood. Marketers tradi�onally looked primarily at the financial costs associated with switching brands, such as the need to acquire and install new equipment. Increasingly, however, the role of psychological switching costs is coming under scru�ny. Psychological switching costs include the inconvenience associated with adap�ng to a new brand, costs associated with learning how to use a new product, and the emo�onal and psychological risks associated with making a change. Within this context, brand loyalty represents a substan�al switching cost for many customers.

In most situa�ons, even consumers who do not regard themselves as brand loyal maintain a bias in favor of s�cking with brands they have used in the past if the product's performance was sa�sfactory. They require the promise of significantly greater benefits to switch to a new and unknown alterna�ve. Consequently, consumers are sensi�ve to the rela�ve advantages and disadvantages of any change rather than absolute differences (Gourville, 2003). The same is true for their percep�on of differences in product prices. They tend to evaluate the rela�ve price difference between brands in light of the psychological costs of switching rather than evalua�ng price levels as absolutes.

The conven�onal view of switching costs and brand loyalty is that these obstacles to changing brands should reduce compe��ve rivalry and increase product prices. In short, they should behave like barriers to entry in that regard. However, research by Dubé, Hitsch, and Rossi (2009) provides surprising evidence to the contrary. They studied the buying behavior of 2,100 households in a large Midwestern city over a two-year interval for orange juice and margarine purchases. Psychological switching costs were observed in the form of loyalty to preferred brands such as Tropicana orange juice and I Can't Believe It's Not Bu�er margarine.

Contrary to expecta�ons, this study found that average market prices for both of these products fell as switching costs increased. That is, as the psychological costs associated with changing brands increased over �me, the per-unit market price decreased. Analysis of the data demonstrated that prices were as much as 18 percent lower with than without the switching costs associated with brand loyalty. Only at excep�onally high levels of switching costs did the researchers observe any significant poten�al to make markets less price compe��ve.

This outcome is counterintui�ve based on our conven�onal ways of thinking about markets, brand loyalty, and pricing. Doing research on this type of phenomenon in a real-world se�ng is quite difficult, and a variety of factors can bias the results or lead to erroneous conclusions. However, there is a growing convic�on among marke�ng prac��oners that switching costs are a far more important and complex dimension of strategy than has been previously recognized.

Bargaining Power of Customers

The a�rac�veness and profit poten�al within a product market are also directly impacted by the extent to which buyers have the ability to impact the terms of sale. Customers' bargaining power directly impacts sellers' ability to maintain or increase prices. The rela�ve power of customers within any given market depends primarily on the size and number of buyers rela�ve to sellers.

When there are rela�vely few buyers for a given product, the poten�al market for sellers is necessarily limited. Aware of this advantageous posi�on, buyers may opt to pit compe�ng sellers against each other to nego�ate the best possible prices and terms. When a single customer represents a large por�on of the poten�al market, sellers have li�le choice but to compete aggressively for that business. Brand differen�a�on is a par�cularly vital countervailing force against the power of

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 6/16

Large retailers such as Walmart o�en squeeze significant price cuts from suppliers and use their market power to compete on price at the retail level.

Associated Press

large customers by providing a value-based defense against being pushed into head-to-head price compe��on.

The same principles apply when one large buyer purchases a substan�al por�on of the market's total output. Large retailers such as Walmart and Sears o�en exact significant price cuts from sellers in product categories where they dominate retail sales (e.g., home accessories and large household appliances). Manufacturers some�mes seek to mi�gate the bargaining power of large buyers by emphasizing end-user promo�ons that directly reinforce brand preference. In this way, consumer- oriented adver�sements and sales promo�ons can strengthen brand-specific demand and provide offse�ng leverage for manufacturers in future nego�a�ons with large retailers.

Many large corpora�ons have travel departments that facilitate travel arrangements for their employees. The opportunity to coordinate airline-related purchases by pooling all of the firm's travel requirements within one buying unit provides the buyer with substan�al leverage when nego�a�ng with major carriers. In most circumstances, however, purchasers lack the ability to collaborate with other buyers to strengthen their bargaining posi�on. Individual consumers are limited to exercising the leverage that comparison shopping on the Internet provides. Though this can be substan�al in some situa�ons, individual consumers are unable to nego�ate airfares from a posi�on of rela�ve

strength or advantage. Airlines will quote fares to these prospec�ve buyers primarily according to route demand. High-demand routes covered by mul�ple compe�tors provide an increased number of nearly perfect subs�tutes. Consequently, prices for these flights will be more compe��ve.

Think About It

Heinz ketchup and Skippy peanut bu�er are two products that grocery retailers recognize as "must-carry" brands. How did they achieve this posi�on?

How could they use this bargaining power as leverage against the demands of large retail grocery chains like Kroger's and Albertson's?

Bargaining Power of Suppliers

The power wielded by the sellers that supply raw materials, component parts, and services to other organiza�onal buyers can make markets more or less a�rac�ve to companies that consider selling finished goods in the market. The dynamics related to the bargaining power of suppliers are comparable to those noted for the bargaining power of buyers.

Suppliers' ability to impact the terms of sale within a given market is primarily dependent on the size and number of alterna�ve suppliers available to buyers. When there are few alterna�ve sources of supply to any given market of organiza�onal buyers, suppliers can leverage this market power to demand rela�vely high prices for the resources they control. When the goods and services provided by market suppliers are highly differen�ated, their market leverage approaches that of monopoly power.

Providing highly specialized raw materials or component parts that are essen�al to the con�nuing opera�on of the customer also elevates the switching costs confron�ng the buyer. In many instances, key suppliers to an organiza�on have cooperated in the development of ordering and inventory systems for the buyer. Product specifica�ons, delivery schedules, order sizes, packaging, and other features may be custom tailored to the needs of the customer. Consequently, switching to a new supplier might require costly adjustments to daily opera�ons of the buyer.

In the airline industry, it is temp�ng to consider the primary supplier to be airplane manufacturers. Firms such as Boeing and Airbus enjoy substan�al bargaining power and leverage over their current customers due to the high switching costs associated with changing airplane types. These costs include training engineers to maintain the new aircra� and training pilots to fly them (RBB Economics, 2002). However, human capital represents a larger investment for airlines each year as employee compensa�on contributes the largest por�on of the airline industry's opera�ng expenses. The rela�ve bargaining power of employees has been evident in several union strikes since the deregula�on of the industry. The downward pressure on airfares over this �me has pushed airlines to trim wage rates and benefits at all levels. The bargaining power of different employee groups, however, will necessarily vary according to the types of employees and whether they are unionized.

Porter's Five Forces Model provides a conceptual, analy�cal basis for evalua�ng the a�rac�veness of markets. This flexible methodology for inves�ga�ng the rela�ve strength of compe�tors, buyers, suppliers, and the poten�al to a�ract new entrants can be applied at the level of market segments, markets, or industries.

Ul�mately, customers and compe�tors are the two primary factors impac�ng marke�ng strategy in most markets. The need to have a thorough understanding of each target market's preferences and characteris�cs has been addressed in preceding chapters. The next sec�on of this chapter provides a systema�c framework for inves�ga�ng and analyzing compe�tors.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 7/16

When Southwest Airlines became a major player in the industry, a number of new airlines fought for their success. How did Southwest analyze their compe�tors' business and counter their strategies?

Gel pens, such as those by Uni-Ball, are considered product form compe�tors of ballpoint pens. Can you think of product form compe�tors for other items?

8.2 Analyzing Competitors and Competitor Strategies The day-to-day prac�ce of marke�ng management is most clearly focused on crea�ng bundles of benefits that sa�sfy target customers. This is both appropriate and essen�al. However, it's a mistake to view the rela�onship between a given brand and target market as exis�ng in isola�on. Marke�ng plans are some�mes developed as though compe�ng brands are en�rely sta�c and have no plans of their own. Worse, it is o�en implicitly assumed that compe�tors' brands will not respond to others' new marke�ng mix ini�a�ves.

Just as marketers need to have a thorough understanding of customers, it is equally important for them to study the strategies, objec�ves, and strengths of compe�tors. This sec�on introduces a framework for organizing the analysis of compe�tors and provides a basis for building strategies on the basis of this informa�on.

Southwest Answers the Compe��on

Identifying Competitors

To create effec�ve marke�ng programs, it is necessary to appreciate the nature and character of compe��on within your target market. The first step in the process is to iden�fy the specific compe�tors for your brand, including those alterna�ves or subs�tutes that extend beyond the immediate product type being sold.

Iden�fying compe�tors is a cri�cal first step in the process of compe�tor analysis since the failure to iden�fy all of the brand's relevant challengers can limit the effec�veness of brand strategy. The failure of movie studios to recognize the emerging compe��ve threat from television in the 1950s was disastrous for the industry. Throughout the past 25 years, soda companies have repeatedly underes�mated the threat posed by sports drinks, non-carbonated flavored drinks (e.g., iced tea), bo�led water, and energy drinks.

There are two basic approaches to iden�fying any given brand's compe�tors. Product based approaches rely on the classifica�on of compe�tors according to the objec�ve a�ributes of the brands being sold. For example, the compe�tors for Pilot ballpoint pens would simply be iden�fied as other brands of ballpoint pens. This is a straigh�orward product orienta�on that defines compe��on based on how company managers perceive the compe��ve product class rather than how consumers perceive the set of relevant alterna�ves. Though s�ll commonly used in some industries, this view is incompa�ble with the fundamental philosophy of marke�ng, as it is more likely to lead to errors of omission than the alterna�ve.

The alterna�ve path to iden�fying a brand's compe�tors is termed the market approach. This method classifies compe�tors based on customer a�tudes, percep�ons of the benefits offered by poten�ally compe��ve brands, and buyers' market-related behaviors. The focus of this approach is that customers, not brand managers, define the compe��ve set. Using the market approach, marke�ng managers can iden�fy three levels or �ers of compe��ve brands based on the percep�ons of target market customers: product form, product class, and generic compe�tors.

Product form compe�tors are those brands of products or services within the same product category. This is the narrowest defini�on of compe��on, and the brands sold in this class are o�en referred to as direct compe�tors. Consequently, the product form compe�tors for Pilot ballpoint pens would be other similar pens (e.g., ballpoints, porous points, gel-ink pens) in a comparable price and quality range.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 8/16

PR Newswire/Associated PressProduct class compe�tors are brands that provide similar bundles of benefits and func�ons, but lie outside the immediate compe��ve set. For Pilot ballpoint pens, this would include more sophis�cated wri�ng instruments (e.g., fountain pens, calligraphy pens), mechanical pencils, felt-�pped markers, and the like.

Generic compe�tors include all kinds of products that the customer may regard as serving the same basic need on a par�cular usage occasion. If the consumer were a student looking for a way to take lecture notes, then digital voice recorders, notebook computers, and even a smartphone with the appropriate app could serve as generic compe�tors to Pilot ballpoint pens.

This final �er of compe��on reflects extraordinary rather than ordinary circumstances. Although the products in this category are unlikely to represent a source of significant compe��on as markets currently exist, they o�en provide clues about where future compe�tors or new market opportuni�es may arise. This might include pens or highlighter markers with voice recorders in the �ps.

Think About It

Consider DiGiorno's frozen flatbread pizza. What brands, products, or services would you classify as product form, product class, and generic �er compe�tors?

The different �ers of compe��on have relevance for marke�ng managers on two levels. In strategic planning, they provide important context for environmental scanning and analysis of the compe��ve environment. In terms of marke�ng plan development, knowing the iden�ty of compe��ve brands at each of the three �ers has implica�ons for brand posi�oning strategy.

The ul�mate objec�ve of posi�oning strategy at all three levels of compe��on is to provide a be�er bundle of benefits for your target customers rela�ve to the offerings of compe�tors. However, knowing which brands compete in each of the three �ers should shape the priori�es and objec�ves of the marke�ng plan in this respect. The direct compe�tors within the product form �er warrant the primary focus of the plan's efforts to differen�ate and promote the brand.

The need to address threats from product form and generic compe�tors must be lesser priori�es since they represent lesser threats in most instances. However, forward-looking market leaders may wish to engage these lower-�er compe�tors when specific threats are recognized on the horizon. This is some�mes observed when manufacturers promote the superiority of their product category's ability to meet buyers' needs. This would be the case for promo�onal campaigns developed by leading names in the railroad industry that have taken aim at the deficiencies in shipping freight via air or over-the-road truck haulers.

Understanding Competitors' Objectives

Understanding compe�tors' brand-specific objec�ves can provide clues about their future plans and strategies. Despite the value of secrecy and confiden�ality in business, many companies rou�nely leak informa�on about future goals through informa�on posted on company websites, interviews given in trade publica�ons, and conversa�ons between company sales representa�ves and clients. Careful observa�on of markets can also provide insights on the future plans for a company.

Think About It

A well known marketer of pasta sauce rou�nely tracks its compe�tors' purchases from suppliers of spices and glass jar packaging. These clues help the company an�cipate compe�tors' changes in the flavor profiles, varie�es, and package sizes of their brands.

How might you use marke�ng intelligence of this sort to an�cipate changes in future trends for the sales of sport u�lity vehicles?

Changes in the objec�ves for any given brand are invariably accompanied by revisions in the marke�ng ac�vi�es that support the brand. Consequently, new market share, growth, or profitability goals will require the development of different strategies. This may impact any or all dimensions of the marke�ng mix.

Monitoring Competitors' Strategies

Strategy is driven by objec�ves. As discussed in previous chapters, the primary areas of strategic planning include market segmenta�on, product differen�a�on, and brand posi�oning. In turn, the goals established for each of these strategic drivers dictate the requirements of the marke�ng mix as defined by the marke�ng plan for the brand.

When considering how to monitor strategic shi�s among compe�tors, marke�ng managers should be cognizant of those changes that are readily evident from the rou�ne monitoring of the compe��ve environment. Pricing is an easily tracked and highly visible dimension of the marke�ng mix for every brand. Changes in product pricing by a compe�tor may signal a strategic shi� and definitely require the a�en�on of compe�ng brand managers. A change may reflect a new strategy in quality/value posi�oning, shi�ing unit costs, or plans to build sales volume. Accompanying changes to other marke�ng mix elements should help to diagnose the larger strategic issues underlying the price change.

Changes in the composi�on of the product being sold, channel strategy, and promo�ons also provide signals that the target market for compe��ve brands may be shi�ing. Shi�s that reposi�on a brand to bring it into closer compe��on with another o�en prompt rapid and aggressive responses as brands move to defend their territory. Shi�s to previously underserved microsegments or regions of product space may signal a compe�tor's recogni�on of untapped poten�al.

In B2B contexts, sales literature, trade promo�ons, and informa�on leaked by sales representa�ves are excellent sources of informa�on. For B2C markets, adver�sing and changes in the pa�ern of media buying are good sources to monitor for changes in compe�tors' strategies.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clien… 9/16

Pharmaceu�cal company Roche has a high innova�ve capacity, enabling it to widen the gap between itself and market followers. Can you think of another company with a high innova�ve capacity?

Associated Press

Assessing Competitors' Strengths and Weaknesses

The strengths and weaknesses of compe�tors both define and limit their strategic alterna�ves to a significant extent. There are four primary dimensions that should be considered when assessing the capabili�es of compe�tors: innova�ve capacity, opera�ng capacity, marke�ng capability, and financial strength.

Innova�ve capacity refers to an organiza�on's ability to develop and market new products or services. Although this can be difficult to assess, firms with a history of making substan�al resource commitments to research and development are likely to con�nue on that path into the future. In industries where research and development (R&D) is both costly and risky (e.g., prescrip�on pharmaceu�cals), the gap between highly innova�ve companies (e.g., Roche, Eli Lilly) and the least innova�ve (e.g., generic drug manufacturers) is both substan�al and consistent. Firms that possess the resources and talent to regularly introduce new products pose a greater long-term challenge than market followers.

Opera�ng capacity is a measure of a firm's manufacturing or service-producing poten�al within exis�ng product and service lines. In capital-intensive sectors (e.g., automakers), crea�ng addi�onal produc�ve capacity in the short term is difficult. Consequently, companies opera�ng at or near full capacity will be unable to threaten compe�ng brands with new strategic ini�a�ves that require more produc�on. Conversely, the promise of greater economies of scale in produc�on and lower unit costs may encourage firms with substan�al unused produc�ve capacity to reduce prices to build sales volume.

Think About It

How do economies of scale and opera�ng capacity relate to "thinking intensive" industries (e.g., so�ware development) where human capital and crea�vity is the primary limita�on on higher levels of produc�on?

Marke�ng capability refers to compe�tors' ability to competently market new products or services. Some companies, for example, simply lack access to distribu�on channels or other prerequisites to successful launches. Some firms simply lack the corporate DNA to successfully launch new brands due to a lack of skilled management personnel. However, even firms with proven track records for successfully launching new products may differ substan�ally in terms of the aggressiveness and innova�on that each brings to the process. Knowing that a given firm tends to plan extensively and move deliberately suggests opportuni�es for more nimble marketers to meet compe��ve threats earlier. More daring, less risk-averse firms, however, may pose a greater threat. Even unsuccessful product launches by these firms have the poten�al to disrupt established market dynamics and damage sales throughout a given product market.

Financial strength is an essen�al ingredient to every successful company. However, limited financial resources can severely limit the strategic alterna�ves open to even successful organiza�ons. Large, diversified firms can allocate marke�ng costs across a broad base of product lines and enjoy significant cost advantages when introducing new brands or revised product strategies. These advantages are par�cularly evident in the lower costs associated with using an established sales force to market the product through exis�ng distribu�on channels, to reach a market that already recognizes the brand or parent company. These unique economies most o�en accompany market leaders to a greater extent than market challengers or followers.

Think About It

Companies with highly publicized financial problems can become vulnerable to compe�tors. How might compe�tors take advantage?

The end result of analyzing compe�tors and compe�tor strategies should be a clearer set of expecta�ons about how the dynamics of the market may change in the near future. Though forecasts of this nature are necessarily somewhat specula�ve, they provide a pla�orm from which to consider how a given brand can best respond to a range of poten�al challenges. The sec�ons that follow inves�gate how this informa�on can be used to determine which of four alterna�ve dominance strategies are best suited to the dynamics of the market.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clie… 10/16

American Airlines is a market challenger with strong brand awareness and the poten�al to gain market share against larger compe�tors.

age fotostock/SuperStock

8.3 Market Dominance Strategies In Chapter 1, we iden�fied Porter's three generic compe��ve strategies for pursuing new market opportuni�es: product differen�a�on, cost leadership, and market focus (1980). The decisions made with respect to these alterna�ves sets an enduring tone for how best to market and posi�on a new brand in compe��ve markets. In this sec�on we consider strategy on a different level. Based on Porter's Five Forces Model and the analysis of compe�tors, we can consider an alterna�ve dimension of brand strategy based on how a brand's rela�ve market share shapes its strategic choices and responses to compe�tors' ac�ons.

Market dominance reflects the strength of a brand rela�ve to compe�tors, and brand market share provides a convenient, though imperfect, measure of this construct. A superior measure is provided by rela�ve market share, as introduced in Chapter 1. Rela�ve market share is simply the ra�o of one brand's market share to the market share of the category's largest compe�tor. This effec�vely provides a comparison of each brand's share to that of the market's dominant compe�tor.

Market dominance strategies are based on a given brand's rela�ve dominance within a specified product market or target segment. The four alterna�ve strategies presented in this sec�on arise from the considera�on of how rela�ve dominance influences the role that brands play within any given market: leader, challenger, follower, or nicher.

Market Leader Strategies

The market leader is the brand that is dominant within its market. By defini�on, it holds the posi�on of market share and rela�ve market share leadership. Economies of scale will typically enable that firm to produce the product or service at a lower unit cost than compe�tors. Consequently, it may exert significant influence on prevailing price levels. Due to its leadership posi�on and rela�ve size, it is less vulnerable to the bargaining power of buyers and suppliers than other brands. Of the four alterna�ve dominance strategies, it is the most adap�ve insofar as there are very few strategic op�ons not available to it.

Market leaders will gain the most from overall growth in market demand if their sales increase in propor�on to their market share. Consequently, leaders o�en pursue strategies intended to expand the market by a�rac�ng new users, developing new uses for the product, or promo�ng greater product usage per occasion.

Market leaders are o�en the companies that are the most commi�ed to product research and the most innova�ve in the development of new products. They also tend to leverage their financial resources to improve the efficiency of product produc�on, customer service, market research, and distribu�on technologies.

The deeper pockets that come with market leadership also provide the number one brand with sufficient resources to increase sales and market share at the expense of their smaller rivals. When targeted by the market's largest brand, most compe�tors will find it difficult to mount a financially comparable defensive response due to the lack of resources. However, in many instances they can defend their brand well enough to make the market leader's cost of capturing addi�onal share points higher than their financial value warrants.

Market Challenger Strategies

A market challenger is a second-�er brand. It is a strong and well-posi�oned brand that lacks the dominance held by the market leader. It is regarded as a challenger insofar as it is engaged in an aggressive strategy to gain market share. It typically has unambiguous ambi�ons to secure the top spot in the market. It may pursue this goal by targe�ng the industry leader directly (e.g., Avis versus Hertz, Colgate versus Crest, Ford versus Toyota, Pepsi versus Coke). However, it may find greater success in focusing on mul�ple smaller compe�tors that are less able to defend their market posi�ons.

The determina�on of the most appropriate target is o�en dictated by the posi�oning strategy of the market challenger. To effec�vely leverage its brand image and equity, the challenger needs to pursue brands that are conceptually close to its own in the minds of consumers. Other considera�ons include an assessment of how vigorously alterna�ve targets are likely to defend their posi�ons.

Market challengers and a�ackers in general have the advantage of deciding when and how they will launch a raid on another brand's posi�on. As illustrated in Figure 8.3, there are five alterna�ve a�ack strategies open to market challengers: frontal, flank, encirclement, guerilla, and bypass (Kotler and Singh, 1981).

Figure 8.3: Alterna�ve a�ack strategies for market challengers

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clie… 11/16

Market challengers and a�ackers have five alterna�ve a�ack strategies available to them: frontal, flank, encirclement, guerilla, and bypass.

(Kotler and Singh, 1981)

In a frontal a�ack, the challenger confronts the defender's brand posi�on directly with a marke�ng mix that provides the buyer with superior product quality and value.

A flank a�ack aims at a specific weakness in the targeted brand's market posi�on. For B2C markets, this could be in rela�on to a specific geographic market where the brand is underperforming rela�ve to expecta�ons or comparable territory averages. In all kinds of markets, the weak spot may be due to a gap between buyers' preferences and expecta�ons and brand performance. The failure to consistently create sa�sfied customers always provides a poten�al invita�on to a compe�tor's a�ack.

The encirclement a�ack is comparable to a flank a�ack with one excep�on: It is launched against mul�ple points of vulnerability or weakness in the defender's posi�on.

A guerilla a�ack is characterized by an intermi�ent hit-and-run approach to compe��ve strategy. It is typical of a smaller brand a�acking a larger one. The a�acker uses a series of small assaults, o�en across a range of mul�ple market mix variables. An intense but brief mass media blitz might be followed by a series of unpredictable short-term price incen�ves to buyers mixed with unconven�onal brand assaults through social media channels. Though generally less expensive than tradi�onal a�ack strategies, it risks dispropor�onately strong responses from its target, intent on defending its share against a smaller challenger.

A bypass a�ack is the least confronta�onal approach to building category sales. Rather than confron�ng the entrenched posi�on held by a market leader, this strategy aims to pursue new opportuni�es that have not yet been exploited. This is most likely to be a strategy op�on in markets where technological advances by smaller firms enable a challenger to pioneer new ways of mee�ng target customers' needs by leapfrogging over exis�ng technologies.

Market Follower Strategies

A market follower is a financially secure firm that does not occupy the most dominant posi�on and is content to hold its market share rank. In some instances, the lack of overall market growth or entrenched posi�ons of compe�tors makes this a logical strategy choice. Like market leaders, followers need to defend their market share posi�on by responding to both new opportuni�es and threats in a manner propor�onate to their posi�on and resources.

Market followers pursue a conserva�ve strategy. The firms that pursue this alterna�ve are o�en commi�ed to serving the specific needs of their target customers, and their dedica�on to one segment may lead to forgoing opportuni�es elsewhere. The advantage to this perspec�ve is the opportunity to cul�vate a very loyal customer base.

Other advantages may also accrue to firms that follow the example set by market leaders. They o�en copy product innova�ons and business prac�ces that have proven to be successful for others without incurring the risks and development costs. Their focus and commitment to serving their customers well minimizes the likelihood of direct compe��ve a�acks on their posi�on. Similarly, they are unlikely to invest in costly market share ba�les with other brands.

Market Nicher Strategies

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clie… 12/16

Coke invests in niche products it thinks could become a phenomenon, like coconut water. Why do you think coconut water is a niche product, and how will Coca Cola market it for the niche consumers?

Market nicher strategies are characterized by brands that concentrate their resources and efforts on rela�vely small target markets. This is directly comparable to the focus strategy previously presented. Limi�ng the marke�ng plan to small, narrowly defined target market segments enables the crea�on of the best possible fit between brand and consumer. Ideally, the target niche chosen should be large enough to be profitable, but small enough to be ignored by the larger brands within the category.

The profit goals that shape this strategy tend to emphasize unit margins rather than volume sales. Market shares are small, and the firm usually builds a loyal customer base slowly by providing a unique bundle of benefits that is unlike any other in the market. O�en these specialized goods and services are aimed at the high end of the market, commanding price premiums over most other category brands. The limited size of the market, however, also allows the company to minimize marke�ng-related expenditures.

The Next Big Thing

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clie… 13/16

Ch. 8 Conclusion Understanding the features that make a market a�rac�ve to prospec�ve compe�tors is certainly important to marke�ng managers. Similarly, being able to analyze the strengths and alterna�ve strategies available to exis�ng compe�tors also plays a cri�cal role in shaping the marke�ng mix strategy for a given brand. Each of the four market dominance strategies iden�fied has specific strengths and weaknesses, and each is appropriate under certain circumstances.

For brand managers, however, it remains of paramount importance to remember that consumers are the sovereigns of the marketplace. Although it is essen�al to understand the compe��ve dynamics of the market, understanding customers' needs remains a higher priority. Nonetheless, effec�ve managers will learn how best to integrate the informa�on gleaned from both compe�tor and consumer analysis to create a sustainable compe��ve advantage and sa�sfy the requirements of the marke�ng concept—that is, to achieve the goals of the organiza�on by sa�sfying customers' wants and needs be�er than the compe��on.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clie… 14/16

Ch. 8 Learning Resources

Key Ideas

Cri�cal Thinking Ques�ons

1. Porter's Five Forces Model is intended to provide a conceptual framework to help managers evaluate the compe��ve dynamics of product markets. Do you think that it is well suited to this purpose? Are there changes you would want to make so that the model would be more managerially useful? Why?

2. Implicit in the design of Porter's model is that managers will have enough informa�on about their markets to make the framework useful for decision making. Do you think it is a realis�c assump�on?

3. Should government be added as a sixth force in Porter's Five Forces Model? Why or why not? 4. Consider "so�ware development" as a hybrid product/services market. Brand posi�oning and high levels of customer sa�sfac�on can be effec�ve barriers against

the entry of new compe�tors into this market. Do you think these things tend to be more or less effec�ve over �me than patents and copyrights? 5. Market share ba�les are typically fought with marke�ng mix weapons. Choose a product category of interest to you and explain how each of the 4 Ps could be

deployed in a ba�le to build market share. How would market leaders use these weapons differently than challengers and nichers? 6. How can market leaders build switching costs into their rela�onships with buyers to reduce the likelihood that they will change brands? Provide examples. 7. Is it ethical to build in these types of "penal�es" to keep customers from switching brands? Crea�ng loyal customers is a be�er solu�on, but which is more

effec�ve? Explain. 8. The text describes several forms of marke�ng intelligence—ways of monitoring your compe�tors' ac�ons and inten�ons by scanning the environment for clues.

Iden�fy at least three techniques for monitoring the compe��on that are not provided in the text. 9. This chapter makes the argument that customers and compe�tors are the two primary factors impac�ng marke�ng strategy in most markets. What are some

excep�ons to this principle? Under what circumstances can other factors drive strategy? 10. The chapter concludes by reitera�ng the point that consumers are the sovereigns of the marketplace. In effect, it says that it is more important to respond to them

than to compe�tors' behavior. Do you agree? If you believe that managers need to take account of both forces and hold a balanced perspec�ve, do you advocate a perfectly even 50-50 balance? What will make the balance shi� from one side to the other?

Key Terms

Click on each key term to see the defini�on.

barriers to market entry (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

Also known as barriers to compe��on, these are factors that reduce the level of compe��ve rivalry within a market. Barriers in any given context may include economic, legal, technological, cultural, and psychological features. Product differen�a�on, branding, adver�sing, patents, entry restric�ons, tariffs, and quotas may all func�on as effec�ve barriers to compe��on.

bypass a�ack (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

This strategy involves avoiding the target compe�tor's posi�on en�rely. It o�en requires the introduc�on of substan�ally new products, new technologies, or significantly different business models. The objec�ve is to change the nature of the market itself.

encirclement a�ack (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

This strategy involves surrounding or enveloping target compe�tors, o�en by producing a range of brands that are similar to the target product. The objec�ve in this instance is for each new brand to steal away a small por�on of the target compe�tor's market share. It is some�mes described as laying siege to a compe�tor.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clie… 15/16

financial strength (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A measure of the firm's depth of financial resources rela�ve to its needs.

flank a�ack (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A strategy designed to exert pressure against compe��ve brands without engaging in a head-on confronta�on. It typically involves launching new marke�ng programs that target segments that are not deemed essen�al or central to the success of the target brand. This may include introducing a new brand to meet the needs of a par�cular market niche.

frontal a�ack (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

This refers to a direct head-on assault against one or more close compe�tors, typically requiring the commitment of substan�al resources.

generic compe�tors (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

All kinds of products that the customer may regard as serving the same basic need on a par�cular usage occasion. This final �er of compe��on reflects extraordinary rather than ordinary buying circumstances.

guerilla a�ack (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

This differs from conven�onal marke�ng programs that are aimed at confron�ng compe�ng brands with sustained ini�a�ves. This kind of a�ack is launched at irregular and unpredictable intervals, o�en using unconven�onal means intended to wear down the target through a long series of minor a�acks.

Industry Concentra�on Ra�o (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

Iden�fies the aggregate market share for the 4, 8, and 25 largest firms in most product markets. High four-firm concentra�on ra�os indicate that a rela�vely few companies within an industry control a large por�on of the market.

innova�ve capacity (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

An organiza�on's ability to develop and market new products or services.

market challenger (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A strong and well posi�oned second-�er brand that lacks the dominance held by the market leader. It is regarded as a challenger insofar as it is engaged in an aggressive strategy to gain market share. Challengers may pursue one of five a�ack op�ons including frontal a�acks, flank a�acks, encirclement a�acks, guerilla a�acks, and bypass a�acks.

market dominance (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

The strength of a brand rela�ve to its nearest compe�tors. O�en measured by brand market share or rela�ve market share.

market follower (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A financially secure firm that does not occupy the most dominant posi�on and is content to maintain its market share rank. Typically follows a conserva�ve strategy and o�en follows the example set by market leaders.

market leader (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A brand that is dominant within its market. It holds the posi�on of market share and rela�ve market share leadership.

market nicher (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A brand that concentrates its resources and marke�ng efforts on rela�vely small target markets. This is directly comparable to the generic focus strategy.

marke�ng capability (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

Ability of compe�tors to competently market new products or services.

4/10/2019 Print

https://content.ashford.edu/print/AUBUS620.12.1?sections=ch08,ch08introduction,sec8.1,sec8.2,sec8.3,ch08conclusion,ch08_eoc&content=all&clie… 16/16

opera�ng capacity (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A firm's manufacturing or service-producing poten�al within exis�ng product and service lines.

Porter's Five Forces Model (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

A framework for industry analysis that iden�fies the five factors that determine the level of compe��ve intensity within a product market. Those factors include the threat of new compe�tors, the intensity of compe��ve rivalry, the threat of subs�tute products, and the bargaining power of both customers and suppliers.

product class compe�tors (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

Brands that provide similar bundles of benefits and func�ons but lie outside the immediate compe��ve set.

product form compe�tors (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

Brands of products or services within the same product category. This is the narrowest defini�on of compe��on, and the brands sold in this class are o�en referred to as direct compe�tors.

switching costs (h�p://content.thuzelearning.com/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12.1/sec�ons/front_ma�er/books/AUBUS620.12

Obstacles to a buyer's change of brands, products, or suppliers.

Web Resources

Harvard Business School's weekly online business strategy newsle�er, Working Knowledge. Each edi�on includes a sec�on devoted to marke�ng and marke�ng strategy. h�p://hbswk.hbs.edu (h�p://hbswk.hbs.edu)

The online home of INSEAD, the French acronym of the former European Ins�tute for Business Administra�on. It has interna�onal graduate business programs in Europe, Asia, and the Middle East. Its Knowledge site provides free access to English-language ar�cles and research bulle�ns from around the world. h�p://knowledge.insead.edu (h�p://knowledge.insead.edu)

The biweekly online magazine of the Wharton School of Business, Knowledge@Wharton. Each edi�on includes a sec�on devoted to marke�ng and recent developments in the field of marke�ng planning and strategy. h�p://knowledge.wharton.upenn.edu (h�p://knowledge.wharton.upenn.edu)