Articles analysis
Marketing is War
What are the criticisms of the marketing concept that Ries and Trout state in this article? What do they recommend instead?
What is the principle of force? Do you agree with this concept? Why or why not? What are the pros and cons of large size in developing strategy?
What are the “better people and better product” fallacies? Do you agree with these? What do the authors claim is more important?
What is the superiority of defense? How might you utilize this principle in marketing?
Acc0rding to Ries and Trout, where is the battleground? What is the artillery? What are the implications of this?
Identify 4-5 general themes from the article.
Study: Leading brands aren’t always enduring
Peter Golder – New York University Stern School of Business – studied capability of brands to maintain leadership status.
Study of >650 products in 100 categories
Leading brands are more likely to fail than to maintain their leading position
Earlier study claimed 19 of 25 leading brands from 192 maintained leadership position, but 25 categories selectively chosen out of 100 categories tested.
Compared leading brands of 1923 study with leaders in 1997 – only 23 of 100 product category leaders were still market leaders
Must be able to adapt with changes in marketplace.
Growth Tactics
Build market share
Develop committed customers and stakeholders
Build powerful brand
Innovate new products, services, experiences
Expand internationally
Acquisitions, mergers, & alliances
Build outstanding reputation for social responsibility
Partner with government & NGOs
Grow the core
Focus on most successful existing products and markets – low risk
Make core of brand as distinctive as possible
Drive distribution through existing and new channels
Offer core product in new formats or versions
Growth Strategies
Product-Market Expansion Grid
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Vertical Integration
Market
Penetration
Product
Development
Diversification
Source: H. Igor Ansoff, “Strategic Diversification”, Harvard Business Review, September-October 1957, pp.113-24
Market
Development
Present
Markets
New
Products
Present
Products
New
Markets
Figure 2.4
Growth Strategies – Synergy
Synergy
Knowledge-based
Operations-based
Market Penetration – Same Market, Same Product
Increase Market Share
Advertising and Sales promotions
Price decrease
Increase Product Usage
Frequency of use
Quantity used per use occasion
New applications or uses
Product Development – New Product, Same Market
Product reformulation
Replacement and line extensions
New generation product
Market Development – Same Product, New Market
New Geographic segment
New market segments
Diversification – New Market, New Product Category
Vertical Integration
Forward vs. Backward
Benefits
Risks
Types
Concentric Diversification – related
Conglomerate Diversification - unrelated
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Stability Strategies
Pause
After growth – realign
Work on synergies
Eliminate duplication
Develop efficiencies
Proceed with caution
waiting for environmental event to unfold
keep options open
Status quo – no change
Consolidation Strategies
Harvesting
Decrease or eliminate promotion and production expenditures
Pruning
Drop unprofitable products and product lines
Retrenchment
Drop unprofitable markets
Pull products out of unprofitable distribution channels
Divestment
Sell off Division, Company or product line
Liquidation/Abandonment
No market – liquidate
Marketing Warfare Positions and Strategies
Market Leader
Expand total market
Primary demand
Market development
Protect market share
Responsive marketing(fill current stated need)
Anticipative marketing (anticipate need)
Creative marketing – solutions customers didn’t ask for, but enthusiastically respond – market-driving firms
Defensive Marketing
Fortress/position defense – shore up strong position
Continuous innovation and fill in shelf space – sizes & forms
Flank – offset challenge to category
Attack first – preemptive defense – different locations
Counteroffensive moves – block competitive moves
Mobile defense – broaden market shift to underlying generic need and market diversification – unrelated industries
Contraction defense – strategic withdrawal – can’t defend everything
Expand market share
Price decrease or increase advertising
Expand distribution
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Challenger
2nd or 3rd company in category aggressively pursuing greater market share
First choose opponent – leader , same size, smaller, or industry as a whole (status quo)
Frontal attack – weaknesses and/or weaknesses in strengths
Modified frontal – match offering and cut price
Flanker – create new category – fill the gap, blue ocean
Encirclement - Hit several fronts simultaneously – should have superior resources
Indirect or bypass attack – attack easier markets to broaden resources, new technologies, unrelated products, new geographic markets
Guerilla attack – small intermittent attacks – selective price cuts, intense advertising, legal action
How to attack the industry leader
Must have an SCA – point of difference
Neutralize leader’s advantage
There must be some impediment to retaliation – situation or weakness in the leader’s strength
Launch attack on as narrow a front as possible
Odds usually in favor of the defender
Three methods:
Reconfiguration – new way to perform essential activities (design, manufacturing, delivery) or add features, level of advertising
Redefinition – scope of competition – focus strategy – concentrate resources
Pure spending – riskiest without reconfiguration or redefinition
Market Follower
Lower tier company
Usually earns less than leader and challengers
Conscious parallelism – Strives for stability in market share and strategy
Product and image differentiation low, price sensitivity
Cloners – innovation imitation – emulates leader’s products, packaging with slight variations – private labels
Imitators – maintain some differentiation in packaging, advertising, pricing or location
Adapter – adapt and improve leader’s products
Market Nicher
Usually smaller firm
Become leader in small market or local market ignored by the major players – growth potential and matches strengths and resources
Know customers well – meet needs better
Usually high margin instead of high volume
Specialization is key
Never act like the leader
Speed and adaptability advantage
Alliances common
Must continually create new niches
Ideal Niche
Sufficient size and purchasing power to be profitable
Growth potential
Negligible interest to major competitors
Firm has required skills and resources to serve the niche effectively
Firm can defend itself against an attacking major competitor through customer goodwill and specialization developed
Specialization is key – end-user, customer-size, geographic, quality/price (low or high)