Page 322 - Marketing Management

Competitive Dynamics

To be a long-term market leader is the goal of any marketer. Today’s
challenging marketing circumstances, however, often dictate that companies reformulate their
marketing strategies and offerings several times. Economic conditions change, competitors
launch new assaults, and buyer interest and requirements evolve. Different market positions can
suggest different market strategies.

Former University of Maryland football player Kevin Plank was dissatisfied in his playing
days with cotton T-shirts that retained water and became heavy during practice. So with
$500 and several yards of coat lining, he worked with a local tailor to create seven pro-
totypes of snug-fitting T-shirts that absorbed perspiration and kept athletes dry. Under
Armour was born and quickly became a favorite at high schools, colleges, and universi-
ties. Intense, in-your-face advertising featuring NFL player “Big E” Eric Ogbogu grunting and scream-
ing, “We must protect this house,” sent a loud message to target teens and young adult males that a
new brand of athletic clothing and gear had arrived. With a focus on perfor-
mance and authenticity, Under Armour later introduced football cleats to cover
This chapter examines the role competition
players literally from head to foot. The introduction of a full line of running
plays and how marketers can best manage their brands
shoes in 2009, however, put them squarely into competition with formidable
depending on their market position and stage of the
opponents Nike and adidas. The launch also reflected an attempt to move
product life cycle. Competition grows more intense every
away some from team sports to attract individual consumers and, in particu-
year—from global competitors eager to grow sales in
lar, reach a new demographic—women. An ad campaign themed “Athletes
new markets, from online competitors seeking cost-
Run” introduced the technologically advanced, high-end Apparition and
efficient ways to expand distribution, from private-label
Revenant running shoes showing many accomplished athletes who were not
and store brands providing low-price alternatives, and
well-known as runners running in the shoes. The next new product initiative from brand extensions by mega-brands moving into new
2
under consideration—basketball shoes—would capitalize on one of their categories. For these reasons and more, product and
athletic endorsers, up-and-coming NBA player Brandon Jennings, but would brand fortunes change over time, and marketers must
also represent an even more full-on, direct assault of some of Nike’s and adi- respond accordingly.
das’s market turf. 1

Competitive Strategies

for Market Leaders

Suppose a market is occupied by the firms shown in Figure 11.1. Forty percent is in the hands
of a market leader; another 30 percent belongs to a market challenger; and 20 percent is claimed by
a market follower willing to maintain its share and not rock the boat. Market nichers, serving small
segments larger firms don’t reach, hold the remaining 10 percent.
A market leader has the largest market share and usually leads in price changes, new-product in-
troductions, distribution coverage, and promotional intensity. Some historical market leaders are
Microsoft (computer software), Gatorade (sports drinks), Best Buy (retail electronics), McDonald’s
(fast food), Blue Cross Blue Shield (health insurance), and Visa (credit cards).
299