Page 323 - Marketing Management

300 PART 4 BUILDING STRONG BRANDS

Although marketers assume well-known brands are distinctive in consumers’ minds, unless a
dominant firm enjoys a legal monopoly, it must maintain constant vigilance. A powerful product
innovation may come along; a competitor might find a fresh marketing angle or commit to a ma-
Market
40% jor marketing investment; or the leader’s cost structure might spiral upward. One well-known
leader
brand and market leader that has worked to stay on top is Xerox.

Xerox Xerox has had to become more than just a copier company. Now the blue-chip
Market Xerox icon with the name that became a verb sports the broadest array of imaging products in the
30%
challenger world and dominates the market for high-end printing systems.And it’s making a huge product
line transition as it moves from the old light lens technology to digital systems. Xerox is
preparing for a world in which most pages are printed in color (which, not incidentally, gener-
Market ates five times the revenue of black-and-white). Besides revamping its machines, Xerox is beefing up sales
20%
follower by providing annuity-like products and services that are ordered again and again: document management,
ink, and toners. It has even introduced the managed print-services business to help companies actually
Market
10%
nichers eliminate desktop printers and let employees share multifunction devices that copy, print, and fax. Once
slow to respond to the emergence of Canon and the small-copier market, Xerox is doing everything it can
|Fig. 11.1| to stay ahead of the game. 3
Hypothetical Market
Structure In many industries, a discount competitor has undercut the leader’s prices. “Marketing Insight:
When Your Competitor Delivers More for Less” describes how leaders can respond to an aggressive
competitive price discounter.

have changed consumer expectations about the trade-off between
quality and price.
To compete, mainstream companies need to infuse their time-
less strategies like cost control and product differentiation with
g
Marketin
Marketing InsightInsight greater intensity and focus, and then execute them flawlessly.
Differentiation, for example, becomes less about the abstract goal of
rising above competitive clutter and more about identifying openings
left by the value players’ business models. Effective pricing means
waging a transaction-by-transaction perception battle for con-
When Your Competitor Delivers sumers predisposed to believe value-oriented competitors are
More for Less always cheaper.
Competitive outcomes will be determined, as always, on the
Companies offering the powerful combination of low prices and high ground—in product aisles, merchandising displays, reconfigured
quality are capturing the hearts and wallets of consumers all over the processes, and pricing stickers. Traditional players can’t afford to drop
world. In the United States, more than half the population now shops a stitch. The new competitive environment places a new premium
weekly at mass merchants such as Walmart and Target. In the United on—and adds new twists to—the old imperatives of differentiation
Kingdom, premium retailers such as Boots and Sainsbury are scram- and execution.
bling to meet intensifying price—and quality—competition from ASDA
and Tesco. Differentiation
These and similar value players, such as Aldi, Dell, E*TRADE Marketers need to protect areas where their business models give
Financial, JetBlue Airways, Ryanair, and Southwest Airlines, are other companies room to maneuver. Instead of trying to compete with
transforming the way consumers of nearly every age and income Walmart and other value retailers on price, for example, Walgreens
level purchase groceries, apparel, airline tickets, financial services, emphasizes convenience. It has expanded rapidly to make its stores
and computers. Traditional players are right to feel threatened. ubiquitous, mostly on corners with easy parking, and overhauled store
Upstart firms often rely on serving one or a few consumer segments, layouts to speed consumers in and out, placing key categories such as
providing better delivery or just one additional benefit, and matching convenience foods and one-hour photo services near the front. To
low prices with highly efficient operations to keep costs down. They simplify prescription orders, the company has installed a telephone and