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COMPETITIVE DYNAMICS | CHAPTER 11 303

• Have the capabilities to innovate,
• Are flexible and nonbureaucratic, and
• Have many managers who think proactively.
Companies that are too risk-averse won’t be winners.
DEFENSIVE MARKETING Even when it does not launch offensives, the market leader must
not leave any major flanks exposed. The aim of defensive strategy is to reduce the probability of
attack, divert attacks to less-threatened areas, and lessen their intensity. Speed of response can make
an important difference to profit.A dominant firm can use the six defense strategies summarized in
Figure 11.2. 11
• Position Defense. Position defense means occupying the most desirable market space in con-
sumers’ minds, making the brand almost impregnable, as Procter & Gamble has done with
Tide detergent for cleaning, Crest toothpaste for cavity prevention, and Pampers diapers
for dryness.
• Flank Defense. The market leader should erect outposts to protect a weak front or support a
possible counterattack. Procter & Gamble brands such as Gain and Cheer laundry detergent
and Luvs diapers have played strategic offensive and defensive roles.
• Preemptive Defense. A more aggressive maneuver is to attack first, perhaps with guerrilla ac-
tion across the market—hitting one competitor here, another there—and keeping everyone
off balance. Another is to achieve broad market envelopment that signals competitors not to
12
attack. Bank of America’s 18,500 ATMs and 6,100 retail branches nationwide provide steep
competition to local and regional banks. Yet another preemptive defense is to introduce a
stream of new products and announce them in advance. 13 Such “preannouncements” can
14
signal competitors that they will need to fight to gain market share. If Microsoft announces
plans for a new-product development, smaller firms may choose to concentrate their develop-
ment efforts in other directions to avoid head-to-head competition. Some high-tech firms
have been accused of selling “vaporware”—announcing products that miss delivery dates or
are never introduced. 15
• Counteroffensive Defense. In a counteroffensive, the market leader can meet the attacker
frontally and hit its flank, or launch a pincer movement so it will have to pull back to defend it-
self. After FedEx watched UPS successfully invade its airborne delivery system, it invested
heavily in ground delivery through a series of acquisitions to challenge UPS on its home turf. 16
Another common form of counteroffensive is the exercise of economic or political clout. The
leader may try to crush a competitor by subsidizing lower prices for the vulnerable product
with revenue from its more profitable products, or it may prematurely announce a product
upgrade to prevent customers from buying the competitor’s product. Or the leader may lobby
legislators to take political action to inhibit the competition.
• Mobile Defense. In mobile defense, the leader stretches its domain over new territories
through market broadening and market diversification. Market broadening shifts the com-
pany’s focus from the current product to the underlying generic need. Thus, “petroleum”
companies such as BP sought to recast themselves as “energy” companies. This change
required them to research the oil, coal, nuclear, hydroelectric, and chemical industries.

|Fig. 11.2|
(2) Flank
Six Types of Defense
(3) Preemptive (1) Strategies
Position
ATTACKER (6) Contraction
(4) Counteroffensive
DEFENDER

(5)
Mobile