Chapter 3 SCANNING THE MARKETING ENVIRONMENT FOR OPPORTUNITIES

Well-researched and A ________ is needed to become a successful company for survival and growth.
clearly articulated
strategy
Environmental A market tool needed for this regular evaluation of the business situation is
scanning called…______
Environmental compels an organization to dig deeper into the external environment and discover
scanning important lessons, trends, opportunities or threats that can unfavorably influence the
company and its industry.
External market Once spotted, these ______ are made used to create new strategies.
factors
Marketing information A ________ is a management information system designed to support marketing
system (MIS) decision making.
“ In order to assess the business situation, data are needed and this is where sound
information system is required.
“ It brings together many different kinds of data, people, equipment and procedures to
help an organization make better decisions.
Philip kotler American academician _____ has defined it more broadly as "people, equipment, and
procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and
accurate information to marketing decision makers.
Marketing information are designed specifically for managing the marketing aspects of the business.
systems
Market research A few rounds of _____ can produce tons of information that must be managed in a way
that ensures it has value to decision makers.
Marketing information The use of a _____ is one approach for dealing with the volumes of market research
system (mis) data created for clients or even to support the use of research data by a business
owner.
Four main Components of Marketing Information System (MIS)
1.Internal Records
2. Marketing Intelligence System
3. Marketing Decision Support System
4. Marketing Research
Marketing information collects, analyzes, and supplies a lot of relevant information to the marketing managers.
system (mis) It is a valuable tool for planning, implementing and controlling the marketing activities.
Role of MIS The ____ is to identify (find out) what sort of information is required by the marketing
managers. It then collects and analyzes the information.
Internal records Marketing managers get lots of information from the ______of the company.
“ The information can be collected from the documents such as invoices, transmit copies,
billing documents prepared by the firms once they receive the order for the goods and
services from the customers, dealers or the sales representatives.

Current sales data The ______should be maintained on a regular basis that serves as an aide to the
Marketing Information System.
Companies maintain several databases such as:
1. Customer database
2. Product database
3. Salesperson database
1. Customer database A database wherein the complete information about the customer's name, address,
phone number, the frequency of purchase, financial position, and others is saved.
2. Product database A database wherein the complete information about the product's price, features,
variants, is stored.

3. Salesperson A database wherein the complete information about the salesperson, his name,
database address, phone number, sales target, and others is saved.
Companies The ____ store their data in the data warehouse from where the data can be retrieved
anytime the need arises.
Statistical experts Once the data is stored, the _____ mine it by applying several computer software and
techniques to convert it into meaningful information that gives facts and figures.
Marketing intelligence A ______ is used by marketing managers to sift information from the external
environment to use in the decision making.
“ It provides information about current marketing-environment and changing conditions in
the market.
Information The ______ which is collected from the external sources cannot be used directly.
This scanning of the economic and business environment can be undertaken in a
variety of ways, including:
1. Unfocused scanning
2. Semi-focused scanning
3. Informal search
4. Formal search
1. Unfocused scanning The manager, by virtue of what he/she reads, hears and watches exposes him/herself to
information that may prove useful.
“ Whilst the behavior is unfocused and the manager has no specific purpose in mind, it is
not unintentional.
2. Semi-focused Again, the manager is not in search of particular pieces of information that he/she is
scanning actively searching but does narrow the range of media that is scanned.
3. Informal search This describes the situation where a fairly limited and unstructured attempt is made to
obtain information for a specific purpose.
4. Formal search This is a purposeful search after information in some systematic way.
Enterprises Some ____ will approach marketing intelligence gathering in a more deliberate fashion
and will train its sales force, after-sales personnel and district/area managers to take
cognizance of competitors' actions, customer complaints and requests and distributor
problems.
Marketing research is the systematic collection, organization, analysis and interpretation of the primary or
the secondary data to find out the solutions to the marketing problems.
Recommendations Then the _____ are given for solving the problem.
Marketing research also provides information to the marketing managers.
Mis The scope of ____ is very wide. . It includes MR.
Mr the scope of ____ is very narrow.
Companies Several _____ conduct marketing research to analyze the marketing environment
comprising of changes in the customer's tastes and preferences, competitor's strategies,
the scope of new product launch, and others.
In order to conduct the market research, the data are to be collected that can be
either:
1. Primary data
2. Secondary data
1. Primary data the data which are collected first hand specially for the purpose of study
2. Secondary data are the data that have been already collected by and readily available from other
sources.
The main sources of collecting primary data are:
1. Salesmen
2. Dealers
3. Consumers
1. Salesmen They are the most important source of providing first hand information
“ They can also know about the dealer's reaction (especially of retailers) towards the
firm's products by taking into consideration price, design, packaging and size etc. of the
product.
Marketing manager The ______may direct the salesmen to prepare periodical reports containing the
information collected by them.
2. Dealers Valuable information can be collected with regard to demand of the product from
retailers.
“ Information about the marketing policies of competitors can also be gathered from the
______.
3. Consumers This source of collecting primary data is of great importance.
“ Representative samples of ______ may be selected for conducting thorough
investigation with regard to price, quality and use of the product
Trends and mega merit close attention.
trends
New product or A ______is likely to be more successful if it is in line with strong trends rather than
marketing program opposed to them.
Marketing decision is the tools which help the marketing managers to analyze data and to take better
support system marketing decisions.
(mdss)
Computer helps the marketing manager to analyze the marketing information.
Marketing managers In fact, today _____cannot work without computers.
Marketers Thus, the _____need to keep a check on the marketing environment, both the internal
(within the organization) and the external (outside the organization, so that marketing
policies, procedures, and strategies can be designed accordingly.
A good MDSS should have the following characteristics:
1. Interactive
2. Flexible
3. Discovery oriented
4. User friendly
1. Interactive The process of interaction with the MDSS should be simple and direct.
“ With just a few commands the user should be able to obtain the results immediately.
2. Flexible A good MDSS should be _____.
“ It should be able to present the available data in either discrete or aggregate form.
“ It should satisfy the information needs of the managers in different hierarchical levels
and functions.
3. Discovery oriented The MDSS should not only assist managers in solving the existing problems but should
also help them to probe for trends and ask new questions.
“ The managers should be able to discover new patterns and be able to act on them using
the MDSS.
4. User friendly The MDSS should be ______.
“ It should be easy for the managers to learn and use the system.
Major forces in the Companies and their suppliers, marketing intermediaries, customers, competitors,
macroenvironment publics all operate in a macro environment of forces and trends that shape opportunities
and pose threats.
Beginning of the new The _______ brought a series of new challenges such as the steep decline of the stock
century market, which affected savings, investment, and retirement funds; increasing
unemployment; corporate scandals; and of course, the rise of terrorism.
SIX MAJOR FORCES IN THE MACROENVIRONMENT
1. demographic
2. natural
3. political-legal
4. technological
5. economic
6. social-cultural
Opportunities and Although these forces will be described separately, marketers must pay attention to their
threats interactions, because these will lead to new _________
1. Demographic explosive population growth
2. Natural leads to more resource depletion and pollution
3. Political-legal which leads consumers to call for more laws
4. Technological stimulate new technological solutions and products
5. Economic if they are affordable
6. Social-cultural may actually change attitudes and behavior
6 Major factors influencing the market
6.1. Political
6.2. Economic
6.3. Socio-cultural
6.4. Demographic
6.5. Ecological
6.6. Technological
6.1. Political
Political environment The _______ includes laws, government agencies, and pressure groups that influence
and limit various organizations and individuals in a given society.
Political factors can create advantages and opportunities for organizations.
Various forms of legislation regulate business such as:
1. Governments develop public policy to guide commerce
2. Almost every marketing activity is subject to a wide range of laws and regulations.
3. Changing government agency enforcement.
4. Increased emphasis on ethics and socially responsible actions.
1. Governments sets of laws and regulations limiting business for the good of society as a whole
develop public policy
to guide commerce-
2. Almost every Some trends in the political environment include:
marketing activity is a. Increasing legislation to:
subject to a wide I. Protect companies from each other
range of laws and ii. Protecting consumers from unfair business practices
regulations. iii. Protecting interests of society against unrestrained business behavior
3. Changing New laws and their enforcement will continue or increase.
government agency
enforcement.
4. Increased emphasis Socially responsible firms actively seek out ways to protect the long-run interests of their
on ethics and socially consumers and the environment.
responsible actions. a. Enlightened companies encourage their managers to look beyond regulation and "do
the right thing."
b. Recent scandals have increased concern about ethics and social responsibility.
c. The boom in e-commerce and Internet marketing has created a new set of social and
ethical issues. Concerns are privacy, security, and access by vulnerable or unauthorized
groups.
Jollibee The operations of _____are affected by the government policies on the regulations of
fast food operation.
Government Currently _____ is controlling the marketing of fast food restaurant because of health
concerns such as cardiovascular and cholesterol issue and obesity among the young
and children in the country.
Good relationship ______ with government in giving mutual benefits such as employment and tax is a
must for the company to succeed in any foreign market.
Philippines labor law McDonalds should also protect its workers by ensuring all the hiring, compensation,
training or repatriation is according to ______ as stipulated.
6.2. Economic All businesses are affected by national and global _____ factors.
Economic conditions. National (and global) interest rates and fiscal policy are set around ______.
Climate of the The _____ dictates how consumers, suppliers and other organizational stakeholders
economy such as suppliers and creditors behave within society.
Successful A _______ will respond to economic conditions and stakeholder behavior
organization
High income level For example, countries with a _____ are more likely to afford luxury items compared to a
low income level country.
Savings level and determine the borrowing power as well as spending power of consumers.
interest rate
Growing economic The _____ of developing countries have attracted major players in the fast food industry
capabilities to establish their stores there.
6.3. Socio-cultural Social factor focuses its attention on forces within society such as family, friends,
colleagues, neighbors and the media.
Social factor focuses its attention on forces within society such as family, friends, colleagues,
neighbors and the media.
Social forces affect the attitudes, and ultimately what they purchase.
Cultural factors consist of opinion people have towards themselves, others, organization and society in
general.
“ People have become more eco-conscious, contributing one or many causes they can
relate to, want organization to be responsible for their action and are looking to open
society with meaningful co- existence.

Among the most dynamic cultural characteristics are:

1. Persistence of cultural values
2. Shifts in secondary cultural values
1. Persistence of People's core beliefs and values have a high degree of persistence.
cultural values
Core beliefs and are passed on from parents to children and are reinforced by schools, churches,
values business, and government. Secondary beliefs and values are more open to change.
2. Shifts in secondary Since secondary cultural values and beliefs are open to change, marketers want to spot
cultural values them and be able to capitalize on the change potential.
Society's major cultural views are expressed in:
a. People's views of themselves
b. People's views of others
c. People's views of organizations
d. People's views of society
e. People's view of nature
f. People's views of the universe
A. People's views of People vary in their emphasis on serving themselves versus serving others.
themselves
1980s - In the_____ , personal ambition and materialism increased dramatically, with
significant implications for marketing.
B. People's views of Observers have noted a shift from a "me-society" to a "we-society."
others
“ Consumers are spending more on products and services that will improve their lives
rather than their image.
C. People's views of People are willing to work for large organizations but expect them to become
organizations increasingly socially responsible. Honesty in appeals is a must.
D. People's views of This orientation influences consumption patterns.
society
"Buy american" versus buying abroad is an issue that will continue into the next decade.
E. People's view of There is a growing trend toward people's feeling of mastery over nature through
nature technology and the belief that nature is bountiful.
F. People's views of Studies of the origin of man, religion, and thought-provoking ad campaigns are on the
the universe rise.
Spiritual individualism Currently, Americans are on a spiritual journey. This will probably take the form of
"_______”.
Organizations must be able to offer products and services that aim to complement and benefit people's
lifestyle and behavior.
Young urban want technology in their life and facilities such as credit card payment, wireless internet,
consumers cozy and relaxing ambient place, and other attraction for their hangout and eating.
6.4. Demographic

Demography is the study of human populations in terms of size, density, location, age, sex, race,
occupation, and other statistics.
“ It is of major interest to marketers being associated with changing nature and volume of
population.
Population changes also have a direct impact on organizations.
Demographic trends are constantly changing.
Baby boomers The ______ following World War II have produced a huge "bulge" in the population's
age distribution.
Middle age group The new prime market is the _____ (in the future it will be the senior citizen group).
There are many subdivisions of this group:
a. Generation X
b. Echo boomers (baby boomlets)
A. Generation x This group lies in the shadow of the boomers and lack obvious distinguishing
characteristics.
“ They are a very cynical group because of all the difficulties that have surrounded and
impacted their group.
B. Echo boomers are the large growing kid and teen market.
(baby boomlets)
“ This group is used to affluence on the part of their parents (as different from the Gen
Xers).
Net-gens One distinguishing characteristic is their utter fluency and comfort with computer, digital,
and Internet technology (sometimes called______ ).
Telecommute Many in the modern family now "_____" or work at home or in a remote office and
conduct their business using fax, cell phones, modem, or the Internet.
Technical skills (such as in computers) will be a must in the future.
Disabled people One important market of the future is that ______ (a market larger any of our ethnic
minority groups).
6.5. Ecological It consists of natural resource composition in a given county.
Two decades During the past ______ environmental concerns have steadily grown.
Some trend analysts labeled the specific areas of concern were:
1. Shortages of raw materials
2. Increased pollution is a worldwide problem
3. Government intervention in natural resource management
4. Environmentally sustainable strategies
1. Shortages of raw Staples such as air, water, and wood products have been seriously damaged and non-
materials renewable such as oil, coal, and various minerals have been seriously depleted during
industrial expansion.
2. Increased pollution Industrial damage to the environment is very serious.
is a worldwide
problem
Environmentally Farsighted companies are becoming "______" and are producing environmentally safe
friendly and recyclable or biodegradable goods.
3. Government has caused environmental concerns to be more practical and necessary in business and
intervention in natural industry.
resource management
Leadership ______, not punishment, seems to be the best policy for long- term results.
4. Environmentally The so-called green movement has encouraged or even demanded that companies
sustainable strategies produce strategies that are not only environmentally friendly but are also
environmentally proactive.
6.6. Technological The internet and connectivity are changing the face of business.
Technology has created a society which expects instant results.
Technological This ______ has increased the rate at which information is exchanged between
revolution stakeholders.
Faster exchange of A _______ can benefit businesses as they are able to react quickly to changes within
information their operating environment.
Internet For example, the ____ is having profound impact on the marketing mix strategy of
organizations.
Silver surfers Technology is utilized by all age groups, children are exposed to technology from birth
and new generations of technology savvy pensioners known as "______” have
emerged.
Marketers should be aware of the regulations concerning product safety, individual privacy, and
other areas that affect technological changes.
ANALYZING THE COMPETITIVE ENVIRONMENT
Competitor analysis In a marketing environment, a ______ is a crucial part of a small business's overall
strategy and should include a thorough assessment of the strengths, weaknesses,
opportunities and threats of current and prospective competitors as well as the political,
economic and technological influences that affect the way in which a business
competes.
Five Competitive One of the most effective tools for assessing the competitive landscape of a business is
Forces model the _______ developed by Michael E. Porter of Harvard Business School.

COMPETITIVE FORCES
1. Direct Competitors
2. Indirect Competitors
Competitive The _______ , also known as the market structure, is the dynamic system in which a
environment business competes.
World Economic ______ for example, might limits the flexibility of a business.
conditions
1. Direct competitors The direct competitors provide products or services similar to a specific business.
Small retail shops compete with warehouse clubs and big-box retail stores that use their huge buying
power to lower overhead costs, enabling them to offer steep discounts that small stores
cannot afford.

2. Indirect competitors In addition to direct competitors, some businesses also face competition from providers
of dissimilar products or services.
IDENTIFYING AND ANALYZING COMPETITORS
Five forces as a foundation for developing a strong analysis of the competition.
1. Threat of New Potential Entrants
2. Threat of Substitute Products
3. Bargaining Power of Suppliers
4. Bargaining Power of Buyers
5. Rivalry among Competitors
1. Threat of New This external force refers to the potential competitors that are not currently in the market
Potential Entrants but have the capabilities and resources to compete.
2. Threat of Substitute Substitute products are identical or similar products from different manufacturers that
Products effectively satisfy a customer's because they restrict price levels.
“ The ______ or services depends on a buyer's willingness to substitute a product, the
relative price.
3. Bargaining Power of Suppliers of raw materials, equipment and components or markets of inputs can control
Suppliers the supply chain and heavily influence pricing and terms when there are few substitutes
in the market.
A supplier's bargaining power increases if the following factors apply:
a. Switching suppliers is too costly;
b. A supplier's input cannot be provided by anyone else;
c. The input is an integral component of a company's product.
Power of suppliers The _____ can be an important economic factor in the marketplace because of the
impact they can have on customer profits.
4. Bargaining Power of Buyers are the customers or market of outputs and they have the power to affect price
Buyers and terms of purchases.
“ By putting pressure on an industry to lower prices and improve quality, influential buyers
can reduce the profitability potential of a business and increase competition in the
industry.
Buyers are strong when they buy in large volume, substitute products are available or the
supply chain is varied.
5. Rivalry among Rivalry for market share among industry competitors can range from low to extreme,
Competitors and the level of intensity refers to the extent to which businesses within an industry put
pressure on one another.
Rivalry The intensity of the ____ can pose a threat to an industry as a whole by limiting profit
potential when competitors forcefully target one another's markets and aggressively
price products to gain the business.
MARKET OPPORTUNITY ANALYSIS
Lifeblood Skill in finding new market opportunities is the _____ of business worldwide.
Fad is short-lived mushrooming of opportunity which is difficult to predict and forecast.
Business profit from fad is pure matter of luck and chance.
Trend is something which takes time to build up compared to fad and has a predictable future.
“ sometimes co-related with changes in social culture and economical situation.
Megatrend is much slower in development and is associated with political, socio-economical,
technology and regulatory changes.
“ are estimated to last around half decade or more.
Trend-spotting activity This _____ can be undertaken by company itself or through market research.
Market opportunity is a kind of business planning that emphasizes on discovering the future opportunities
analysis and evaluating the company's technological, financial and competitive willingness to
make use of them.
Market analysis includes the identification of the unmet needs of the customers, identification of target
markets, and assessing the competitive advantages as well as resource capacity of the
company in order to meet the market's needs.
The following procedure involved in analysis of market opportunity is presented
below:
1. Identify what's currently happening in the business environment
2. Define the industry and determine the outlook
3. Look into the details of competitors
4. Describe the target market
5. Create projections
1. Identify what's - In this section there is a need to look at the economic conditions (growth, stable or
currently happening in decline) as well as any trends or social changes that could have an impact on the
the business business.
environment
2. Define the industry Here the company needs to state exactly the industry that is operating within, and make
and determine the forecasts on the size of the market.
outlook
3. Look into the details A company needs to know what businesses they are competing with, and know their
of competitors products inside and out.
4. Describe the target A company needs to construct a profile of its ideal customer, so that it can adequately
market focus its sales and marketing efforts and reach its customers.
In essence, a company simply needs to look at the needs of its customers by
trying to ask one of these questions:
a. Who are my potential customers?
b. What are my potential customers like as consumers?
c. What are my potential customers looking for?
d. When is the product needed?
e. Is there a particular channel that the product sells best in?
 f. How do my potential customers make a decision to buy a product?
g. How important is each of my products attributes to my potentialcustomers?
h. Are there any outside influences that have an effect on their buying decision?
i. Is there any limitation that can influence the level of opportunity?
j. What is the competition starting to do?
k. How is the market developing and changing?

5. Create projections Use a variety of techniques that build on all of the information in the marketing plan to
set a forecast of its sales.
Gut-feelings This includes best and worst case scenario analysis, any intuition or "______" it has
about new markets, and compare any results it has seen to date.
Here are the types of information that will help a company build its market
opportunity analysis:

a. Published works

i. Trade reports from industry associations

ii. Newspapers and periodicals
iii. Information service reports that are standardized for an industry
iv. Government reports
v. Annual Company Reports

b. Firsthand observations

i. Interviews and discussions with customers or suppliers

ii. Interviews and discussions with competitors (or with customers about competitors)
iii. Interviews and discussions with experts
iv. A personal opinion of the macro environmental influences

Here are the questions a company may need to be asking, whether it is in a

survey, or in an interview:

1. Their estimate on the size of the market

2. Their estimates of the market potential, and how fast it is growing
3. Their understanding of position in the market and value proposition
4. Their preferred product and why
5. What aspect of the product adds the most value to them as an end-user
6. How they see the differences between the top three competitors in the field
7. Are the differentiators sustainable over time?
8. What are the short- and long-term needs of the market?
9. List out all the emerging markets that can use the product
FOUR KEY AREAS WHERE IT CAN CREATE VALUE FOR ITS CLIENTS.
1. Trapped value
2. New value
3. Horizontal value
4. Vertical value
1. Trapped value This is empowering customers, creating greater efficiency and accessibility of products.
2. New value This is extending product lines, personalizing products and using collaboration to build a
loyal following of customers.
3. Horizontal value This is improving the functionality of existing products
4. Vertical value This is improving the industry specific products and activities the business engages in.
MARKETING STRATEGIES BASED ON MARKET DOMINANCE
Market dominance is a measure of the strength of a brand, product, service, or firm, relative to competitive
offerings.
FOUR TYPES OF MARKET DOMINANCE STRATEGIES
1. market leader
2. market challenger
3. market follower
4. market nicher
Market leader The _____ is dominant in its industry. It has substantial market share and often
extensive distribution arrangements with retailers.
“ It typically is the industry leader in developing innovative new business models and new
products (although not always).
“ Of the four dominance strategies, it has the most flexibility in crafting strategy.
 The main options available to market leaders are:
1. Expanding total market
2. Defending/maintaining current market share
3. Expanding market share
1. Expanding total The leader normally gains more when the total market expands.
market
Total market can be expanded in four different ways:
a. Add new users
b. Discover new uses
c. More usage per occasion/time
d. More frequent uses
A. Add new users The leader firm must try to ______.
“ Every product class has potential to attract new buyers who are either not aware of the
product or are resistant due to high price and lack of desired features.
New users can be added in several ways:
i. Convincing non-users to use the product (market penetration strategy)
ii. Adding more users in user-class (new market strategy)
iii. Winning competitors customers (aggressive strategy)
iv. Selling product in other markets (geographical-expansion strategy)
B. Discover new uses Another option to expand the total market consists of discovering and promoting new
uses of the existing products.
Users are encouraged to suggest the new/ innovative uses of the product. In the same way,
the company's research and development wing can also contribute in discovering the
innovative uses of the product.
C. More usage per The third strategy to expand the market consists of convincing the present users to use
occasion/time more of the product per use occasion.
D. More frequent uses Sometimes, a company tries to convince users to use the product more frequently to
increase consumption.
2. This strategy is based on the theme; "Customer-retention is more profitable than
Defending/maintaining customer-creation."
current market share
Plague holes - It has to "_____" to keep the enemy away
THERE ARE SIX DEFENSE STRATEGIES:
a. Position defense
b. Flank defense
c. Preemptive or preventive defense
d. Counter-offensive defense
e. Mobile defense
f. Contraction defense
A. Position defense The most basic defense strategy is to build an indestructible protecting fort around one's
territory to keep the opponents away.
“ It involves continuous innovation, diversification, price-cuts, improving distribution, and
strengthening promotional efforts.
B. Flank defense Here, the purpose is to protect weak sides or fronts.
“ consists of setting outposts to protect weak fronts that are vulnerable to be attacked.
C. Preemptive or The basic idea of ______ is to launch the attack before the enemy starts attacking.
preventive defense
D. Counter-offensive indicates responding enemy's attack with a counterattack.
defense
“ The leader cannot remain passive when competitor's attacks in forms of price-cut,
product modification, promotion attack, or any time of invasion on its sales territories.
Economical clout includes applying further price-cut or may announce product upgradation to delay
customers buying the competitors' products while political clout includes lobbying
legislators to take political actions to hamper or slow down the enemy.
E. Mobile defense , also called shifting defense, is much more than simply protecting the territories.
“ The leader stretches or expands its area over new territories that can serve as the future
centers for offense as well as defense.
THERE ARE TWO APPROACHES TO MOBILE DEFENSE:
i. Market broadening
ii. Market diversification
I. Market broadening It involves shifting company's focus from the current product to forthcoming new
technology and concentrating more on research and development activities.
Ii. Market calls upon moving quickly into unrelated industries to strengthen its position.
diversification
F. Contraction defense Sometimes, even large companies can no longer defend all territories
“ The best strategy in this situation is a planned contraction or strategic withdrawal.
Planned contraction does not mean market abandonment or fleeing from the market, but rather giving up
weaker territories and concentrating on stronger territories.
3. Expanding market Instead of expanding total market and defending current market shares, sometimes the
share market leader prefers to improve profitability by increasing market share.
There are several ways to expand market share:
a. Adding new product lines
b. Expanding existing product lines
c. Improving product qualities
d. Increasing promotion efforts
e. Improving distribution system
f. Deploying aggressive sales force
g. Applying price-cut
g. Improving production efficiency
A. Adding new product In order to expand market share, the market leader can add new and diversified product
lines lines to make the product mix comprehensive and attractive.
B. Expanding existing It is a product line extension strategy.
product lines
“ It calls upon expanding current product lines by adding new models, varieties or items
with attractive features (colors, sizes, shapes, weights, get-ups and so on) and
superior qualities (durability, taste, usefulness, safety, convenience, status and
others).
C. Improving product Market share can be increased by improving qualities of current products so that
qualities customers expecting better qualities can be attracted.
D. Increasing Heavy advertising, aggressive sales force, effective sales promotion, and attractive
promotion efforts publicity efforts can help expanding market share faster relative to competitors.
E. Improving Market share can be expanded via better distribution system.
distribution system
“ Both direct and indirect channels and overall physical distribution system must be
modified
F. Deploying Effective personal selling efforts also have positive impact on sales volume, market
aggressive sales force share, and profitability as well.
G. Applying price-cut In order to attract price-sensitive customers, leader can practice price-cut strategy.
“ This strategy is profitable only when the percent of sales-rise is more than percent of
price-cut.

G. Improving A leader must improve production efficiency to reduce overall costs.

production efficiency
“ Due to improved production efficiency, a company can sell better-quality products even
at low price.

Market challenger A ___________ is a company in a strong, but not dominant position that is following an
aggressive strategy of trying to gain market share.
“ It typically targets the industry leader.
Some of the options to open to a market challenger are:
1. Defining strategic objectives and opponents
2. Choosing general attack strategies
3. Choosing specific attack strategies or attacking tools
1. Defining strategic First of all, a market challenger firm must define its strategic objectives. Normally, most
objectives and of market challengers' strategic objective is to increase market share.
opponents
A markeť challenger can attack any of the following opponents:
a. Attacking the market leader.
b. Attacking the firms of its own size that are not doing the job well and are
underfinanced.
c. Attacking the small local and regional firms that are not doing the job well and are
underfinanced.
2. Choosing general Once strategic objectives are defined and opponents are selected, the challenger can
attack strategies apply following attacking options:
a. Frontal attack
b. Flank attack
c. Encirclement/all-round attack
d. Bypass attack
A. Frontal attack A frontal or head-on attack is an aggressive attack strategy.
“ A challenger attacks the opponent's strengths rather than its weaknesses.
This option is preferred by the company with greater resources, otherwise it is proved as
a suicide mission.
B. Flank attack The challenger concentrates on opponent's less-secured, rear-side or weak spots to
attack.
It is a side-attack rather than a front attack strategy.
This option is particularly attractive to an aggressor with fewer resources than
opponents.
There are two strategic dimensions of a flank attack
• geographical
• segmental
Geographical attack In _________, the challenger spots (locates) areas where the opponent is
underperforming.
Segmental attack In ______, a challenger spots the markets, which are not served by the leaders.
C. Encirclement/all- is a form of all-rounded and comprehensive attack.
round attack
“ It involves launching a grand offensive attack on several fronts, so that the opponent
must protect its fronts, sides, and rears simultaneously.
D. Bypass attack It is the most indirect attacking option to harm others.
“ It indicates bypassing (i.e., ignoring or avoiding) the enemy and attacking easier markets
to broaden one's resource base.
“ This is the easiest way to face the leader.
“ There are three approaches:
i. Diversifying into unrelated products
ii. Diversifying into new geographical markets
iii. Leapfrogging into new technologies to replace existing products
I. Diversifying into It involves producing and introducing unrelated product to avoid direct confrontation.
unrelated products
Ii. Diversifying into It involves launching the products in such areas where competitors are absent.
new geographical
markets
Iii. Leapfrogging into It involves researching and developing patiently new technologies and launching an
new technologies to attack with superior products.
replace existing
products
E. Guerrilla attack This type of warfare contains making small and intermittent (sudden and irregular)
attacks on enemy's different territories.
3. Choosing specific The five main attack strategies namely frontal attack, flank attack, encirclement attack,
attack strategies or bypass attack, and guerrilla attack are very broad.
attacking tools
“ These strategies consist of many specific attack strategies, some of them have
been described as under:
a. Price-discount strategy
b. Cheaper-good strategy
c. Prestige-good strategy
d. Product-proliferation strategy
e. Product-innovation strategy
f. Improved-services strategy
g. Distribution-innovation strategy
h. Manufacturing-cost-reduction strategy
i. Intensive advertising and promotion
A. Price-discount It consists of offering a comparable product at a lower price.
strategy
B. Cheaper-good It consists of offering average or low quality products at much lower price.
strategy
C. Prestige-good It consists of launching the high quality products and selling them at premium price.
strategy
D. Product- It consists of attacking leader by launching a large number of product varieties to give
proliferation strategy buyers more choice.

E. Product-innovation It consists of adopting product innovation to attack leaders' position.

strategy
F. Improved-services It consists of offering the customers new and better services with same products.
strategy
G. Distribution- It consists of attacking leaders by discovering new ways or channels of distribution.
innovation strategy
H. Manufacturing-cost- It consists of reducing manufacturing costs by more efficient purchasing, lower labor
reduction strategy costs, modern production equipment, and improved technology.
I. Intensive advertising It consists attacking the leader by increasing advertising and promotional expenditures.
and promotion
Market follower A ________ is a company in a strong, but not dominant position that is content to stay at
that position.
“ Market follower may have following strategic options:
1. Counterfeiter/fraudster
2. Cloner/emulator
3. Imitator
4. Adaptor
1. It is a simple way to follow the leader. The follower who wants to be counterfeiter
Counterfeiter/fraudster duplicates the leader's product as well as package and sells it in the market through
disrepute distributors.
“ Products are marketed secretly to avoid legal complications.
2. Cloner/emulator The cloner emulates the leader's products, distribution, advertising and other aspects.
“ The cloned products are openly sold in the market due to different brand names.
3. Imitator Some followers prefer to copy some aspects from the leader, but maintain differentiation
in terms of packaging, advertising, sales promotion, distribution, pricing, services, and
so forth.
“ Quite noticeably, such products are sold at low price.
4. Adaptor Some followers prefer to adapt the leader's products and improve them. They make
necessary changes/improvements in the original products and develop little different
products.
Market nicher In this niche strategy, the company concentrates on a select few target markets. It is
also called a focus strategy.
Niche The ___ should be large enough to be profitable, but small enough to be ignored by the
major industry players.
Profit margins are emphasized rather than revenue or market share.
The most successful nichers tend to have the following strategies:
1. End-user specialist
2. Vertical level specialist
3. Customer size specialist
4. Specific customer specialist
5. Geographic specialist
6. Product or product line specialist
7. Event specialist
1. End-user specialist It is very popular and widely used option to serve niches.
“ The company prefers to operate one-type of end-use customers, for example, a legal
advisory company can handle only criminal cases, or a fashion designer can work only
for a few film stars.
2. Vertical level A company can specialize at vertical level of production or distribution, for example,
specialist producing only raw-materials for specific companies, only warehousing services, or it
may concentrate only on retailing. It can serve only a part of the total process.
3. Customer size A company can sell products only to small, medium, or large sized customers.
specialist
“ For example, a company can supply one or two components only to large companies.
4. Specific customer -A firm supplies its products only to distinct group of buyers.
specialist
“ For example, designing special two-wheeler for handicapped people or serving special
foods to people who are suffering from certain diseases like diabetes.
5. Geographic A company serves customers of only specific region or area of the world
specialist
“ for example, specific need of the people living in the hilly area.
6. Product or product A company produces or sells only one product or product line
line specialist
“ for example, it sells only socks, ties, or tie pins. A small finance company deals with only
car loans or personal loans.
7. Event specialist A company concentrates its efforts only on particular events or occasions like marriage,
grand inauguration, birthday, anniversary, or some festivals. It offers goods or services
for celebrating the events of target buyers.

ENTRANT STRATEGIES
According to Lieberman and Montgomery, every entrant into a market, be it new or not,
is classified under the following:
1. Pioneers
2. Close followers
3. Late followers
1. Pioneers Market Pioneers are known to open a new market to consumers based off a major
innovation.
“ have the first-mover advantage, and in order to have this advantage, businesses must
ensure they have at least one or more of three primary sources which are technological
leadership, preemption of assets or buyer switching costs.
Technological ______ means gaining an advantage through either research and development (R&D)
leadership or the "learning curve".

2. Close followers Being a market pioneer can more often than not attract entrepreneurs and/or investors
depending on the benefits of the market.
“ These entrants into the market can also be seen as challengers to the market pioneers
and the late followers.
3. Late followers Those who follow after the close followers are known as the late entrants.
“ While being a late entrant can seem very daunting, there are some perks to being a
latecomer.
“ _______ have the advantage of learning from their early competitors and improving the
benefits or reducing the total costs.