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Defensive and Offensive Marketing Strategies Chapter 14 Slides developed by: Peter Yannopoulos 4/13/2015 © 2006 by Nelson, a division of Thomson Canada Limited 14-1 Why Does Rivalry Occur? Rivalry occurs because one or more competitor either feels the pressure, or sees an opportunity, to enter an industry or to improve its position within an industry © 2006 by Nelson, a division of Thomson Canada Limited 14-2 How Do Companies Respond? Companies respond to competitors’ challenges by counterattacking with increasing advertising expenditures, cutting prices, increasing innovation, and introducing new products, or even accommodating the entrant © 2006 by Nelson, a division of Thomson Canada Limited 14-3 Incumbents Need to be prepared for attacks by new entrants and existing firms seeking to expand their business They may also attack in an attempt to enter a new market, reposition themselves, or improve their market position © 2006 by Nelson, a division of Thomson Canada Limited 14-4 Defensive Marketing Strategies Because of ongoing rivalry, established firms need to engage in defensive strategies to fend off various challengers © 2006 by Nelson, a division of Thomson Canada Limited 14-5 The primary purpose of defensive marketing strategies….. is to make a possible attack unattractive and discourage potential challengers from attacking a firm © 2006 by Nelson, a division of Thomson Canada Limited 14-6 Defensive strategies work better …. when they take place before the challenger makes an investment in the industry or if the challenger enters the industry before exit barriers are raised © 2006 by Nelson, a division of Thomson Canada Limited 14-7 Factors Affecting Competitor Retaliation The extent of perceived threat by incumbent firms Amount of resources and capabilities of the defending firm The incumbent’s willingness to respond © 2006 by Nelson, a division of Thomson Canada Limited 14-8 Defensive Marketing Strategies Defensive Marketing Strategies Pre-entry Strategies •Signalling •Fortify and defend •Covering all bases •Continuous improvement Post-entry Strategies •Defend position before entrant becomes entrenched •Fighting brands •Cross-parry •Capacity expansion © 2006 by Nelson, a division of Thomson Canada Limited 14-9 Principles of Offensive Warfare The superiority of defence Concentration of force The element of surprise The path of least resistance Creation of mixed motives for opponent © 2006 by Nelson, a division of Thomson Canada Limited 14-10 Offensive Marketing Strategies Offensive Marketing Strategies •Frontal attack •Seeking undefended markets •Flanking attack •Break the rules •Guerrilla attack •Underdog strategy •Strategic encirclement •Judo strategy •Predatory strategy •The pivot and the hammer strategy © 2006 by Nelson, a division of Thomson Canada Limited 14-11