Vol. 2 No. 13 [Special Issue - July 2011]
Defensive and Offensive Strategies for Market Success
Dr. Peter Yannopoulos Associate Professor Brock University, St. Catharines Ontario, Canada, L2S 3A1 E-mail: firstname.lastname@example.org Tel: (905) 688-5550 ext. 3909 Abstract In industries in which there is strategic interaction among competing firms, companies are continuously involved in defensive and offensive strategies. In this paper we discuss several defensive and offensive strategies that managers can you for market success. Defensive strategies are divided into pre-entry and post-entry stretegies. Marketing managers should attempt to discourage would be entrants before entry has occurred. They can achieve this goal by engaging in pre-entry startegies. After entry is occurred it is more difficult to persuade new entrants to exit the industry. For this reason, marketing managers should use different defensive strategies for defending their positions in pre-entry and post-entry situations.
Key words: Defensive strategies, offensive strategies, pre-entry strategies, post-entry strategies 1. Introduction Competition forces companies to constantly engage in offensive and defensive marketing strategies. Rivalry occurs because one or more competitors either feels the pressure or sees an opportunity to enter an industry or to improve its position within an industry. In most cases, competitive moves by one firm have noticeable effects on its competitors and, thus, may invite retaliation or efforts to counter the move (Porter 1980). Companies respond to competitor challenges by counterattacking with increasing advertising expenditures, cutting prices, increasing innovation, and introducing new products, or even accommodating the entrant by doing nothing or decreasing the level of marketing effort (Karakaya and Yannopoulos, 2011; Scherer, 1980). Firms grow by taking market share from rivals or creating new markets. Incumbents need to be prepared for attacks by existing firms seeking to expand their business and new entrants. The incumbents’ objective is to defend their market share and strengthen their position by making it harder for companies to enter or for existing firms to challenge them. Incumbent firms may also attack in an attempt to enter a new market, reposition themselves, or improve their market position. Markets are dynamic arenas where firms try to expand into their industries or reposition themselves in other segments within the industry. As firms attempt to improve their position, they engage in competitive battles and adopt offensive strategies. Successful use of offensive strategies can help a firm improve its competitive position, gain market share, and increase profits. In this paper we discuss both defensive and offensive marketing strategies. We, first, discuss the pre-entry and post-entry defensive marketing strategies, and, then, a number of offensive marketing strategies.
2.0 Defensive Strategies
Because of ongoing rivalry, established firms need to engage in defensive strategies to fend off the various challengers. The primary purpose of defensive strategy is to make a possible attack unattractive and discourage potential challengers from attacking another firm. Incumbents try to shape the challenger’s expectations about the industry’s profitability and convince them that the return on their investment will be so low that it does not warrant making an investment in that industry. Defensive strategies work better when they take place before the challenger makes an investment in the industry, or if they enter the industry before exit barriers are raised, making it difficult for the challenger to leave the industry. For this reason, an incumbent needs to take timely action to discourage a challenger from making any substantial commitment, because once the commitment is made, it is more difficult to dissuade the challenger from following through with...