For any company reaching leadership position is far easier than maintaining the top slot. Competitor firms constantly vie for the leadership position and continuously pose threat to the leader’s position and try to take advantage of its weaknesses. The firm leading the market may become weak or obsolete to face threats by new entrants. In order to maintain its leadership position and keep competition at bay, firms can use one or a combination of the following three strategies.
I. Expand the total market strategy
Market leader firms have a strong financial stability and can invest in new markets to increase its total market share. The decision to launch the product or service in new markets also depends on where the product is in its life cycle. …show more content…
However, if the defender focuses on improving the service, product portfolio, pricing strategy, and target market it can strive to maintain its leadership position. In this strategy, the company builds a fort around their product, making the brand impregnable and extremely difficult for competitive firms to attack. The firm attempts to maintain its market leader position by reinforcing the status of the brand to the customers, building entry barriers to discourage new entrants, establishing exclusive distribution contracts and obtaining patents. The marketer allocates maximum resources to the brands which are currently successful. For example, Colgate spends heavily on advertising to keep competitors like Pepsodent and others at bay.
(ii) Flanking defence
In this strategy the firm not only protects the market position of its leading brands but also develops some market niches to defend its weak front or to establish an invasion base for counterattack, if necessary. For example, HUL successfully established its first ₹100 crore Indian-made brand Vim. HUL combated the attack of competitors through product innovation, interactive public campaigns, road shows and public relations and customer engagement tactics.
(iii) Pre-emptive …show more content…
The company may go for related or unrelated product or market diversification. For example, ITC diversified into FMCG products such as Fiama Di Wills and Vivel.
(vi) Contraction defence
In this strategy, companies retract into businesses where they enjoy dominance and strength and not focus on non-core markets. This strategy is used in the later stages of the product life cycle, that is, when the firm has faced considerable attack from its rivals. For example, HUL decided to concentrate on its core strengths such as soaps and detergents, and has emerged as the clear leader in the toiletry industry.
III. Expanding the market share strategy
In order to maintain its leadership position, companies attempt to increase their market share. A company which enjoys a very large market share deters new entrants into the markets since the market conditions are determined in the favour of the dominant company. Companies such as HUL, Procter and Gamble, and McDonald’s try to improve their profitability by increasing their market shares by way of
I. Expand the total market strategy
Market leader firms have a strong financial stability and can invest in new markets to increase its total market share. The decision to launch the product or service in new markets also depends on where the product is in its life cycle. …show more content…
However, if the defender focuses on improving the service, product portfolio, pricing strategy, and target market it can strive to maintain its leadership position. In this strategy, the company builds a fort around their product, making the brand impregnable and extremely difficult for competitive firms to attack. The firm attempts to maintain its market leader position by reinforcing the status of the brand to the customers, building entry barriers to discourage new entrants, establishing exclusive distribution contracts and obtaining patents. The marketer allocates maximum resources to the brands which are currently successful. For example, Colgate spends heavily on advertising to keep competitors like Pepsodent and others at bay.
(ii) Flanking defence
In this strategy the firm not only protects the market position of its leading brands but also develops some market niches to defend its weak front or to establish an invasion base for counterattack, if necessary. For example, HUL successfully established its first ₹100 crore Indian-made brand Vim. HUL combated the attack of competitors through product innovation, interactive public campaigns, road shows and public relations and customer engagement tactics.
(iii) Pre-emptive …show more content…
The company may go for related or unrelated product or market diversification. For example, ITC diversified into FMCG products such as Fiama Di Wills and Vivel.
(vi) Contraction defence
In this strategy, companies retract into businesses where they enjoy dominance and strength and not focus on non-core markets. This strategy is used in the later stages of the product life cycle, that is, when the firm has faced considerable attack from its rivals. For example, HUL decided to concentrate on its core strengths such as soaps and detergents, and has emerged as the clear leader in the toiletry industry.
III. Expanding the market share strategy
In order to maintain its leadership position, companies attempt to increase their market share. A company which enjoys a very large market share deters new entrants into the markets since the market conditions are determined in the favour of the dominant company. Companies such as HUL, Procter and Gamble, and McDonald’s try to improve their profitability by increasing their market shares by way of