Market Standing Based Strategies
Market share speaks of the extent each unit has its share in the total sales turnover in a given industry. It is the total demand for the goods and services in a given industry shared by firms. This share is expressed in value, in turn expressed in terms of percentage of the proportion.
In a way, the market share of a company is based on its competitive ability as against the competitive advantage it has. It is because many firms have competitive advantage but fail to take full advantage of it that is why, ‘market share’ and competitive ability are closely linked.
Customer Value Analysis
Managers are keen on conducting customer value analysis to reveal the company’s strengths and weaknesses relatives to various competitors.
The major steps involved in such analysis are:
- Identifying the Major Attributes of Customer Value
The customers are asked to specify as to what attributes and performance levels they are looking for in choosing a product and the sellers.
- Assessing the Quantitative Importance of the Different Attributes
Here, the customers are asked to rate the importance of the different attributes. If the customers diverge too much in their ratings, they should be clustered into different customer segments.
This assessing shall be on the different customer values against their rated importance. Customers describe where they see the company’s and competitor’s performances on each attribute.
- Attribute buys Attribute Examination
Examine how the customers in a specific segment rate the company’s performance against a specific major competitor on an attribute by attribute basis. In case the company’s offer exceeds the competitor’s offer on all important attributes, the company can charge higher price or it can charge the same price and gain more market share instead of higher profits in first case.
- Monitoring Customer Values over the Time
The company must periodically redo its studies of customer. Values and competitors’ standings as the economy, technology and features change.
Focus of Attack
Once the company has done its customer value analysis, it can focus its attacks on the “strong vs. weak,” “close vs. far,” and “good vs. bad” competitors.
Most companies go after weak competitors because it takes less money and time to gain one share point from them. When a company goes after a weak competitor, it gets better capabilities.
The company can’t just ignore strong competitors because they have a lot to gain. More importantly, it’s important to remember that even strong competitors have some weaknesses that it can take advantage of.
Most companies compete with other businesses that are most like them. Even though the competition is far away, it is easy to deal with them because they are still competitors. At the same time, the company shouldn’t try to get rid of its closest competitor, because if it does, other people might get the benefits.
There are both “good” and “bad” competitors in every field. A smart business is one that helps its good competitors and hurts its bad ones. This is because “good” competitors follow the rules of the industry, make realistic assumptions about the growth potential of the industry, and set prices that are in line with their costs. They like a healthy industry, limit themselves to a position or a segment of the industry, and push others to lower costs or improve differentiation.
Bad competitors, on the other hand, spend more than they earn, take huge risks, invest in too much capacity, and upset the industrial balance.
It’s important to remember that the leader of the market needs to be on guard because there are people who want to take their place. Again, followers try to move up one step to become the challengers. Even people who are in a niche could move up. That is, nothing is certain, and Newton’s Law says that anything that goes up has to come down at some point.
But the important thing is to keep your current position and, if you have the chance, improve it. This means that each player’s strategy as a leader, challenger, follower, or nicher needs to be studied.
Market Leader Strategies:
In every field, there is a company or firm that is seen as the leader. It goes without saying that a market leader in a certain product market has the biggest share of that market. Because it is in a better position than other companies, it can change prices, introduce new products, expand its reach, and do more advertising than other companies.
Take world leaders like Kodak in photography, Microsoft in computer software, Xerox in copying, P&G in consumer packaged goods, Caterpillar in earth-moving equipment, Coca-Cola in soft drinks, Mc Donald’s in fast food, Gillette in razor blades, Casio in calculators and watches, Sony in sound gadgets, and so on. What’s true is also true on the national market, where we already have a good share of the market.
The Strategies Open to Market Leader
A company which wants to maintain TOP POSITION as a LEADER has three options or fronts.
These are:
- Expanding the Total Market
Any dominant firm normally gains the most when the total market expands. The Colgate Company gains by expanding its market as already it has 53 percent share in dental cream market.
In case the Colgate Company convenes the Indians more and Indians will buy and Colgate Company stands to gain. As a part of expanding the total market, the company should look for new users, new users and more usage of its products.
Tap New Users
Every product class has the potential of attracting buyers who are unaware of the product or those who resist it because of price or lack of certain features.
A company can search for new users among three groups:
- Those who might use it but do not by using market penetration strategy.
- Those who have never used it by market segment strategy.
- Those who live elsewhere by geographical expansion strategy.
Find New Uses
Markets can be extended by discovering and promoting new uses of the product. Take the case of dental cream. It not only makes gleam the teeth, stops ba4 breath, solidifies gums, but can be a best silver ware cleaver.
The poultry eggs can be put to variety of uses and it can be a product that can change total food habits. Many a times, the customers only discover new uses may be by trial and error. Take the case of petroleum jelly was introduced first as a lubricant, later it was accepted as ointment, healing agent, as a hair gel.
In case of baking soda was used in bakeries, but later it became a very powerful fridge deodorant and used as a grease fires in Kitchen fighter or quelled.
Make Them Use More
The consumers can be convened to use more of a product per use. Gillette razor blades were with single blade with adjustability, later twin blades as to how it saves time and changing blades or cartridges. Now it has three blades popularly known as 3 “Mach 3” which gives so with shave within no time instead of wasting valuable time.
Tea companies speak of more cups of tea a day those who are brain workers. Even in case of shampoo users, they are concerned to use daily instead of attentive days or by giving “instructions for better results” “as lather, revise and repeat”.
- Defending the Market Share
The dominant firm or the leader must continuously defend its current status of business performance against rivals while trying to expand the total market size. Leader is like a mighty elephant being attacked by swarm of bees. Thus in soft-drinks, Coca-Cola must guard against Pepsi-Coca; in shaving razor system Gillete against BIC; in Jeans Herty against Avis; in fast food, McDonald’s against their challengers namely Burger King; in case of Cars General Motors against Ford, in case of cameras and films Kodak against Fuji.
In case India, Colgate against HLL, in case of detergents HLL against Procter and Gamble, in case of masala Everest against MDH and Badshaha Masala, Dettol makers against Salon and so on. What then the market leader do to maintain the position NUMBER ONE. In this regard the most constructive response is continuous innovation.
The leader leads the industry by developing new product and customer services, distribution, effectiveness and Cost Cutting. Leader keeps on increasing his competitive strength and value to customers. True leader applies the military principle of the offensive. That is the commander exercises initiative, sets the pace and exploits enemy weaknesses. The best possible defence is a good offence.
The market leader must consider, carefully which territory or territories are important to defend even at loss which can be surrendered. The aim of defence or defensive strategy is to reduce the probability of attack, divert attacks to less threatening areas and lessen their intensity.
One thing is sure that any attack is likely to hurt the profits. However, the defender’s speed of response and effectiveness can make a significant difference in the profit impact.
