19487123 strategy of challenger leader and follower

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Strategyof challenger,

leader, followerand nicher

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INTRODUCTION

Marketing strategy is defined by David Aaker  as a process that can allow anorganization to concentrate its resourceson the optimal opportunities with the goalsof increasing sales and achieving a

sustainable competitiveadvantage. Marketing strategy includes allbasic and long-term activities in the field ofmarketing that deal with the analysis of thestrategic initial situation of a company andthe formulation, evaluation and selection ofmarket-oriented strategies and thereforecontribute to the goals of the company andits marketing objectives

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Market leader strategy 

Expanding the total market 

•  New user

•  New uses

•  More usage

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Defending market share 

•  Position defence•  Flank defence

•  Preemtive defense

•  Counter offensive defence

•  Mobile defense

•  Contraction defensive

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Stimulate selective demand

among later adopters Head-to-head positioning againstcompetitors 

•  Develop a second brand or productline with features or price moreappealing competitive offerings orpotential to a specific segment ofpotential customers offerings.

•  Make product modifications orimprovements to match or beatsuperior' : competitive offerings

(confrontatian strategy) 

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•  Meet or beat lower prices or heavierpromotional efforts by competitors

when necessary to retain customersand when lower unit costs allow(confrontation strategy). •  When resources are limited relative to a

competitor's, consider withdrawing fromsmaller or slower growing segments to

focus product development andpromotional efforts on higher potentialsegments threatened by competitor

(contraction or strategicDifferentiated positioning against 

•  Develop multiple-line extensions orbrand offerings targeted to the needs,competitive offerings or variouspotential user applications orgeographical segments (market

expansion strategy). •  Build unique distribution channels

to more effectively reach specific

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segment! of potential customers(market expansion strategy). 

•  Design multiple advertising and/or

sales promotion campaignstargeted at specific segments ofpotential customers (market  expansion strategy  

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Retain

current customers 

Maintaining/improving satisfactionand loyality 

•  Increase attention to quality control asoutput expands.and loyalty.•  Continue product modification andimprovement efforts to increase customerbenefits and/or reduce costs.•  Focus advertising on stimulation of

selective demand; stress product's superiorfeatures and benefits; reminder advertising.

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•  Increase sales force's servicing of current

accounts; consider formation of national orkey account representatives to majorcustomers; consider replacing independentmanufacturer's reps with companysalespeople where appropriate.•  Expand post sale service capabilities;develop or expand own service force, ordevelop training programs for distributors'and dealers' service , expand partsinventory; develop customer service hotlineor website

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Encouraging/simplifying

repeat purchase 

•  Expand production capacity in

advance of increasing demand to avoid

stockouts

•

  Improve inventory control andlogistics systems to reduce delivery times.

Continue to build distribution channels;

•  use periodic trade promotions to gain

more extensive retail coverage and

maintain shelf-facings; strengthen relation-

ships with strongest distributors/dealers.

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•  Consider negotiating long-term

requirements contracts with major

customer:

•  Consider developing automatic

reorder systems or logistical alliances

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Reducing attractiveness

switching 

•  Develop a second brand or product linewith features or price more appealing to aspecific segment of current customers•  Develop multiple-line extensions or

brand offerings targeted to the needs ofseveral user segments within the market•  Meet or beat lower prices or heavierpromotional efforts by competitors-or tryto preempt such efforts by potentialcompetitors-when necessary to retaincustomers and when lower unit costsallow

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Market challenger  

 A market challenger must first

define its strategic objective 

•  It can attack the market leader

•  It can attack firms of its ownsize

•  It can attack firms smaller insize

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 Attack strategy 

• Frontal attack

• Flank attack

• Encirclement attack

• By pass attack

• Guerilla warfare

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Head to head positioning 

•  Develop products with featuresand/or performance levels superior tothose of the target against competitor'soffering competitor

•  Draw on superior product design,

process engineering, and supplierrelationships to achieve lower unit costs.

•  Set prices below target competitor'sfor comparable level of quality orperformance, but only if low-cost position

is achieved.•  Outspend the target competitor on

promotion aimed at stimulating selectivedemand:Comparative advertising appeals directed

at gaining a more favorable positioningthan the target competitor's brand enjoysamong customers in the mass market.

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Sales promotions to encourage trial if

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offering's quality or performance 

• Outspend the target competitor on tradepromotion to attain more extensive retailcoverage, better shelf space, and/orrepresentation by the bestdistributors/dealers

•

 Outperform the target competitor oncustomer service

Develop superior production scheduling,inventory control, and logistics systems tominimize delivery times and stockout. 

Develop superior post sale servicecapabilities. Build a more extensivecompany service force, or provide bettertraining programs for distributor/dealerservice people than those of target

competitor  

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Technological

differentiation 

•

  Develop a new generation ofproducts based on different technology that

offers superior performance or additionalbenefits desired by current and potentialcustomers offering in its primary in themass market (leapfrog strategy).

•  Build awareness, preference, andreplacement demand through heavyintroductory promotion: Comparativeadvertising stressing product's superiority

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•  Sales promotions to stimulate trial orencourage switching.•  Extensive, well-trained sales force;heavy use of product demonstrations insales presentations.•  Build adequate distribution throughtrade promotions and dealer training

programs

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Differentiated positioning 

•

  Develop a differentiated brand orproduct line with unique features orprices that is focused on untapped ormore appealing to a major segment ofpotential customers whose needs arenot met underdeveloped segments. by

existing offerings(flanking strategy). 

•  Develop multiple line extensions orbrand offerings with features or pricestargeted to the unique needs andpreferences of several smaller potentialapplications or regional segments(encirclement strategy). 

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•

  Design advertising, personal selling,and/or sales promotion campaigns thataddress ,(, specific interests andconcerns of potential customers in oneor multiple underdeveloped segments tostimulate selective demand.

•  Design service programs to reducethe perceived risks of trial and/or solvethe unique problems faced by potentialcustomers in one or multipleunderdeveloped segments

•

  (e.g., systems engineering,installation, operator training, extendedwarranties, service hotline, or website).

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Choosing a specific

strategy 

• Price discount

• Lower price goods

• Prestige goods

• Product proliferation• Product innovation

• Improved service

• Distribution innovation

• Manufacturing-cost reduction• Intensive price promotion

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Market follower

strategy 

 ‘Market Follower strategy’  is a

strategy of product imitation. Theinnovator bears the expense of

developing the new product, bringingin the technology, breaking entry

barriers and educating the market.However, another firm can come

along and copy or improve on the

new product.

Although it probably will notovertake the leader, the follower can

achieve high profits because it didnot bear any of the innovation

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expense.

Many companies prefer to follow

rather than challenge the market

leader. Many runner-up companies

do not challenge the market leader

The four follower strategies are

as given below:

1. Counterfeiter: Copies theleader’s product and packages and

sells it on the black market.

E.g.pirated music/ movie CDs2. Cloner: Copies the leader’s

products as it is as well as name,packaging with slight variations. 

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3. Imitator: Copies some of thethings from leader’s product but

maintains difference in packaging,and other factors.

4.Adaptor: Launches improved

products over that of the innovator’s

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Market nichers 

 Nichers are small firms that target smallmarkets of little or no interest to larger

firms. But, these firms can be highly

 profitable through smart niching. In a study

of hundreds of business units, the Strategic

Planning Institute found that return oninvestment average 27 in small markets,

 but only 11% in larger markets. (E.R.

Linneman and L.J. Stanton, Making Niche

MarketingWork, McGraw-Hill, 1991)

The niche specializations include:

End user segments: Specialising on

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 particular end user segments

Vertical segments: Concentrated at a level

in the production-distribution value chain

Customer size segments: Selling either to

small, medium size or large customers

Specific customer servicing: Selling to

some major customers. Even only one or

two customers.

Geographic segments: Selling only in

certain localities not served well by broad

market firms

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Specific products: Selling only one

 product line or product line. Giving a big

choice to choose to the buyers.

Specific product features: Specializing and

offering a particular product feature

Job shop production: Customizedmanufacture for individual customers.

Quality segment: Operating at low- or

high- quality segments.

Price segment: Operating at low- or high-

 price segments

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High service segment: Offering features not

offered by other firms

Channel segment: Serving only one or

two

distribution channels

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BIBLIOGRAPHY

smartamarketing.wordpress.com

www.wikipedia.com 

books.google.co.in

www.management101.info/marketing_str 

ategies