Market Standing Based Strategies

05/06/2020 0 By indiafreenotes

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:

  1. 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.

  1. 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.

  1. Assessing the Company’s and the Competitors Performances

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.

  1. 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.

  1. 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 conducted its customer value analysis, it can focus its attack on the competitors who are classed as “strong versus weak”, “close versus distant” and “good versus bad”.

Most of the companies aim their shots at weak competitors because this warrants fewer resources per share point gained. In attacking weak competitor the firm achieves in the way of improved capabilities.

The firm cannot brush aside strong competitors because they gain much. What is more important to note is that even the strong competitors have some weaknesses on which it can capitalize.

Majority of the companies compete with their competitors who resemble them most. The distant competition can be handled easily without underestimating, after all he or the firm is a competitor. At the same time, the company should avoid trying to destroy the closest competitor, for there is danger of benefits going to others.

In every industry, one comes across ‘good’ and ‘bad’ competitors. A wise company in one which supports its good competitors and attack its bad competitors. It is so because, ‘good’ competitors play by the industry’s rules; they make realistic assumption about industry’s growth potential, they set prices which are in consonance with costs: they favour healthy industry; they limit themselves to a position or a segment of the industry; they motivate others to lower costs or improve differentiation.

As opposed to these, bad competitors they invest than earning; they take huge risks; they invest in over-capacity and upset the industrial balance or equilibrium.

It is worth noting that the market leader has to be alert because challengers are there to topple their leadership; again followers try to move up one step to be the challengers. Even nichers might improve their position. That is nothing is certain and a unit which soars high has to come down sooner or later as per Newtons Law.

However, point lies in maintaining the existing position and if opportunities strike improve-upon the existing position. This takes as to the study of strategies of each player as leader, challenger, follower and nicher.

Market Leader Strategies:

Each industry has a company or firm which is accepted as industry leader. It goes without saying that such a market leader has largest market share in the relevant product market. Because of its superior position it dominates others or leads other firms in price changes, new-product introductions, distribution coverage and promotional intensity.

Take world leaders, Kodak in photography, Microsoft in computer software, Xerox is copying, P and G in consumer packaged goods, Caterpillar in earth-moving equipments, Coca-Cola in soft drinks, Mc Donald’s in fast food items, Gillette in razor blades, Casio in calculators and watches, Sony in sound Gadgets and so on. What is true, is also true in national market of which we already taken practical market shares.

The Strategies Open to Market Leader

A company which wants to maintain TOP POSITION as a LEADER has three options or fronts.

These are:

  1. 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”.

  1. 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.