Every business market has a market leader and some market followers, and they all play a specific role and follow various strategies. Today, we’ll discuss market follower strategies, their meaning, types, and pros and cons with examples in detail.
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What is Market Follower Strategy?
A market follower is a business or a company that follows the footstep of the market leader. The market follower performs the complete opposite role to the market leader, and it avoids taking risks. However, it carefully studies and observes the market leaders and the competitors, and then follows their proven successful strategy.
The follower holds the second position in the market after the market leader. It doesn’t like the idea of disrupting the status quo and losing market share. However, it’s such a business that doesn’t target or challenge the market leader. It follows the strategy of achieving maximum market share at a lower cost than the competitors.
The follower has to carry the low investment because the leaders already perform most of the groundwork. That’s why it doesn’t directly compete against the leader for a number of reasons because it knows that the leader would defeat him in direct confrontation.
For instance, a bicycle manufacturing company is the world’s first bicycle company. It has spent millions of dollars on research and development, marketing, and developing a quality product. Through marketing, the company has educated and spread awareness about the benefits of the bicycle.
Now, another second bicycle company enters the market and it doesn’t have to spend money on marketing and advertisement. It just takes advantage of the groundwork of the market leader company.
Type of Market Follower Strategies
Some of the main four types of market follower strategies are as follows;
Counterfeiters are those followers that manufacture a slightly different copy of the original product and sell it in the market as original. Counterfeiting usually falls under the category of stealing and thieving and happens in the black market. The pirate CDs/DVDs of music and movies are great examples of counterfeiters.
The film, TV, and entertainment industries talk about the laws and awareness against piracy now and then. Counterfeiting and piracy do a lot of damage and steals the work of the original creator of the product/service. For instance, counterfeit products/shoes of Adidas and Reebok can easily find it in the black market.
We see bags and luxury items of Gucci and wristwatches of Rado, if you come across brands like Gucci and RADA, then it’s cloning. Cloning means that the followers create the same, but slightly subtle and different product. However, it also means that you take advantage of the top brands and offering the same product as theirs.
The silver lining difference between the cloner and the imitator is there. When we talk about imitators, then it not only just copies the original traits of the product, but it also tries to retain the quality of the product. For example, timesjobs.com not only followed the idea and imitated the naukri.com, but it has also added some unique characteristics.
If you see a cloning product of Samsung and Apple phones, then don’t get surprised by seeing a lot of similarities with the original product.
The imitator is a very good example of flattery, and it would cut down a lot of your market share and profit if you’re a market leader and original manufacturer. They take advantage of the marketing and branding work of the market leader and offer the same product as theirs at a lower price.
If you’re buying the imitated product, then you’d see the difference in terms of poor product quality and lower service quality. It’s important to keep in mind that imitated products have a very big market because people want to buy the low-cost product.
For instance, Tata Sky has a very big TV market in India and achieved the position of a market leader. Soon imitator brands like Reliance, Airtel, and Videocon followed the market leader and started offering products.
Adaptor follows the strategy of white-collared market followers. For instance, automobile companies follow the adoption follower strategy. Vehicle brands like Brio, Zen, Alto, and Maruti 800 adapt the best quality features of each others’ brands and bring a new style to the market.
Tech companies like Sony and Dell offer the same products in the market, and they adopt the feature of their close competitors’ brands. The adaption allows the follower to become the market leader by offering a unique product and style in the market.
Advantages of Market Followers
Some of the main advantages of the market followers are as follows;
- It allows them to follow the price-skimming and low-cost strategy in order to amplify the profitability
- It would create the perception of the company as being the agile brand that is willing to serve people
- It becomes a flexible organization that would work alongside customers in order to resolve their issues
- It decreases the research and development cost
- You exploit the mistakes of the market leader and convert them into opportunities
Disadvantages of Market Followers
Some of the main disadvantages of the market followers are as follows;
- You won’t be an innovator and leader in the market, you’ll have the perception of such a brand that doesn’t take risks
- It would stop you to take on new challenges of securing the business in the market
- Followers aren’t the first choices of customers in the market because of not being a leader
- Customers always compare the follower with the market leader, and they would trust the leader
Examples of Market Follower Strategy
There are many products and services that we often see in the market are actually the follower of the market leaders. If you pay close attention to them, then you would see a clear difference in terms of quality, color, and brand name.
Market follower strategy is very common in the apparel and clothing and fragrance industry. Many companies use logos and printing to sell their products at a lower price.