It’s very difficult to achieve a leadership position in the market. The competitor businesses would challenge your company’s strengths, or they try to take advantage of your weaknesses. If new and current businesses are following the latest trends, then it would weaken your leadership position in the market. Businesses and companies use various strategies to maintain their position in the market. Today, we’ll discuss competitive market leader strategies with examples in detail.
When it comes to defending and retaining the market leadership position, companies usually follow three strategies;
- Expand Total Market Size
- Defend Market Share
- Expand Market Share
Expand Total Market Size (Total Industry)
The expansion of total market size releases the tension of leaders, and market expansion allows them to gain maximum. When we talk about total market expansion, then it happens in three ways like creating new users, discovering new users, and more users to sell your products/services.
Creating New Users
There are some products in the market that people neither buy nor are aware of it. It shouldn’t be surprising because they either couldn’t afford it, or were unaware of the product’s existence, and some find the product not suited to their needs and requirements. It means that every product has a potential for growth in a certain market. Usually, market leaders expand the size of their market by following strategies with examples.
- Market Expansion Strategies. Market expansion strategy is when you target the need of the existing market with the current product, and you can use many approaches for this strategy. For instance, a marketing manager plans to increase the total number of customers, because some of the customers in the existing aren’t buying your products. You do it by promoting your existing product/service.
- New Market. A new market strategy is when you find a new market to sell your current products/services. The marketing managers go out with the expectation that they would find new users for their product.
- Geographical Expansion Strategy. Here managers expand their market into the new geographical region in order to find new customers and sell their product/service. For example, Honolux complexion cream is expanding its market by entering the Middle Eastern market.
Managers try to discover the new uses and applications of their existing products in order to expand the market of their products/services. For instance, Bangladeshi people use bread for breakfast. Now, the manufacturers are promoting the use of bread at other times like lunch and evening.
If you want to find out the new uses of your product, then you have to conduct surveys and interview people and ask them how they’re using the product.
Customers could amplify the consumption of your product/service if you start the promotional campaign. Many studies have shown that every market has a small percentage of heavy users and they consume most of the products, and it attracts the attention of customers. You can increase the consumption of drinks and beverages if you offer some discounts and offers.
Defend Market Share
When market leaders expand the total size of their total market, then they have to defend their business from the competitors’ attacks. For example, Coca-Cola has to defend and guard its market consistently from Pepsi. Likewise, Honda and Hero have to put guards and defend their market share from TVS, Suzuki, and Bajaj.
In the defend market share strategy, the business should maintain the production cost low, and the retail price should be relevant to the value of the product that customers perceive it. Some of the main six types of defending market share strategies are as follows;
In the position defense strategy, management decides to strengthen its position in one or more markets that the company is targeting currently. The company focuses on the single market and offers the product in order to meet the needs of the market. It allows the company to become a big fish in the small pond. In the single market, the company follows the differentiation and cost leadership strategy.
The manager always questions himself why customers prefer his products over competitors in this strategy. If he doesn’t receive a solid answer, then the success of the product would be in jeopardy. In short, the company takes every possible step in order to secure its market position.
The flank defense strategy means that the company should take precautionary measures not only to protect its current domain but also its weaker areas. Those measures act as a basis to use against competitors. However, the flank defense is a serious strategy, and the company shouldn’t take it lightly.
If you’re developing a flank defense strategy, then you should focus on the short-term goals, and they would help to face immediate attacks of competitors.
Preemptive defense strategy is similar to the quote that prevention is much better than cure. Here you start attacking the competitors before they could get a chance to attack you. However, it allows you to further strengthen your company’s position in the market.
There are two ways to start the preemptive defense strategy. First is a shotgun attack, it’s when you randomly attack all the competitors, instead of attacking any one of them. The goal is to spread fear among them so that they don’t take any step.
The second is pervasive distribution, it’s when you cover a big portion of the market and attack the competitors in terms of low pricing. However, when you follow such attacking strategies, then it would keep the competitors busy defending their market position. They won’t have time to come up with an offensive strategy to attack you.
It keeps the motivation level of employees up and they’ll remain active. The other goal of the preemptive strategy is to create psychological pressure on competitors and keep them weak. Usually, market leaders have a strong financial position. They create such circumstances, where an attack on the leader becomes very costly for them. If they attack them, then they would destroy themselves.
A counter-offensive strategy is attacking your enemy when he attacks you. When competitors attack the market leader, then he attacks back in order to protect his position in the market. The attack could be in the form of invasion of territory, improving quality of the product, and price cut. It leaves very few options for the market leader.
When you’re going to launch the direct counterattack, then attack all sides or a certain corner of the competitor. The market leader counters attacks when his market share is in great jeopardy. However, when no one attacks the market leader, then he waits for the right moment to launch the attack on competitors.
The market leader usually has a strong economic and political position. When the leader is under attack, then he would lower the prices of the vulnerable product to a great extent, it would put the attackers in great financial jeopardy. The leader would spread rumors about the competitors’ products, and promote its product as advance and updated.
In the mobile defense strategy, leaders defend their market territory and expand their business into new areas. Such type of expansion assists you to attack and defend against the potential attacks of competitors. However, the newly expanded territories act as a foundation for future offensive attacks against competitors. You can launch the mobile defense strategy for market diversification and market broadening.
Speaking of market broadening strategy, the company finds out the generic needs of customers and tries to satisfy them with a broader offer. For example, a telephone manufacturing company produces other products that would assist telephonic communication. It’s important to keep in mind that broadening could put the company in jeopardy in the future.
When a company finds it difficult to hold the bigger market in the long term, then it follows the contraction strategy. It means that the company creates a list of its weaker areas, and then withdrawing from those weak markets. However, it mobilizes and focuses on the strong areas, and follows an aggressive strategy in those areas. The market contraction doesn’t mean abandonment.
Expand Market Share
Market share is a very good measuring instrument for management. It comprises of estimating the company’s share and the total industry sale of products/services. In simple words, we can say;
Market Share = Company’s Share + Industry Sale
After finding out the total market share, you can contract with yours in order to measure your performance. Whether you should increase the company’s share, or increase the profitability.
However, you can increase the market share of your company by following a good marketing strategy. When it comes to choosing the strategy for your business, then it depends on the following factors;
- Cost of implementing market activities and marketing mix
- Strengths and weaknesses of your company
- Structural cost relevant to production and engineering cost
- Country’s economic situation
- Profitability of the product
- Market size and growth rate
- Competitive track record
- Product quality