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Classification of firms based on the rolesplayed in the target market

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Classification of firms based on the roles played in

the target market

40%

30%

20%

10%

Market Leader

Market Challenger

Market Follower

Market Nichers

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Characteristics: Market Leaders

Mostly one market leader.

Largest Market share in the relevant product market.

Leads the other firms in the price changes, new-product

introductions, distribution coverage, and promotional

intensity.

Unless the firm enjoys legal monopoly, it must maintain

constant vigilance.

A new product innovation by follower may loose the marketshare of leader.

Leader spends conservatively and challenger spends

liberally.

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Market Challengers

Second, third or lower rank in the industry.

Opt for two postures- attack the leader in an

aggressive bid for further market share. Or peacefulco-existence.

Set high aspiration , leveraging their resources, while

market leader runs the business as usual.

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Characteristics: Market followers

Achieve high profits as it did not bear any of the

innovation expense.

Prefer to follow rather than to challenge the market

leaderOffers similar offers to buyers, copying the leader.

Market share show high stability.

Should hold the current customers and win a fairshare of new customers.

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Market Nicher

Leader in a small market or niche.

Avoid competing with large firms by targeting small

markets.

Companies with low shares of total market can behighly profitable through smart niching.

Market nicher knows the target customers so well

that it meets their needs better than other firms

selling casually.

Niche marketer a high price, achieves high margin,

whereas the mass marketer achieves high volume.

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Market Leader Strategy

1.Expanding the total Market.

New Customers

More Usage

New and Different applications

2.Defending the Market Share

Continuous innovations.

A leader leads the industry in new products,

customer services, distribution effectiveness and costcutting.

Six defense strategies.

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Six defense strategies of a Market leader

Position Defense

Flank Defense

Pre-emptive Defense

Counter offensive defense

Mobile defense

Contraction Defense

3.Expanding the market share

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Market Challenger Strategies

1.Defining the strategic Objective and OpponentsWhom to attack?

Attack market leader.

Attack firms of its own size.

Attack small local and regional firms.

2. Choosing a general attack strategy

Frontal Attack

Flank Attack (geographical or segmental)Encirclement Attack

Bypass Attack

Guerrilla Warfare

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Attack Strategies

Company

Competitor

Guerrilla

attack1.Frontal attack

2.Flank Attack

4.Bypass Attack

3.Encirclement attack

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Market FollowerStrategies

Counterfeiter

Cloner

Imitator

Adaptor

Market-Nicher StrategiesThree tasks Creating Niches, Expanding Niches and

Protecting Niches.Multiple niching preferable to single niching.

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Balancing Customer and Competition

Orientation

Competitor-centered company

Customer- centered company

Market- centered company

A company need to be market oriented ,paying balanced

attention to both customers and competitors.

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Read: pg 239

Responsive MarketerAnticipative Marketer

Creative Marketer