Marketing

Strategies
Group 3
Siddhesh Amare 02
Aarti Deopure 13
Kalpita Choudhary 09
Contents
• BCG matrix
• GE Features, Limitations
• Leaders, Challengers, Followers
• Niche strategies

MS_Siddhesh_Aarti_Kalpita 2
BCG Matrix

MS_Siddhesh_Aarti_Kalpita 3
BCG Matrix
• Boston Consulting Group.
• Categorized products in the four groups:
1.Question marks (Problem child)
2.Star
3.Cash cows
4.Dogs
• Based on the market share in relation to
competition and the market growth rate.

MS_Siddhesh_Aarti_Kalpita 4
Overview
• BCG model assumes a market growth rate
of 10% as cut off.
• All SBU’s growing at a rate higher than
10% are in the higher growth segment
and those growing lower than this are
perceived to be in the lower growth
segment.
•
•

MS_Siddhesh_Aarti_Kalpita 5
MS_Siddhesh_Aarti_Kalpita 6
QUESTION MARK
• This is a product growing at the rate of
more than 10% and hence is in the high
growth market.
• Many times firm may decide to build a
product not because it is getting good
profits but purely for maintaining an
image.
• These products require high cash resource.
• These products are generally new products
and the firms learning cost is high,
compared to the sales revenue
generated byMS_Siddhesh_Aarti_Kalpita
these products. 7
 Question Mark ( problem child
or wild cat )


• Characteristics:
 Businesses in high- growth industries with
low relative market share
 Closely responds to the introduction phase
of PLC
 Require large cash for;
 expansion to keep up with rapidly
growing market;
 marketing activities to build market
share and catch the industry leader
 These are usually new products or service
with good commercial potential

 Question Marks

• Strategy:
èExpansion - if the business feels that
it can obtain dominant market share
èRetrenchment – in other case it is
realistic alternative
 Question marks can either become

‘stars’ if enough investment is made

or may turn ‘dogs’, if ignored.


 Examples: Holiday resorts, light

commercial vehicles, home improvement
products

STAR
• An SBU, which is a market leader in a high
growth market.
• Mostly question marks go on to become
stars.
• It does not mean that star generates
surplus or high profits.
• These type of products require cash to
maintain leader status.
•

MS_Siddhesh_Aarti_Kalpita 10
Stars
• Characteristics:
 High growth, high market share
businesses
 Market leader in high – growth industry
 Corresponds closely to the growth phase
of PLC
 May or may not be self – sufficient in
terms of cash flow
 Often net users rather than suppliers of
cash in the shot- run for the following
reasons:
 investment is high to keep up with rapid
market growth
 to support R&D and marketing activities
 Stars
• Strategy:
èExpansion strategy to establish a
strong competitive position


Examples: Petrochemicals, electronics and



telecommunication, fast foods are some of

the industries having very high growth
rate.
CASH COWS
• Over a period of time product reaches
saturation point and the product stops
growing.
• Once a star has been the market leader
and has deployed strategies to build
customer loyalties, it usually becomes a
cash cow.
• Cash cow is a SBU that generates cash
surplus.
• The stronger the cash cow, the higher the
cash generation.
• Strong cash cows can be maintained for 13
MS_Siddhesh_Aarti_Kalpita
 Cash Cows
• Characteristics:
 Former stars with high relative share in slow
growth markets
 Generate large amount of cash due to
economies of scale and higher margins
 In terms of PLC, these are generally mature
businesses
 Cash generated here is reinvested in ‘Stars’
and ‘Question marks’
 Cash Cows
• Strategy:
 Hold strategy – for strong cash cows if
they are to continue yielding large
positive cash flows
 Harvest strategy – appropriate for
weak cash cows whose future is dim
and from which more cash flow is
needed
 Harvesting generally involves:
• eliminating R&D expenditure
• not replacing the physical plant and
salespeople
 Cash Cows
Examples


• Scooters for Baja Auto

• Toothpaste for Colgate
• Decorative paints for Asian Paints
DOGS
• Products that have lost their position of
leadership and are in the low growth
markets.
• These are also weak cash cows.
• These products or SBUs need to be killed
or divested or they consume lot of
management time and scarce resources,
which can be utilized somewhere else
effectively.
•
•
MS_Siddhesh_Aarti_Kalpita 17
 Dogs
• Characteristics:
è
 Low- share businesses in low- growth
markets
 Usually in late maturity or decline
stage of PLC
 Generate low profits or losses


•
Dogs
• Strategy:
 Harvest- maximizing short- term cash flow by
paring investments and expenditures until
the business is gradually phased out.
 Divest – to liquidate business so that resources
can be better used elsewhere.


 Examples: Photocopiers, shipping, jute have become

dogs for quite a few companies


 Firm may decide to retain these

businesses if they expect turnaround
in the market growth rate
MS_Siddhesh_Aarti_Kalpita 20
The BCG matrix has two dimensions -


market growth and market share

• The market growth rate on the vertical
axis indicates the annual growth rate of
the market in which the business
operates.
• Relative market share on the horizontal
axis, refers to the SBU’s market share
relative to that of its largest competitor
in the segment. It serves as a measure
of the company’s strength in the
relevant market segment.
•
MS_Siddhesh_Aarti_Kalpita 21
• The market growth rate on the Y- axis is
a proxy measure for the maturity and
attractiveness of industry
•
• Relative market share is a proxy
measure for a business’s competitive
strength within its industry.


B u sin=e ss’ s a b so lu te m a rke t s

• Relative market share

M a rke t sh a re o f le a d in g co m p e

MS_Siddhesh_Aarti_Kalpita 22
STAR QUESTION MARK
(Maintain hold) (Build/Withdraw)

Revenue ++++ Revenue +

Expenses --- Expenses ----

CASH COWS DOG

(Harvest) (Kill/Divest)

Revenue ++++++ Revenue ++

Expenses -- Expenses ----

BCG MATRIX 23
MS_Siddhesh_Aarti_Kalpita 24
• It is important for the marketer to
appreciate that the SBUs change their
positions in the growth share matrix over
a period of time.
• This change may be brought because of
environmental factors like:
o Customer preferences
o Competitive activity
o Government policy
o Etc.
• Marketers needs to continuously evaluate
the product mix and examine the growth
of the product vis-a-vis the industry and
the largest competitor.
MS_Siddhesh_Aarti_Kalpita 25
Limitations of
BCG

MS_Siddhesh_Aarti_Kalpita 26
Limitations of BCG
• It is too simplistic.
• Link between market share and profitability is
not necessarily strong since even small
businesses may be profitable.
• Growth rate is considered as the only aspect
of industry attractiveness.
• Small competitors with fast growing
competitors are ignored.
• Market share is the only aspect of overall
competitive competition.
 Market growth rate is an inadequate
descriptor of overall industry
attractiveness.
• MS_Siddhesh_Aarti_Kalpita 27
 Relative market share is inadequate as
a description of overall competitive
strength.
 The outcomes of growth - share
analysis are highly sensitive to
variations in high growth and share
are measured.
 The matrix specifies appropriate
investment strategies for each
business, it provides little guidance
on how best to implement those
strategies.
 The model implicitly assumes that all
business units are independent of 28
MS_Siddhesh_Aarti_Kalpita
 Limitations of the BCG
Matrix (in depth)

• Market growth rate is an inadequate

descriptor of overall industry
attractiveness. Market growth is not
always directly related to profitability or
cash flow. Some high-growth industries
have been very profitable because low
entry barriers and capital intensity have
enabled supply to grow even faster,
resulting in intensive price competition.
Also, rapid growth in one year is no
guarantee that will continue in the
following year.MS_Siddhesh_Aarti_Kalpita 29
• Relative market share is inadequate
as a description of overall
competitive strength. Market share is
more popularly viewed as an outcome of
past efforts to formulate and implement
effective business –level and marketing
strategies than as an indicator of
enduring competitive strength. If the
external environment changes, or the
SBU’s managers change their strategy,
the business’s relative market share can
shift dramatically.
•
MS_Siddhesh_Aarti_Kalpita 30
• The outcome of a growth-share
analysis are highly sensitive to
variations in how growth and share
are measured. Defining the relative
industry and served market(i.e. the
target-market segments being pursued)
also can present problems. E.g.: does
Pepsi Cola compete only for a share of
the cola market, or for a share of the
much larger market for non-alcoholic
beverages, such as iced tea, bottled
water, and fruit juices?
• MS_Siddhesh_Aarti_Kalpita 31
• While the matrix specifies
appropriate investment strategy for
each business, it provides little
guidance on how best to implement
those strategies. While the model
suggests that a firm should invest cash
in its question mark business, for
instance it does not consider whether
there are any potential sources of
competitive advantage that the business
can exploit to successfully increase its
share. Simply providing a business with
more money does not guarantee that it
will be able toMS_Siddhesh_Aarti_Kalpita
improve its position within32
the matrix.
• The model implicitly assume that all
business units are independent of
one another except for the flow of
cash. Is this assumption inaccurate, the
model can suggest some inappropriate
recourse allocation decisions. For
instance, if other SBUs depend on a dog
business as a source of supply-or if they
share functional activities, such as
common plant or sales force, with that
business-harvesting the dog might
increase the cost or reduce the
effectiveness of the other SBUs.
MS_Siddhesh_Aarti_Kalpita 33
New BCG matrix
In tro d u ce d in
1989
It is 2 * 2 matrix
sh o w in g th e size
o f co m p e titive
a d va n ta g e a n d
th e n u m b e r o f
a p p ro a ch e s to
a ch ie ve
a d va n ta g e s.

MS_Siddhesh_Aarti_Kalpita 34
• Fragmented business – Are small and
confined to region. It is noted that
profitability is not related to size, and
advantage is gained by focus. There is
no premium on growth.
• Specialized business – Has focused
segment and are characteristics by
steep learning curves. Here the
companies must learn to protect their
focus.


MS_Siddhesh_Aarti_Kalpita 35
• Volume business – Are those where
economies of scale and increasing
returns operate. They are constrained by
market segmentation and differentiation.
Eg: car industry in Indian market.
• Stalemated business – Are those where
it is difficult to gain any advantage. It is
their sheer sustaining power which gives
them competitive advantage in the
market. Eg: Kellogg’s in India.
•

MS_Siddhesh_Aarti_Kalpita 36
GE Matrix

MS_Siddhesh_Aarti_Kalpita 37
Introduction
• The two composite value for industry
attractiveness and business
strength/competitive position are plotted
for each business in a company's
portfolio.
• The nine cell of GE matrix are grouped on
the basis of low to high industry
attractiveness and weak to strong
business strength.
• There are 3 zones yellow, green and red.

MS_Siddhesh_Aarti_Kalpita 38
 GE matrix
High

Ma Medium
rk
et
at
tr Low
ac
ti
vn
es
s Strong Average Weak

Business strength

MS_Siddhesh_Aarti_Kalpita 39
Factors for market
attractiveness
• Market size and growth rate.
• Industry profit margin
• Competitive intensity
• Seasonality
• Cyclicality
• Economies of scale
• Technology
• Social, environmental, legal and human
impacts.

MS_Siddhesh_Aarti_Kalpita 40
Factors for business
strength
• Relative market share
• Profit margin
• Ability to compete on price and quality
• Knowledge of customer and market
• Competitive strength and weakness
• Technological capability
• Caliber of management

MS_Siddhesh_Aarti_Kalpita 41
 GE matrix
High

Ma Medium
rk
et
at
tr Low
ac
ti
vn
es
s Strong Average Weak

Business strength

MS_Siddhesh_Aarti_Kalpita 42
• Green zone - “Go ahead” to grow and
build, indicating expansion strategies,
attract major investment.
• Yellow zone - “wait and see” indicating
hold and maintain type of strategies
aimed at stability and consolidation.
• Red zone - “stop” indicating retrenchment
strategies of divestment and liquidation,
rebuilding approach for adopting
turnaround strategies.

MS_Siddhesh_Aarti_Kalpita 43
Advantages
• It offers an intermediate classification of
medium and average ratings.
• It incorporates a large variety of strategic
variables like market share and industry
size.
• Is a powerful analytic tool to channel
corporate resource to business that
combine medium to high industry
attractiveness.

MS_Siddhesh_Aarti_Kalpita 44
Disadvantages
• It only provides broad strategic
prescriptions rather than specific
business strategy.

MS_Siddhesh_Aarti_Kalpita 45
Leaders, Challengers,
Followers and
Nichers

MS_Siddhesh_Aarti_Kalpita 46
What is market
dominance?
• Market dominance is a measure of the
strength of a brand, product, service, or
firm, relative to competitive offerings.
There is often a geographic element to
the competitive landscape. In defining
market dominance, you must see to
what extent a product , brand, or firm
controls a product category in a given
geographic area.
•

MS_Siddhesh_Aarti_Kalpita 47
Market leaders
• Are the firms that have the largest market
share in the relevant product market and
usually lead the industry in factors, such
as technological developments, products
and service attributes, price benchmarks
or distribution channel design.

MS_Siddhesh_Aarti_Kalpita 48
 Market Leader Strategies

Position
Position Flanking
Flanking Preemptive
Preemptive
protect
fortificati weakness guerrilla
on create psychologica
assault l
posts preventative

Market
Market
Leader
Leader

Counteroffen
Counteroffen Contractio
Contractio
sive Mobile
Mobile nn
sive
fast , solid broadening fronts strategic withdrawal

MS_Siddhesh_Aarti_Kalpita 49
Market leader strategies
1. Expand total market through new
users, new uses and more usage.
2. Defend market share through position

defense, flank defense, counteroffensive

defense, mobile defense and contraction
defense.
3. Expand market share through

enhancement of operational effectiveness

by means of NPD, raising manufacturing
efficiency, improving product quality,
providing superior support services or
increasing marketing expenditure.
MS_Siddhesh_Aarti_Kalpita 50
1. Expand total market
through new users
• New Users
E.g.: perfume: Non-users (market-

penetration strategy)
men (new market strategy)

other countries (geo-expansion strategy)

• New uses
Cereals: as snacks --> increase frequency of

use
Du Pont nylon: parachute-->pantyhose--

>blouses & shirts --> auto tires -->seat

belts -->carpeting
MS_Siddhesh_Aarti_Kalpita 51
 Expand Total Market

Kodak ----- New user, new uses, more uses

Arms and hammer’s baking soda, refrigerator demand and

kitchen grace fires

Michelin Tire (French) – French car owners to drive

there car more miles per year. More tire replacement

MS_Siddhesh_Aarti_Kalpita 52
2. Defend market share
Position defense
•
• Purely defensive not enough
• Must take offensive counter-measure
•
Eg: Coke --> multi segments of cola market

--> enter wine market

--> acquire fruit drink companies

MS_Siddhesh_Aarti_Kalpita 53
 Defend market Share

Coca vs . Peps , Gillette vs .

Bick ,
Hertz vs . Avis

MS_Siddhesh_Aarti_Kalpita 54
Flanking defense
• Guarding territory not enough
• Create outposts/flanks
• Protect weak front
• Invasion base for counter-attack
Eg: Hyvee: supermarket still dominant yet

facing challenges from other retailers

MS_Siddhesh_Aarti_Kalpita 55
 Flank Defense

Heublein ’ s brand Smirnoff attack by

Wolf Schmidt vodka . Smirnoff price rise
by one dollar for the advertising

MS_Siddhesh_Aarti_Kalpita 56
Flanking strategy
Strengthening via superstore concept

• Traditional foods - meat/canned/packaged

• Non-traditional --> ethnic foods, wines

• Prepared foods --> restaurant, take out,

salad bar, bakery

• Non-food retailing --> clothing's, garden

store
• Services: catering, party planning, video

rental, dry cleaning, photo developer.

•

MS_Siddhesh_Aarti_Kalpita 57
Counter-offensive
defense
• When attacked most market leaders will
respond with counterattack.
• Price cut, promo blitz, product
improvement, sales-territory invasion.
Options: “wait and see”

• Identify areas of weakness of competitor.

Eg: BMW & Mercedes vs Lexus & Infinity

• Price cuts

• New models for under $45K segment

MS_Siddhesh_Aarti_Kalpita 58
Mobile defense
• More than aggressively defend
• Stretches domain over new territories
CAUTION: Marketing Myopia --> Marketing

Hyperopia


Market diversification:


• Reynolds: from cigarettes --> beer, liquor,

soft drinks, frozen foods
• MB: shifts more resources into aeronautics,
auto design equipment CAD/CAM.
MS_Siddhesh_Aarti_Kalpita 59
Contraction defense
• Strategic withdrawal.
• Give up weak territories.
• Concentrates strength at pivotal positions.
•
• Eg: Ford retires T-birds and Probe, focuses
on Contour & Taurus

MS_Siddhesh_Aarti_Kalpita 60
3. Expanding market
share
• PIMS (Profit impact on market strategy)
reports higher with higher market share.
• Argument: Profitability goes with high
market share.
Caution

• Gaining market not necessarily gain profit,

depends on strategy for gaining market
share.

MS_Siddhesh_Aarti_Kalpita 61
 Conditions when market
share and profit go
together
1.Unit costs fall with increased MS
• Real gains in economies of scale.
• Cost/experience curves.
• Intel: significant improvements in both
product and process innovations, and
large capital investment in new plants.
2. Target Premium segment
• Premium price covers cost of offering
higher quality
• Strategy used by Mercedes Benz/BMW.
MS_Siddhesh_Aarti_Kalpita 62
Market challengers
• Are firms that have the second, third or
lower ranking in the industry. These
firms can either challenge the market
leader or choose to follow them. When
they seek to challenge the market leader
they do so in the hope that they would
be able to gain the market share. The
tactics adopted by the market
challengers have several components.
1.The challenger has to define the objective
and the opponents, choose the general
attack strategy and then choose the
specific attack strategy.
2.The most common objective of the
MS_Siddhesh_Aarti_Kalpita 63
 Encirclement
Encirclement

Flanking
Flanking Bypass
Bypass

Frontal
Frontal Guerrilla
Guerrilla

Market
Market Challenger
Challenger Strategies
Strategies

64
Market challenger
strategies
• Frontal attack involving matching
opponents in terms of product, price,
promotion and distribution.
• Flank attack involving challenging the
opponents weak or uncovered
geographical or segmental areas.
• Encirclement attack involving a grand
move to capture the opponent’s market
share by means such as launching an
advertisement blitzkrieg, making an
unbeatable product related offering or
presenting a MS_Siddhesh_Aarti_Kalpita
unique service guarantee. 65
• Bypass attack involving ignoring the
opponent and attacking the easier
market by means of diversifying into
unrelated products, moving into new
geographical areas or leapfrogging into
new technologies.
• Guerilla attack involving small,
intermittent attack to harass and
demoralize the opponent firm and
eventually secure a firm foothold in the
industry. This could be done by means of
price cuts, price discounts, intensive
comparative advertising or initiating
legal actions.
MS_Siddhesh_Aarti_Kalpita 66
Frontal attack
• “Head-on” attack
• Attacker matches opponent along all parts
of marketing mix
•
Cases: Shampoo/conditioner market 1977.

MS_Siddhesh_Aarti_Kalpita 67
Flank attack
• “Concentration against weakness”
• Attack strong side - tie up defender’s
troops
• Real attack: side or rear - catch off guard
• Spot uncovered market needs not served
by leaders
• Identify shifts in market segments - quick
entry, develop segment into strong
segments.
Case: Beer industry 1970

• Miller “discovered” light beer segment:

MS_Siddhesh_Aarti_Kalpita 68
Encirclement attack
• Capture a wide slice of territory via
blitzkrieg
• Grand offensive in many fronts
• Enemy must protect front, rear sides
• Attacker offers everything leader offers &
more

MS_Siddhesh_Aarti_Kalpita 69
Bypass attack
• Indirect assault
• Avoid enemy; attack easier markets
• Three alternative bypass attack strategies:
a. Diversify into unrelated products

b. New geographical markets

c. Leapfrog into new technologies

•
Case: Colgate Vs P&G: futile head-on

• expand into non-P&G markets via

acquisition
MS_Siddhesh_Aarti_Kalpita 70
Guerrilla attack
• Harassing & demoralizing opponent
• Excellent for small companies.
• By launching small, intermittent hit-and-
run attacks to harass and destabilize the
leader
• Usually use to precede a stronger attack.
• e.g. airlines use short promotions to attack
the national carriers especially when
passenger loads in certain routes are low


MS_Siddhesh_Aarti_Kalpita 71
 Some Attack Strategies
Available to Challengers
1.Price discounts: Fuji vs. Kodak
2.Cheaper goods strategy: Average/low quality at
much lower price
3.Prestige goods strategy
4.Product proliferation - Hunt: several flavours,
several bottle sizes, Cold cereal market
5.Product innovation strategy
6.Improved services strategy
7.Distribution innovation
8.Manufacturing cost reduction strategy
9.Intensive advertising strategy
MS_Siddhesh_Aarti_Kalpita 72
Market followers
• Are the firms that imitate the market
leaders but do not upset the balance of
competitive power in the industry. They
prefer to avoid direct attack, keep out of
the way of other firms and reap the
benefits of the innovations made by the
market leaders through imitation.

MS_Siddhesh_Aarti_Kalpita 73
Market-Follower
Strategies
• “Innovative Imitation” argued that a
product imitation strategy might be just
as profitable as a product innovation
strategy.
 - Theodore Levitt
 e.g. Product innovation--Sony
 Product-imitation--Panasonic

MS_Siddhesh_Aarti_Kalpita 74
Market followers
strategies
• Counterfeiter strategy involving
duplicating the market leaders product
and packaging and selling it in black
market.
• Cloner strategy involving emulating the
market leaders products, name and
packaging.
• Imitator strategy involving copying
some things from the market leader
while retaining some features such as
pricing, packaging or advertising.
• Adaptor strategy involves adapting ones
own productsMS_Siddhesh_Aarti_Kalpita
to those of the market 75
• Each follower tries to bring distinctive
advantages to its target market--
location, services, financing
• Four broad follower strategies:
– Counterfeiter (which is illegal)
– Cloner e.g. the IBM PC clones
– Imitator e.g. car manufacturers
imitate the style of one another
– Adapter e.g. many Japanese firms
are excellent adapters initially
before developing into challengers
and eventually leaders

MS_Siddhesh_Aarti_Kalpita 76
Growth market
(Examples)
• Fortress/ position defense: Coke vs.
Pepsi, Crest, impregnable Tide
• Flanker: Lexus(luxury version of Toyota),
HQ(leader with strong presence),
Pillsbury biscuit dough.
• Confrontation: Compaq vs. IBM, Dell,
Gateway.
• Market expansion: Pillsbury variety
crescent rolls, Danish rolls, Nike line
extension.
• Contraction/strategic withdrawal: IBM
abandoned low end of PC’s,
concentrated on lucrative, commercial
MS_Siddhesh_Aarti_Kalpita 77
Challengers (Examples)
• Frontal attack: Dell superior customer
satisfaction + low price, Helene certis.
• Leapfrog: attractively differentiated video
cameras from movie equipments, Digital
Camera to video market.
• Flank attack: Japanese cars at low price
penetrated US market, Honey well beat
IBM.
• Encirclement attack: Cadbury-
Schweppes cream soda, Root Bee
anything but Cola vs. Coke or Pepsi
• Guerilla attack: Kitchen phones vs.
AT&T, Princetown review .
MS_Siddhesh_Aarti_Kalpita 78
Mature Markets
(Example)
• Increase Penetration: Johnson
integrated facilities too lower cost of
opportunity communication blog,
Starbucks.
• Extended use: General foods frozen
desserts.
• Market expansion: Heinz

MS_Siddhesh_Aarti_Kalpita 79
Declining markets
• Harvesting: Best beats first web based
customer service applications
• Maintenance: Focus on customer service
• Profitable survival: Focus on customer
service benefits first. Eg.: P&G liquid
soaps
• Niche

MS_Siddhesh_Aarti_Kalpita 80
Market Nichers
• Are firms that carve out distinct niche for
themselves which have been left
uncovered by the other firms in the
industry, or which is of no interest to
others.
• There are several means by which the
specialization for serving a niche market
can be developed.
• Market niche strategies carry the risk that
can be identified for focusing on
business strategies.
• E.g.. A market leader may choose to
expand its own market coverage to
MS_Siddhesh_Aarti_Kalpita 81
Market Nicher Strategies
• Creating niches involves looking foe
ways and means by which niches can be
identified or created in an industry.
• Expanding niches involves enhancing
the coverage of the present niche to
include similar market niches or new
niches
• Protecting niches involves shielding the
niches served from attacks by other
firms in the industry

MS_Siddhesh_Aarti_Kalpita 82
Market-Nicher Strategies

• Smaller firms can avoid larger firms by

targeting smaller markets or niches
that are of little or no interest to the
larger firms
 e.g. Logitech--mice
 Microbrewers--special beers

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Market-Nicher
Strategies
• Nichers must create niches, expand the
niches and protect them
• e.g. Nike constantly created new
niches--cycling, walking, hiking,
cheerleading, etc
• Market niche may be attacked by larger
firms once they notice the niches are
successful.

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Nicher Strategies for
Advantage

Geographic
End - Use Specialist Specialist
Vertical - Level Product / Feature
Specialist Specialist
Customer - Size Quality - Price
Specialist Specialist
Specific - Customer
Specialist Service Specialist

MS_Siddhesh_Aarti_Kalpita 85
• End user specialist: The firm specializes
in serving one type of end use customer.
E.g. a value added seller customizes the
computer hardware and software for
specific customer segments and earns a
price premium in the process.
• Vertical level specialization: The firm
specializes at some vertical level of the
production distribution value chain. A
copper firm may concentrate on
producing raw copper, copper
components, or finished copper
products.
• Customer-size specialist: the firm
concentrates on selling to either small,
medium size or large customers. Many
nichers specialize in serving small
MS_Siddhesh_Aarti_Kalpita 86
• Specific-customer specialist: The firm
limits its selling to one or a few
customers.many firms sell their entire
output to a single company, such as
Sears or General Motors.
• Geographic specialist: The firm sells
only in a certain locality, region or area
of the world.
• Product or product line specialist: The
firm carries or produces only one product
or product line. A firm may produce only
lenses for microscopes. A retailer may
carry only ties.
• MS_Siddhesh_Aarti_Kalpita 87
• Product feature specialist: The firm
specializes in producing a certain type of
products or product features. Rent-a-
Wreck, E.g.: is a California car rental
agency that rents only “beat up” cars.
• Job shop specialist :The firm customizes
its products for individual customers.
• Quality-price specialist: The firm
operates at the low or high quality ends
of the market. HP specializes in the high
quality, high price and of the hand
calculator market.


MS_Siddhesh_Aarti_Kalpita 88
• Service specialist: The firm offers one or
more services not available from other
firms. E.g. would be a bank that loan
requests over the phone and hand-
delivers the money to the customers.
• Channel specialist: The firm specializes
in serving only one channel of
distribution. E.g.: a soft drink company
decides to make a very large-sized soft
drink available only at gas stations.

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 What makes a Niche a Good
Niche?
General Nicher - Rules
•Be satisfied being small.
•Stay stealthy, stay healthy.
•Don’t be myopic.
•The customer’s always right but not
always right for you.
•Stick to niching but not necessarily to
your niche.

MS_Siddhesh_Aarti_Kalpita 90
Multiple Niching
‘ A firm should `stick to its Niching’ but not


necessarily to its niche. That is why

multiple Niching is preferable to single
Niching. By developing strength in two or
more niches the company increases its
chances for survival.”
 - Philip Kotler


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MS_Siddhesh_Aarti_Kalpita 92