Classification of firms based on the roles played in the target market

Classification of firms based on the roles played in the target market

40% Market Leader

30% Market Challenger

20% Market Follower

10% Market Nichers

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 market share of leader. Leader spends conservatively and challenger spends liberally.

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 peaceful co-existence. Set high aspiration , leveraging their resources, while market leader runs the business as usual.

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 leader

Offers similar offers to buyers, copying the leader.

Market share show high stability. Should hold the current customers and win a fair share of new customers.

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 be highly 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.

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 cost cutting. Six defense strategies.

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

Market Challenger Strategies

1.Defining the strategic Objective and Opponents Whom 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

Attack Strategies
4.Bypass Attack 2.Flank Attack

Company

1.Frontal attack

Guerrilla attack

Competitor
3.Encirclement attack

Market Follower Strategies

Counterfeiter Cloner Imitator Adaptor

Market-Nicher Strategies
Three tasks Creating Niches, Expanding Niches and Protecting Niches. Multiple niching preferable to single niching.

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.

Read: pg 239

Responsive Marketer Anticipative Marketer Creative Marketer