Market Position Link to Marketing Communications Strategy. Prepared by: Edmond Saadah Marketing & Training Consultant

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1 Market Position Link to Marketing Communications Strategy Prepared by: Edmond Saadah Marketing & Training Consultant

2 Table of Contents 1. Marketing Strategies Link to Market Position 2. Market Leader s Objectives & Strategies 3. Market Challenger s Objectives & Strategies 4. Market Follower s Objectives & Strategies 5. Market Nicher s Objectives and Strategies

3 A good strategist seeks not only to win the hill, but hold on to it. Subash Jain

4 Competitive Advantage: Definition An advantage over competitors gained by offering consumers greater value than competitors offer.

5 Competitive Strategies Basic Winning Competitive Strategies: Porter Overall cost leadership Lowest production and distribution costs Differentiation Creating a highly differentiated product line and marketing program Focus Effort is focused on serving a few market segments

6 Evolving Company Orientations

7 Hypothetical Market Structure Market Leader Market Challengers Market Followers Market Nichers 40 % 30 % 20 % 10%

8 Marketing Strategy Link to Market Position

9 Introduction Having a Competitive Advantage is necessary for a firm to compete in the market But what is more important is whether the competitive advantage is sustainable A firm must identify its position relative to the competition in the market By knowing if it is a leader, challenger, follower or nicher, it can adopt appropriate strategies to compete

10 Marketing Strategy Link to Market Position Market Position Marketing Objectives Marketing Strategy Leader: 1. Visionary and growth strategies 2. Winning Organization & People 3. Relentless Innovation Expand the total market Protect its current market share Increase its market share Offense and Defense: 6 commonly used defense strategies: Position Defense Mobile Defense Flanking Defense Contraction Defense Pre-emptive Defense Counter-Offensive Defense Challenger: Option 1: Challenge the market leader Option 2: Challenge firms of the same size, smaller size or challenge regional or local firms The market challengers strategic objective is to gain market share and to become the leader eventually Attack Strategy: Frontal attack Flank attack Encirclement attack Bypass attack Guerilla attack Reduce costs Improve services Innovate products & distribution Advertise heavily Proliferate the range

11 Business Strategy Link to Market Position Market Position Marketing Objectives Marketing Strategy Nicher: Good strategy for small firms with limited resources Nichers must create niches, expand the niches and protect them Serving market niches means targeting sub segments Offers high margins Specialization is key By market, customer, product, or marketing mix lines Follower Follow the market leader to make profit Focus is on improving profit instead of market share Many advantages: o Learn from the market leader s experience o Copy or improve on the leader s offerings o Strong profitability

12 Market-Leader Strategies

13 3 Business Strategies of Market Leaders: Do business differently, smarter and faster 1. Visionary and daring growth strategies Innovative business model Vision and Mission Smart competitive & marketing strategies 2. Winning Organization & People Innovative organization & growth culture Wining leaders and team Extended enterprise and lean processes 3. Relentless Innovation Venture strategies Fast company Innovation system

14 Market Leader s Objectives & Strategies Objectives Expand the Total Market Strategies Finding new users Creating new uses; and Encouraging more usage Protect its current market share by Adopting defense strategies Increase its market share Note the relationship between market share and profitability

15 Market Leader s: Which Strategy to Use? Depends on your answer to the followings: Is it worth fighting? Are you strong enough to fight? How strong is your defense? Do you have any choice but to fight?

16 Market Leader s Defense Strategies Position Defense Least successful of the defense strategies A company attempting a fortress defense will find itself retreating from line after line of fortification into shrinking product markets. Mercedes was using a position defense strategy until Toyota launched a frontal attack with its Lexus Mobile Defense By market broadening and diversification For marketing broadening, there is a need to o Redefine the business (principle of objective), and o Focus efforts on the competition (the principle of mass). Flanking Defense Secondary markets (flanks) are the weaker areas and prone to being attacked. Pay attentions to the flanks

17 Market Leader s Defense Strategies Contraction Defense Pre-emptive Defense Withdraw from the most vulnerable segments and redirect resources to those that are more defendable. By planned contraction or strategic withdrawal India s TATA Group sold its soap and detergents business units to Unilever in Detect potential attaches and attack the enemies first Let it be known how it will retaliate Product or brand proliferation is a form of pre-emptive defense: Seiko has over 2000 models Counter-Offensive Defense Responding to competitors head-on attack by identifying the attacker s weakness and then launch a counter attack. Toyota launched the Lexus to respond to Mercedes attack.

18 Market-Challenger Strategies

19 Market Challenger s Objectives & Strategies The market challengers strategic objective is to gain market share and to become the leader eventually How? By attacking the market leader By attacking other firms of the same size By attacking smaller firms

20 Market Challenger s Strategies The strategic choice is to attack the leader or to attack other firms If you are the number two firm in the market, you should attack the leader In order to adopt the attack strategy, the challenger must meet 3 conditions: Must have a SCA either in terms of cost or differentiation Able to neutralize the leader s advantage by doing as well as the leader When there is some impediment to the leader retaliating Success in attacking the leader is typically based on how well the challenger can reconfigure its market strategies and marketing mix strategies

21 Market Challenger s Strategies Types of Attack Strategies: Frontal attack Flank attack Encirclement attack Bypass attack Guerrilla attack

22 Market Challenger s Strategies Frontal Attack The challenger has sufficient fire-power and staying power, and The challenger has clear distinctive advantage(s) Example: Japanese and Korean firms launched frontal attacks in various countries through quality, price and low cost

23 Market Challenger s Strategies Flank Attack Attack the enemy at its weak points or blind spots i.e. its flanks Ideal for challenger who does not have sufficient resources Example: Kudu opened the Breakfast menu by attacking MacDonald's and other QSRs in KSA

24 Market Challenger s Strategies Encirclement Attack Attack the enemy at many fronts at the same time Ideal for challenger having superior resources Example: Guess attacked on fashion, features, user preferences and anything that might interest the consumer

25 Market Challenger s Strategies Bypass Attack By diversifying into unrelated products or markets neglected by the leader Could overtake the leader by using new technologies Example: Pepsi use a bypass attack strategy against Coke in China by locating its bottling plants in the different cities within KSA

26 Market Challenger s Strategies Guerilla Attack By launching small, intermittent hit-and-run attacks to harass and destabilize the leader Usually use to precede a stronger attack Example: Airlines use short promotions to attack the national carriers especially when passenger loads in certain routes are low

27 Which Attack Strategy should a Challenger Choose? Use a combination of several strategies to improve market share over time

28 Market-Follower Strategies

29 Market Follower s Strategies Theodore Levitt in his article, Innovative Imitation argued that a product imitation strategy might be just as profitable as a product innovation strategy e.g. Product innovation--sony Product-imitation--Panasonic

30 Market Follower s Objectives & Strategies Each follower tries to bring distinctive advantages to its target market--location, services, financing, etc. 4 Broad Follower s 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

31 Market-Nicher Strategies

32 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. Nichers must create niches, expand the niches and protect them e.g. Nike constantly created new niches--cycling, walking, hiking, cheerleading, etc What is the major risk faced by nichers? Market niche may be attacked by larger firms once they notice the niches are successful

33 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

34 Edmond Saadah Marketing & Training Consultant Mobile (Saudi Arabia): edmond.olvamarketing.com

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