In Chapter 11 we focused in some detail upon Porter’s generic strategies and the nature and Buy this file from http://www. Download-it. Org/learning-resources. PH? Promoted===story=1321 sources of competitive advantage. This chapter takes the analysis a stage further by examining how the organization’s position in the market, ranging from market leader through to market niche, influences strategy and planning. Finally, we turn our attention to the ways in which market and product life cycles need to be managed. 2. The influence of market position on strategy In discussing how best to formulate marketing strategy, we have focused so far on the models and approaches to planning that can help to tourmaline the analytical process. In making use of models such as these the strategist needs to pay explicit attention to a series of factors, including the organization’s objectives and resources, managerial attitudes to risk, the structure of the market, competitors’ strategies and, very importantly, the organization’s position within the market.
The significance of arrest position and its often very direct influence upon strategy has been discussed in detail by a wide variety of writers, most of whom suggest classifying competitive position along a spectrum from market leader to market niche’s: Market leader. In the majority of industries there is one firm that is generally recognized to be the leader.
It typically has the largest market share and, by virtue of its pricing, advertising intensity, distribution coverage, technological advance and rate of new product introductions, it determines the nature, pace and bases of competition. It is this dominance that typically provides the benchmark for other companies in the industry. Market challengers and followers. Firms with a slightly smaller market share can adopt one of two positions.
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A case in point is Morgan, specializing in traditional sports cars. By concentrating their efforts in this way, market niche’s are able to build up specialist market knowledge and avoid expensive head-on fights with larger companies. This approach to classification has in turn led to a considerable discussion of the strategic alternatives for leaders, challengers and achier, with numerous analogies being drawn between business strategy and military strategy. The idea has been to show how the ideas of Buy this file from http:// www. Unload-it. Org/learning-resources. PH? Promoted===story=1321 military strategists, and in particular Von Classicist, Sun Thus and Lidded-Hart, might be applied to the alternatives open to a company intent on gaining or retaining a competitive advantage . This section therefore examines some to these ideas and shows how market leaders might defend their current position, how challengers eight attempt to seize share, and how followers and niche’s are affected by this.
An overview of how this might be done appears in Figure 12. 1 . Figure 12. 1 Leaders, followers, challengers and market niche’s 521 12. 4 Strategies for market leaders Although a position of market leadership has undoubted attractions, in terms of both the scope that often exists to influence others and a possibly higher return on investment, leaders have all too often in the past proved to be vulnerable in the face of an attack from a challenger or when faced with the need for a major technological hanger.
If, therefore, a market leader is to remain as the dominant company, it needs to defend its position constantly. In doing this, there are three major areas to which the marketing strategist needs to pay attention: 1 How best to expand the total market 2 How to protect the organization’s current share of the market 3 How to increase market share. Buy this file from http://www. Download-it. Org/learning- resources. PH? P A summary of the ways in which leaders might do this appears in Figure 12. 2. Figure 12. 2 Strategies for market leaders