Market-Leader Strategies

The leader has the largest market share and usually leads the other firms in price changes, new product introduction, distribution coverage, and promotion spending. Competitors focus on the leaders as a company to challenge, imitate, or avoid.

The leading firm normally gains the most when total market expands. In general, the market leader should look for new users, new uses, and more usage of its products.

New Users. Every product class can attract buyers who are still unaware of the products, or who are resisting it because of its price or its lack of certain features. For example, Revlon might find new perfume users in its current markets by convincing women who do not use perfume to try it.

New Use. The marketer can expand markets by discovering and promoting new uses for the product. For example, the makers of WD-4, the multipurpose household lubricant and solvent, sponsors an annual contest to discover new uses.

More Usage. A market expansion strategy is to convince people to use the product more often or to use more per occasion. For example, Procter & Gamble advises users that its Head and Shoulders shampoo is more effective with two applications instead of one per shampoo.

2.4.2 Market-Challenger Strategies [Expanding Market Share]

Market leaders also can grow by increasing their market shares further. In many markets, small market share increases mean very large sales increases. Profitability rises with increasing market share. That’s why many companies have sought expanded market shares to improve profitability. For example, General Electrics declared that it wants to be at least number one or two in each of its markets or else get out.

But gaining increased market share will improve profitability automatically. Much depends on their strategy for gaining increased share. There are many high-share companies with low profitability and many low-share companies with high profitability. Higher shares tend to produce higher profits only when unit costs fall with increased market share, or when the company offers a superior-quality product and charges a premium price that more than covers the cost of offering higher quality.

Date: 2015-01-12; view: 964