COM 442
CHAPTER TEN
MARKETING
STRATEGIES
FOR
GR
OW
TH MARKETS
Com 442…1
MARKET STRATEGY - THE RULES
IGNORE AT YOUR PERIL
TO OPTIMIZE ANY STRATEGY
IT MUST BE TAILORED TO EACH SPECIFIC
APPLICATION AND CIRCUMSTANCE.
TURNOVER – RATE OF REPURCHASE
- IT IS LIKE A TIME ACCELERATER –
THE HIGHER THE TURNOVER THE LESS STABLE THE
MARKET CONDITIONS BECOME.
ALWAYS FACTOR IN PRODUCT TURNOVER IN ANY MARKET
CONSIDERATIONS.
ALWAYS KEEP ‘ONE EYE’ ON BUILDING A LONG-TERM
COMPETITIVE ADVANTAGE THAT CAN BE MAINTAINED
INTO THE MATURITY STAGE.
Com 442…2
In growth markets…
SHARE MAINTENANCE
BECOMES THE PRIMARY OBJECTIVE OF THE SHARE LEADER THRU

RETAINNING REPEAT BUSINESS WITH LOYALTY PROGRAMMES
AND ACTIVITIES.

CONTINUE TO CAPTURE THE MAJOR SHARE OF NEW CUSTOMER
BUSINESS -SHARE GROWTH-
THE ATTRACTION
1. EASIER TO GAIN SHARE WHEN MARKET IS GROWING
2. SHARE GAINS ARE WORTH MORE IN A GROWTH
MARKET THAN A MATURE MARKET
3. PRICE COMPETITION IS USUALLY LESS INTENSE
4. EARLY ENTRY FACILITATES KEEPING UP WITH THE
TECHNOLOGY CURVE
Com 442…3
1. Easier To Gain Share When Market Is
Growing.

HIGH RATIO OF NEW USERS – BRAND LOYALTY LESS OF AN
ISSUE.

CONSUMER NEEDS-PREFERENCES MAY SHIFT WITH CHANGE
IN ADOPTER CATEGORIES.

COMPETITIVE RESPONSE LESS LIKELY – AS LONG AS THEY
STILL HAVE POSITIVE NUMBERS. ~TENUOUS (DON’T COUNT ON
IT)
2. Share Gains Are Worth More In A Growth
Market Than A Mature Market.

VALUE OF EACH SHARE POINT GROWS WITH THE TOTAL
MARKET GROWTH.
UNLESS…

“POSITIVE NETWORK EFFECTS” INITIAL SHARE NUMBERS
REFLECT PROPRIETARY USERS WHICH INFLUENCE FUTURE
SHARE GROWTH (WINDOWS → WINDOWS)

RULES CHANGE – TECHNOLOGY, OR NECESSARY CORE
COMPETENCIES CHANGE.

TOTAL INDUSTRY GROWTH (# OF ENTRANTS / PLAYERS)
EXCESSIVE THEN SHARES TOO FRAGMENTED TOO AFFECT
ANY LEVERAGE ADVANTAGES.

FUTURE FRAGMENTATION OF SEGMENTS CHANGES ‘IN GOING’
GROWTH CONDITIONS.
Com 442…4
3. Price Competition Is Usually Less Intense

USUALLY DEMAND EXCEEDS SUPPLY

IF PIONEER HAS ENTERED WITH A PENETRATION STRATEGY –
THERE MAY NOT BE ENOUGH MARGIN TO WORK WITH.
4. Early Entry Facilitates Keeping Up With
The Technology Curve

MORE CRITICAL WITH TECHNICALOGICALLY SOPHISTICATED
PRODUCTS.

R-D KEY AS TECHNOLOGICAL CHANGE CAN CREATE INSTANT
OBSOLESCENCE.
Com 442…5
Growth Market Strategies
For MARKET
LEADERS
KEEP THE LEAD –

MAINTAIN THE GAP AS COMPETITORS INCREASE IN QUANTITY
AND QUALITY

MARKET BEGINS TO FRAGMENT INTO SMALLER SIZED NICHES.

PRODUCT INNOVATION-NEXT GENERATION- INCREASES WITH
TIME.

THE LARGER YOUR SHARE THE HARDER THE TASK.

STILL LESS THAN A THIRD LOSE THEIR LEAD.
Marketing Objectives
For SHARE
LEADERS

RETAIN CURRENT USER BASE (CUSTOMERS)

STIMULATE MAX. SELECTIVE DEMAND AMONGST LATER
ADOPTERS.
Com 442…6
Tactics & Strategies To Achieve
SHARE MAINTENANCE OBJECTIVES
EXHIBIT 10-3
OPTIONS-
1. FORTRESS or a position defense
strategy
2. FLANKER strategy
3. CONFRONTATION strategy
4. MARKET EXPANSION –mobilestrategy
5. CONTRACTION or strategic withdrawal
strategy
OR COMBINATIONS THERE OF
Com 442…7
CHOICE OF STRATEGY
DEPENDS
ON:
1. MARKET SEGMENT SIZE
2. CUSTOMER CHARACTERISTICS
3. NUMBER AND CALIBER OF
COMPETITORS
4. YOUR AVAILABLE RESOURCES AND
COMPETENCIES.
Com 442…8
1. FORTRESS OR POSITION DEFENCE
STRATEGY REINFORCE YOUR CURRENT STRENGTH
CONDITIONS - WORKS WELL WITH RELATIVELY HOMOGENEOUS
SEGMENTS AND LEADER ENJOYS HIGH AWARENESS AND PREFERENCE
LEVELS.
TACTICS - CONSUMER SATISFACTION AND LOYALTY PROGRAMS.
THRU

CONTINUED PRODUCT IMPROVEMENT

REDUCE PER UNIT COSTS

INITIATE - SELECTIVE DEMAND FOCUSED CONSUMER AND
PROMOTIONAL ACTIVITY.

REPEAT PURCHASE ACTIVITY – COUPONS ET AL.

INVEST SALES FORCE AND CUSTOMER SERVICE FUNCTIONS
SPECIALIZATION
ENCOURAGE –SIMPLIFY REPEAT PURCHASE BEHAVIOUR

MAXIMIZE AVAILABILITY

MINIMIZE STOCK OUTS.

SHORTEN ORDER – DELIVERY CYCLE.

EXPAND DISTRIBUTION CHANGES.

COMPUTERIZED RE-ORDER SYSTEMS –CURRENTLY = 5 BILLION
ANNUALLY

DEVELOP LONG-TERM RELATIONSHIPS

CONTRACTUAL AGREEMENTS

SPECIALIZED CUSTOMER SERVICES – COKE, MR. G-

TRUST – AVOID OPPORTUNIST SHORT TERM SELF INTEREST
ACTIVITY AT YOUR PARTNERS EXPENSE.

MAKE CUSTOMER SPECIFIC INVESTMENTS CCMS

DOESNÈT WORK IN VOLATILE MARKETS E.G. HIGH-TECH. RAPID
CHANGE.
Com 442…9
2. FLANKER STRATEGY

ALWAYS USED INCONJUNCTION WITH A POSITION DEFENCE
STRATEGY

CAN BE EITHER PROACTIVE OR REACTIVE
CONDITIONS- WHEN COMPETITION TRIES AN END-RUN
TACTICS
NEED A FLANKER OR FIGHTING BRAND TO
CONFRONT THE ATTACK.

USUALLY A LOWER QUALITY, LOW PRICED BRAND (PRICE NOT
ATTRIBUTE FOCUSED)
3. CONFRONTATION STRATEGY
‘HEAD-TO-HEAD’
CONDITIONS- PROACTIVE (TO INITIATE) IS BEST BUT USUALLY
REACTIVE IS THE NORM
TACTICS- LOWER PRICE HAS ADVANTAGE OF SPEED BUT
COMMODITIZES AT THE EXPENSE OF DIFFERENTIATION INVESTMENT.
-
INCREASE PROMO USUALLY THE ACTIVITY BEST ALTERNATIVE
-
ADD ATTRIBUTES, BENEFITS –FAST.
Com 442…10
4. MARKET EXPANSION OR MOBILE
STRATEGY
CONDITIONS - PROACTIVE EXPANSION INTO NEWLY
EMERGING SEGMENTS.
TACTICS - LAUNCH PRODUCT-LINE EXTENSIONS, NEW BRANDS,
RELATED PRODUCTS TO PREMPT COMPETITIVE ACTIVITY AND
IMPROVE UNIT MARGINS FOR BATTLE.
-
CREATE SPECIALIZED SALES FORCES (MIT); OFFER ANCILLARY
SERVICES (FULL SERVICE VENDING) TO ENHANCE
DIFFERENTIATION A LA COMPETITIVE ADVANTAGE.
5. CONTRACTION OR STRATEGIC
WITHDRAWAL
CONDITIONS: UNABLE TO ADEQUATELY DEFEND ALL SEGMENTS
TACTICS:

CONSOLIDATE STRONG SEGMENTS -WITH FUTURE GROWTH
OPPORTUNITIES.

TEMPORARILY WITHDRAW FROM LEAST TENABLE SEGMENTS.
Com 442…11
Share Growth Strategies
For Market
FOLLOWERS
Marketing Objectives
For FOLLOWERS

ACHIEVE MARKET DOMINANCE

BUILD PROFITABLE NICHE SEGMENTS.
MARKETING TACTICS AND STRATEGIES TO
ACHIEVE SHARE GROWTH
OPTIONS:
1. OBTAIN VOLUME FROM COMPETITORS EXISTING
CUSTOMERS
CONDITIONS: LEADER HAS LARGE EXISTING SHARE.
TACTICS: ‘HEAD-TO-HEAD’ WITH IMPROVED, NEW ATTRIBUTES
OR PRICING
Com 442…12
OPTIONS continued…
2. OUT EXECUTE AND OUT SPEND
CONDITIONS:
NUMEROUS HETEROGENEOUS SEGMENTS

LEADER HAS STRENGTH IN ONLY A FEW

STIMULATE DIFFERENTIATED DEMAND IN
TACTICS:
LATER ADOPTER CATEGORIES
WHO TO ATTACK?

TARGET SHARE LEADER IN THEIR PRIMARY MARKET SEGMENT –
USE FRONTAL OR ‘LEAPFROG’ (YOU HAD BETTER BE BIGGER AND
STRONGER).

TARGET ANOTHER FOLLOWER WITH FRONTAL ATTACK – SECURE
SEGMENT ‘BEACH HEAD’.

SIMULTANEOUSLY TARGET SMALLER REGIONAL COMPETITORS
(WITH LIMITED RESOURCES).

INDIRECT –FLANKING OR ENCIRCLEMENT- ESTABLISH IN
MULTIPLE UNCONTESTED NICHE SEGMENTS –DON’T ATTRACT
RETALIATION.
Com 442…13
STRATEGIC ATTACK ALTERNATIVES
a. FRONTAL ATTACK Strategy
CONDITIONS:

RELATIVELY HOMOGENEOUS SEGMENT

VERY LIMITED OR EARLY DIFFERENTIATION

YOU ARE BIGGER AND STRONGER.
TACTICS: ACHIEVE A SUSTAINABLE ADVANTAGE THRU

LOWER COSTS – MULTIPLE SBU SYNERGY – SHARE
PRODUCTION – MARKETING

SUPERIOR PRODUCTION TECHNOLOGY

EXISTING SUPPLIER RELATIONSHIPS
OR A

DIFFERENTIATED POSITION

PROVIDE BETTER VALUE

SUPERIOUR SALES, SERVICE FUNCTION
Com 442…14
b. LEAPFROG Strategy
CONDITIONS: YOU HAVE SUPERIOR TECHNOGICAL RESOURCES
TACTICS:

ABLE TO OFFER NEXT GENERATION PRODUCT (DIFFERENTIATION)

MORE DIFFICULT WITH DURABLE GOODS (SWITCHING COSTS
PROGRAMMES)
c. FLANK ATTACK Strategy
CONDITIONS – WHEN THE MARKET CAN BE BROKEN INTO TWO OR
MORE LARGE SEGMENTS.
TACTICS:

CHOOSE LEAST DEFENDED DEVELOPED SEGMENT.

DIFFERENTIATE PRODUCT OFFERING –OR DISTRIBUTION
CHANNELS- TO SPECIFICALLY ADDRESS THIS SEGMENTS NEEDS

DOES NOT HAVE TO BE PURELY PHYSICAL ATTRIBUTES.
Com 442…15
d. ENCIRCLEMENT Strategy
CONDITIONS: NUMEROUS UNDERDEVELOPED NICHE SEGMENTS
(GEOGRAPHIC OR USER APPLICATION)
TACTICS:

SIMULTANEOUS ENTRY OF TARGETED PRODUCT EXTENSIONS
SPECIFICALLY TAILORED FOR EACH NICHE SEGMENT.
e. GUERRILLA ATTACK Strategy
CONDITIONS – LIMITED RESOURCES, COMPETITOR TOO
POWERFUL.
TACTICS:

CHOOSE LESS ENTRENCHED SEGMENT

QUICK IN AND OUT –COUPON DROPS, PRICE OFFS, VOLUME
DROPS, MERCHANDISING DEALS, COOPS

TAKE’M TO COURT???
Com 442…16
SUCCESSFUL FIRMS
Have certain commonalities:
1. Increased product quality relative to
the competitors.
2. Had more line extensions, product
improvements relative to the
competitors.
3. Increased marketing expenditures:
sales function and promotions; media
advertising utilized primarily in pkg.
Goods - faster than the rate of market
growth –investment spending-.
Com 442…17