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Part 7

DEVELOPING & POSITIONING STRATEGY


1. How your company is situated related to its competitors?
2. How your products & services are situated in the minds of customers &
target audiences?

(1) Market Leader Strategies

 Expand total market


- When total market expands, the dominant firm usually gains the
most.
- The market leader should look for new customers @ more usage
from the existing customers.
- (New Customers) A company can search for new customers among
these 3 groups:-
1. Those who might use it but do not (market penetration
strategy)
2. Those who have never used it (new market segment strategy)
3. Those who live elsewhere (geographical expansion strategy)
- In targeting new customers, the firm should not lose sight of the
existing ones.
- (More Usage) Marketers can try to increase the amount, level or
frequency of consumption through packaging or product redesign to
boost the amount.
- In general, increasing frequency of consumption requires:-
1. Identifying additional opportunities to use the brand in the
same basic way (tie the act of replacing the product to a
holiday event @ time of a year/ provide customers with better
information about when they first used the product @ need to
replace it @ a gauge of the current level of product
performance)
2. Identifying completely new & different ways to use the brand
(e.g. company launched a heavy promotion on Arm & Hammer
baking soda after discovering some consumers used it for
refrigerator deodorant & expanding the brand into variety of
new product categories)
 Defend market share
- While trying to expand total market size, the dominant firm must
actively defend its current business – through continuous
innovation.
- (Proactive Marketing) In satisfying customer needs, we can draw a
distinction between responsive marketing (finds a stated need & fills
it) anticipative marketing (looks ahead to needs customers may
have in the future) & creative marketing (discovers solutions to the
customers did not ask for but to which they enthusiastically respond)
- A company need 2 practical skills:-
1. Responsive anticipation.
2. Creative anticipation to devise innovative solutions.
- Responsive anticipation is performed before a given change, while
reactive response happens after the change takes place.
- (Defensive Marketing) The market leader must not leave any major
flanks exposed & the aim of defensive strategies is to reduce the
probability of attack, divert attacks to less threatened areas &
lessen their intensity.
- A dominant firm can use these 6 defence strategies:-
1. Position Defence – occupying the most desirable position in
consumers’ minds, making the brand almost impregnable
(maintaining the status quo of the products)
2. Flanking Defence – the market leader should erect outposts
to protect a weak front @ support a possible counterattack
(weaknesses in product lines usually require flanking defence
& smart companies will fill the gap to defend flanks)
3. Preemptive Defence – attack first with guerrilla action across
the market, hitting competitors & keeping everyone off
balance. Also introducing a stream of new products &
announcing in advance, signalling the competitors that they
will need to fight to gain the market share.
4. Counteroffensive Defence – the market leader can meet the
attacker frontally & hit its flank @ launch a pincer movement
so the attacker will have to pull back to defend itself ( exercise
economic @ political clout) The leader may try to crush a
competitor by subsidizing lower prices @ announcing a
product upgrade to prevent customers from buying the
competitor’s product.
5. Mobile Defence – the leader stretches its domain over new
territories through market broadening (shifts the company’s
focus from the current product to the underlying generic need)
& market diversification (shifts the company’s focus into
unrelated industries)
6. Contraction Defence – sometimes large companies can no
longer defend all their territory, then they give weaker markets
& reassign resources to stronger ones (as conditions change,
some leaders restructure by reducing operations & refocusing
exclusively on core businesses)
(2) Market Challenger Strategies

- A market challenger must define its strategic objective which is to


increase the market share then deciding whom to attack.
1. It can attack the market leader (high risk but potentially high
payoff strategy & makes good sense if the leader is not serving
the market well) this strategy often has the added benefit of
distancing the firm from other challengers.
2. It can attack firms its own size that are not doing the job & are
underfinanced (these firms have aging products, are charging
excessive prices @ are not satisfying customers in other ways)
3. It can attack small local & regional firms (several major banks
grew to their present size by gobbling up smaller regional banks)
4. It can attack the status quo
- Below are the 5 general attack strategies:-
1. Frontal Attack – the attacker matches its opponent’s product,
advertising , price & distribution (a modified frontal attack such
as cutting price can work if the market leader does not retaliate
& if the competitor convince the market its product is equal to
the leader’s)
2. Flank Attack – this strategy chooses weak end of the competitor’s
existing product lines & launches new products to meet
consumer needs & gaps within the competitor’s lines may be
filled by the challenger (particularly attractive to a challenger with
fewer resources & also to serve the uncovered market needs)
3. Encirclement Attack – attempts to capture a wide slice of territory
by launching a grand offensive on several fronts (when the
challenger has superior resources, it can launch product offers
against all of the competitors position)
4. Bypass Attack – bypassing the enemy altogether to attack easier
markets (usually involves technological innovations that ignore
the competitor’s offers & offering the consumer new ways to
meet needs)
5. Guerilla Attack – smaller & poorly financed challengers
sometimes use sporadic marketing offers that probe competitors
for weaknesses.