Like Products market evolve thru four stages: Emergence, Growth, Maturity & Decline. Before Market materializes, it exists as a latent market. Eg: Need for a faster means of calculation –satisfied by Abacuses, Slide Rules, Adding m/c. Hand held electronic calculator as an option; Entrepreneur has to decide on the set of attributes – physical size, no. of mathematical functions etc.
Customers want - four basic arithmetic functions /scientific/ commercial %, decimal /handheld vs. desk top --- a condition where buyer preference scatter uniformly spread is called a D iffused Preference M arket.
MARKET EVOLUTION-2 Problem: to design an optimal product Option-1: (Niche strategy) Designed to meet one of the corn-ers of the market. Option-2: (Multiple niche strategy) Two or more products simultaneo-usly launched to capture two or more parts of the market. Option-3: (Mass market strategy) New product designed for the middle of the market. If pioneer firm is large and designs its product for mass market, it is the beginning of emergence. For small firms single niche strategy makes sense. Resource limits. A large firm may opt for mass mktg
A product in the middle minimizes total dissatisfaction.
MARKET EVLN. GROWTH If the product sells well then new firm enter the market. Entry options for second firm: ( assume that first opted for – mass market stragy ). 1. It can position its brand in one of the corners (single niche). 2. It can position its brand next to the first competitor (mass market) 3. Launch two or more products in different vacant corners (Multiple niche strategy)
If the second firm is small it will try and avoid direct confrontation with the pioneer and will opt for the niche. Jyothi Labs detergent segment with Speed.
MARKET EVLN. GROWTH Stage 2: Growth stage (contd.) If they are large it will launch its new brand in the center against pioneer. Ariel / Henko’s entry in India. The two firms can easily end up sharing the mass market or a large firm can go for multi niche strategy and cover the pioneer. Eventually competitors cover and serve all the major market segments ----Maturity Stage; Growth slows down. Invade each other’s territories. Profits reduce due to undercutting
Market Fragmentation- splitting into segments
MARKET EVLN. (CONTD.) Often followed by Market consolidation due to the emergence of a strong attribute. P&G’s Crest which retarded dental decay. Other brands with whitening, mouth-wash, taste, sex appeal were pushed to the corners and crest won lion’s share of the market. Demand will decline & decline starts. Societies total need level decreases or superior technology replaces the old. Mouth Rinse Liquid in place of tooth paste.
In this the old technology will eventually disappear and a new life cycle will emerge.
COMPETITVE STRATEGIES Expanding The Total Market New Users : Market penetration strategy, new-market segment strategy, geographical expansion strategy. New Uses : Discovering and prom-oting new uses for the product More usage : Strategy aimed at convincing people to use more product per use occasion. Or incr-easing the no. of use occasions. While trying to expand the leader must continuously defend its cur-rent business.
Position defense : involves in build-ing superior brand power, making the brand almost impregnable.
COMPETITVE STRATEGIES-2 Defensive Strategies (contd.) Flank Defense : other than fortifying your major brand build flanker bra-nds (out posts) to protect main one Normally a counter offensive act. Eg: Rin, Wheel – Surf; Colgate Herbal, Cibaca – C. Strong Teeth. Preemptive Defense : An aggress-ive maneuver by the leader is to attack the enemy before he does. Mobile Defense: stretching the do-main to new territories.
This is achieved by market broad-ening where the company redefine-s by shifting focus from the current product to the generic. “Petroleum company redefining themselves as “energy” co.
COMPETITVE STRATEGIES -3 MARKET-CHALLENGER STRATEGIES Frontal Attack : Matches its oppon-ent’s product, advertising, price and distribution. Principle force says that the side with more resources will win. Flank Attack: aims at identifying enemy’s weak spots and attacking them. Can be directed along two strategic dimensions – geographic-al or segmental. Encirclement Attack: is an attempt to capture a wide slice of the ene-my’s territory through a “blitz” – grand offensive on several fronts. Telco (Tata Indica) Bye Pass Attack: Bye pass and attack easier markets. Diversifying into unrelated products/new mark-ets or moving into new technologies.
Pepsi taking over Tropicana the juice giant.
COMPETITVE STRATEGIES -4 MARKET-CHALLENGER sTRATEGIES Guerrilla Warfare: waging small, intermittent attacks to demoralize the opponent and eventually secure a permanent foothold. Selective price cuts, intense pro-motional blitzes, and occasional legal actions. MARKET FOLLOWER STRATEGIES Counterfeiter: Duplicates the lead-er’s product and package and sell it in the black market. Cloner: Emulates leader’s products name and packaging with slight variations. Imitator: copies some things from the leader, but maintains different-iation in packaging, ads, location price etc.
Adapter: adapts to sell in diff mkts.