Market Evolution
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  • 1. MARKET EVOLUTION
    • Like Products market evolve thru four stages:
    • Emergence, Growth, Maturity & Decline.
    • Stage – 1: EMERGENCE
    • 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.
  • 2. 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.
  • 3. MARKET EVLN. GROWTH
    • Stage 2: Growth stage
    • 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.
  • 4. 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.
    • Stage 3 – Maturity
    • 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
  • 5. 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.
    • Stage 3 – Decline
    • 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.
  • 6. COMPETITVE STRATEGIES
    • Market Leader 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.
    • DEFENDING MARKET SHARE
    • While trying to expand the leader must continuously defend its cur-rent business.
    • Defensive Strategies
    • Position defense : involves in build-ing superior brand power, making the brand almost impregnable.
    • Eg: Lux, Lifebuoy
  • 7. COMPETITVE STRATEGIES-2
    • DEFENDING MARKET SHARE
    • 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.
  • 8. 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.
  • 9. 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.