Market Evolution


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Market Evolution

  1. 1. MARKET EVOLUTION <ul><li>Like Products market evolve thru four stages: </li></ul><ul><li>Emergence, Growth, Maturity & Decline. </li></ul><ul><li>Stage – 1: EMERGENCE </li></ul><ul><li>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. </li></ul><ul><li>Hand held electronic calculator as an option; Entrepreneur has to decide on the set of attributes – physical size, no. of mathematical functions etc. </li></ul><ul><li>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. </li></ul>
  2. 2. MARKET EVOLUTION-2 <ul><li>Problem: to design an optimal product </li></ul><ul><li>Option-1: (Niche strategy) </li></ul><ul><li>Designed to meet one of the corn-ers of the market. </li></ul><ul><li>Option-2: (Multiple niche strategy) </li></ul><ul><li>Two or more products simultaneo-usly launched to capture two or more parts of the market. </li></ul><ul><li>Option-3: (Mass market strategy) </li></ul><ul><li>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. </li></ul><ul><li>For small firms single niche strategy makes sense. Resource limits. </li></ul><ul><li>A large firm may opt for mass mktg </li></ul><ul><li>A product in the middle minimizes total dissatisfaction. </li></ul>
  3. 3. MARKET EVLN. GROWTH <ul><li>Stage 2: Growth stage </li></ul><ul><li>If the product sells well then new firm enter the market. </li></ul><ul><li>Entry options for second firm: ( assume that first opted for – mass market stragy ). </li></ul><ul><li>1. It can position its brand in one of the corners (single niche). </li></ul><ul><li>2. It can position its brand next to the first competitor (mass market) </li></ul><ul><li>3. Launch two or more products in different vacant corners (Multiple niche strategy) </li></ul><ul><li>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. </li></ul>
  4. 4. MARKET EVLN. GROWTH <ul><li>Stage 2: Growth stage (contd.) </li></ul><ul><li>If they are large it will launch its new brand in the center against pioneer. </li></ul><ul><li>Ariel / Henko’s entry in India. </li></ul><ul><li>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. </li></ul><ul><li>Stage 3 – Maturity </li></ul><ul><li>Eventually competitors cover and serve all the major market segments ----Maturity Stage; Growth slows down. </li></ul><ul><li>Invade each other’s territories. </li></ul><ul><li>Profits reduce due to undercutting </li></ul><ul><li>Market Fragmentation- splitting into segments </li></ul>
  5. 5. MARKET EVLN. (CONTD.) <ul><li>Often followed by Market consolidation due to the emergence of a strong attribute. </li></ul><ul><li>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. </li></ul><ul><li>Stage 3 – Decline </li></ul><ul><li>Demand will decline & decline starts. </li></ul><ul><li>Societies total need level decreases or superior technology replaces the old. </li></ul><ul><li>Mouth Rinse Liquid in place of tooth paste. </li></ul><ul><li>In this the old technology will eventually disappear and a new life cycle will emerge. </li></ul>
  6. 6. COMPETITVE STRATEGIES <ul><li>Market Leader Strategies </li></ul><ul><li>Expanding The Total Market </li></ul><ul><li>New Users : Market penetration strategy, new-market segment strategy, geographical expansion strategy. </li></ul><ul><li>New Uses : Discovering and prom-oting new uses for the product </li></ul><ul><li>More usage : Strategy aimed at convincing people to use more product per use occasion. Or incr-easing the no. of use occasions. </li></ul><ul><li>DEFENDING MARKET SHARE </li></ul><ul><li>While trying to expand the leader must continuously defend its cur-rent business. </li></ul><ul><li>Defensive Strategies </li></ul><ul><li>Position defense : involves in build-ing superior brand power, making the brand almost impregnable. </li></ul><ul><li>Eg: Lux, Lifebuoy </li></ul>
  7. 7. COMPETITVE STRATEGIES-2 <ul><li>DEFENDING MARKET SHARE </li></ul><ul><li>Defensive Strategies (contd.) </li></ul><ul><li>Flank Defense : other than fortifying your major brand build flanker bra-nds (out posts) to protect main one </li></ul><ul><li>Normally a counter offensive act. </li></ul><ul><li>Eg: Rin, Wheel – Surf; Colgate Herbal, Cibaca – C. Strong Teeth. </li></ul><ul><li>Preemptive Defense : An aggress-ive maneuver by the leader is to attack the enemy before he does. </li></ul><ul><li>Mobile Defense: stretching the do-main to new territories. </li></ul><ul><li>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. </li></ul>
  8. 8. COMPETITVE STRATEGIES -3 <ul><li>MARKET-CHALLENGER STRATEGIES </li></ul><ul><li>Frontal Attack : Matches its oppon-ent’s product, advertising, price and distribution. </li></ul><ul><li>Principle force says that the side with more resources will win. </li></ul><ul><li>Flank Attack: aims at identifying enemy’s weak spots and attacking them. Can be directed along two strategic dimensions – geographic-al or segmental. </li></ul><ul><li>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) </li></ul><ul><li>Bye Pass Attack: Bye pass and attack easier markets. Diversifying into unrelated products/new mark-ets or moving into new technologies. </li></ul><ul><li>Pepsi taking over Tropicana the juice giant. </li></ul>
  9. 9. COMPETITVE STRATEGIES -4 <ul><li>MARKET-CHALLENGER sTRATEGIES </li></ul><ul><li>Guerrilla Warfare: waging small, intermittent attacks to demoralize the opponent and eventually secure a permanent foothold. </li></ul><ul><li>Selective price cuts, intense pro-motional blitzes, and occasional legal actions. </li></ul><ul><li>MARKET FOLLOWER STRATEGIES </li></ul><ul><li>Counterfeiter: Duplicates the lead-er’s product and package and sell it in the black market. </li></ul><ul><li>Cloner: Emulates leader’s products name and packaging with slight variations. </li></ul><ul><li>Imitator: copies some things from the leader, but maintains different-iation in packaging, ads, location price etc. </li></ul><ul><li>Adapter: adapts to sell in diff mkts. </li></ul>