competitive dynamics, market leader, Challengers, Followers, market Nicher, competitive strategies for market leaders, expand the total market, defend market share, protect market share, increase market share, other competitive strategies

1. Competitive Dynamics
Dr. Parveen Nagpal

2. Market Leaders
Firms can be classified by the roles they play in the target market:
1. Leader – 40% of the market
2. Challenger - 30% of the market
3. Follower - 20% of the market
4. Nicher - 10% of the market
Market Leaders
Many industries have one firm that is the acknowledged market leader.
This firm has the largest market share in the relevant product market, and
usually leads the other firms in price changes, new product introductions,
distribution coverage, and promotional intensity.

3. Competitive Strategies for Market Leaders
1. Expand the Total Market Demand
Marketers try their best to increase the market demand.
For instance, if Indian consumers increase their consumption of ketchup, the
Kissan brand of Hindustan Unilever Ltd., as the market leader, will be the biggest
gainer. To further increase sales, HUL can convince more people to use ketchup,
or to use ketchup on more occasions, or to use more of ketchup per occasion.
The strategies to expand the total market demand are:
• New Customers: Every product has the potential to attract buyers who are
unaware of the product or who are resisting it because of price or lack of
certain features. A company can search for new users among three groups:
those who might use it but do not (market-penetration strategy), those who
have never used it (new-market segment strategy), or those who live
elsewhere (geographical-expansion strategy).

4. Competitive Strategies for Market Leaders
• More Usage: Marketers can try to increase the amount, level or frequency
of consumption.
The amount of consumption can sometimes be increased through packaging
or product redesign.
Larger package sizes have been shown to increase the amount of product
that consumers use at one time. The usage of impulse consumption products
such as soft drinks and snacks increases when the product is made more
available.
Increasing frequency of consumption, on the other hand, requires either
i. identifying additional opportunities to use the brand in the same basic way
ii. identifying completely new and different ways to use the brand.

5. Competitive Strategies for Market Leaders
Consumers may see the product as useful only in certain places and at certain
times, especially if it has strong associations to particular usage situations or user
types.
To generate additional opportunities to use the brand in the same basic way, a
marketing program can communicate the appropriateness and advantages of using
the brand more frequently in new or existing situations or remind consumers to
actually use the brand as close as possible to those situations
One strategy to speed up product replacement is to tie the act of replacing the
product a holiday, event, or time of year.
Another might be to provide consumers with better information about either:
i. when they first used the product or need to replace it or
ii. the current level of product performance.
The second approach to increasing frequency of consumption is to identify

6. Competitive Strategies for Market Leaders
2. Protect/ Defend Market Share
While trying to expand total market size, the dominant firm must
continuously and actively defend its current business. E.g. Google against
Yahoo! and Microsoft.
In order to defend its terrain, the market leader must adopt “Continuous
Innovation” The leader should lead the industry in developing new products
and customer services, distribution effectiveness and cost cutting. It keeps
increasing its competitive strength and value to customers by providing
comprehensive solutions
Dominant firm can use 6 defense strategies:
i. Position Defense: involves building superior brand power, and making the
brand almost impregnable. E.g. Nescafe has defended its position against
several attacking brands using this strategy.

7. Competitive Strategies for Market Leaders
ii. Flank Defense: Although position defense is important, the market leader
should also erect outposts to protect a weak front or possibly serve as an
invasion base for counterattack.
iii. Preemptive Defense: This defense strategy manoeuvre involves the
launching of an offence against an enemy before it starts an offence. For
example, Titan launched more brands and sub-brands to corner the market
share of HMT watches in the early 1990s
iv. Counter Offensive Defense: This is a strategy of identifying a weakness in an
attacker and aggressively going after that market niche so as to cause the
competitor to pull back its efforts to defend its own territory. When a leader is
attacked, he may base his counterattack in the attacker’s territory. E.g. Hero
Honda's launch of its 100cc pleasure scooters and women-exclusive scooter
showrooms called just4her across the country to take the two-wheeler industry
fight to the markets of its main competitors Bajaj and TVS

8. Competitive Strategies for Market Leaders
v. Mobile Defense: This strategy involves the leader broadening and
expanding its territories to new market areas by diversifying. The leader takes
innovation works in both these directions. For instance, a five-star hotel can
become a foreign exchange dealer, inbound and outbound tour operator,
flouriest and so on. Such diversification into related areas comes under
mobile defense strategies.
vi. Contraction Defense: This strategy involves retrenching into areas of
strength and is often used in later stages of a product life cycle or when the
firm has been under considerable attack. For example, HUL decided to
concentrate on its core business areas, that is, soaps and detergents, and has
emerged as the clear leader in the toilet industry.

9. Competitive Strategies for Market Leaders
3. Increase the Market Share
Market leaders can improve their profitability by increasing their market
shares, like HUL, Procter and Gamble, McDonald’s and Titan.
In conclusion, market leaders who stay on top have learned the art of
expanding the total market, defending their current territory, and increasing
their market share and profitability.
Competing with highly aggressive market leaders presents a formidable
challenge to all newcomers.

10. Other Competitive Strategies
Market Challenger Strategies
Firms that occupy second third, and lower ranks in an industry are often
called runner-up or trailing firms. These firms can attack the leader and other
competitors for enhancing further market share as market challengers or they
can act as market followers.
• Defining the strategic objective and opponents
• Choosing a general attack strategy
• Choosing a specific attack strategy

11. Other Competitive Strategies
Market Follower Strategies
In today’s world, the competency of all companies are so high that innovation
is quickly copied or imitated in different formats.
Market followers are bound to exist in a mature market. The market followers
are wider in case of online marketing because online marketing has lower
entry barriers and higher returns.
E.g. Companies like Snapdeal, Flipkart, Jabong etc. have all started one after
the other. However, the market leaders were E-bay and Amazon.
Market Follower Strategies-
i. Counterfeit: The marketer duplicates the leaders product and packages and
sells it on the black market or through disreputable dealers. Music firms,
Apple and Rolex have been plagued by the counterfeiter problem.

12. Other Competitive Strategies
ii. Cloner: emulates the leaders products, name and packaging with slight
variations.
iii. Imitator: copies some things from the leader but maintain differentiation
in terms of packaging, advertising, pricing and location. The leader does not
mind the imitator as long as the imitator does not attack the leader
aggressively.
iv. Adapter: takes the leaders products and adapts or improves them. They
adapter may choose to sell to different markets, but often it grows into the
future challenger.

13. Other Competitive Strategies
Market-Nicher Strategies
Smaller firms normally avoid competing with larger firms by targeting small
markets of little or no interest to the larger firms.
Sometimes, even the large, profitable firms may choose to use niching
strategies for some of their business units.
Firms with low shares of the total market can become highly profitable
through smart niching.
Such companies tend to offer high value, charge a premium price, achieve
lower manufacturing costs, and shape a strong corporate culture and vision.

14. References
1. Marketing Management: The Millennium Edition, Kotler. P, Prentice – Hall
2. Kotler, Philip. (2002). Marketing Management. Prentice Hall of India