1. The document discusses strategies for entering new markets as a pioneer versus a follower. Pioneers have advantages like first choice of market position but also risks, while followers can learn from pioneers' mistakes. 2. For pioneers to succeed, barriers must exist to limit competition initially, and the pioneer must have resources to defend its position. Followers are best when few barriers inhibit entry and they can overwhelm pioneers. 3. Strategic options for pioneers include mass market penetration, niche penetration, or skimming then withdrawing. The best option depends on circumstances and competitive responses. Introductory marketing plans would differ under each strategy.

1. 1-1
McGraw-Hill/Irwin
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All Rights Reserved
C
H
A
P
T
E
R
EIGHT
Marketing
Strategies
for
New Market
Entries
8

3. How do opportunities evolve
over time? [Exhibit. 8.1]
Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West Publishing
Company. All rights reserved.
Time (years)
Product
category
sales
(real
dollars)
Profit
per
unit
(real
dollars
)
Profit/unit
Sales
Life cycle
extension
Growth
Competitive
turbulence
Maturity Decline or
extension
Introduction

4. •Original Uses
•A
•D
•C
•B
•#1
•#4
•#3
•#2
•Extensions
•Years
•Sales

5. SELECTED PROCUCT LIFE CYCLE PATTERNS
Time
Time
Time
Time
Time
Time Time
Sales
Sales
Sales
Sales
Sales
Sales
Sales
A. Traditional B. Boom or Classic C. Fad
D. Extended Fad E. Seasonal or Fashion F. Revival or Nostalgia G. Bust

6. •Total Company Sales
•Total Company
•Individual
Products

9. Categories of New Products Defined
According to Their Degree of Newness to
the Company and Customers in the Target
Market (Exhibit 8.4.)
High
Low
Low High
Newness to the market
Source: New Products Management for the 1980s (New York: Booz, Allen & Hamilton, 1982).
Newness
to
the
company
26% 26%
20%
New product
lines
Revisions/
improvements to
existing products
11%
Cost
reductions
7%
Additions to
existing product
lines
Repositionings
10%
New-to-the
world products

12. Discussion Question
1.Is it better to be a market pioneer,
or a follower?

14. What are the advantages for pioneers?
•First choice of market segments and positions
•Defines the rules of the game
•Distribution advantages
•Economies of scale and experience
•High switching costs for early adopters
•Possibility of positive network effects
•Possibility of preempting scarce resources to suppliers
What are the advantages for followers?
•Ability to take advantage of pioneer’s positioning mistakes
•Ability to take advantage of pioneer’s product mistakes
•Ability to take advantage of pioneers marketing mistakes
•Ability to take advantage of pioneer’s limited resources

15. Discussion Question
2. When, and for whom, does it make
sense to pursue a pioneer
strategy?

16. A pioneering firm stands the best chance for
long-term success in market-share leadership
and profitability when:
• The new product-market is insulated from the
entry of competitors, at least for a while, by
strong patent protection, by proprietary
technology (such as a unique production
process), by substantial investment
requirements, or by positive network effects.
• The firm has sufficient size, resources, and
competencies to take full advantage of its
pioneering position and preserve it in the face
of later competitive entries.

17. Discussion Question
3. When, and for whom, does it make
sense to pursue a follower
strategy?

18.  A follower will most likely succeed
when:
• There are few legal, technological, or
financial barriers to inhibit entry.
• It has sufficient resources or
competencies to overwhelm the
pioneer’s early advantage.

19. Discussion Question
4. If you want to be a pioneer, what
are your strategic options?

20.  Strategic options for pioneers
• Mass-market penetration
• Niche penetration
• Skimming and early withdrawal

21.  Mass-market Penetration
> Aims at convincing as many potential
customers as possible to adopt the new
product quickly to drive down unit costs
and build a large contingent of loyal
customers before competitors enter the
market.
 Niche Penetration
> Focus efforts on a single market segment
instead of pursuing the object of capturing
and sustaining a leading share of the entire
market.

22.  Skimming; Early Withdrawal
> Setting a high price and engaging in limited
advertising and promotion to maximize per
unit profits and recover the product’s
development costs as quickly as possible.
> At the same time, the firm may work to
develop new applications for its technology
or the next generation of new technology.
> When competitors enter the market and
margins fall, the firm is ready to cannibalize
its own product with one based on new
technology or move on to new segments.

24. Discussion Question
5.Under what circumstances might
each option be more likely to
succeed?

26. Discussion Question
6. How might introductory marketing
plans differ under each of these
new market entry strategies?

29. Pioneer Global Market Strategy
 Exporting
Export Merchant
Export Agent
Cooperative Organizations
 Contractual Entry Modes
Licensing
Franchising
Contract Manufacturing
Turnkey Construction
Coproduction
Counter trade
Buyback Agreement
 Direct Investment
Joint Venture
Sole Investment

30. Some Advice for Would-Be
Pioneers
 First mover advantage is trumped by
pioneers who are better. Best beats
first. Concentrate on being best.
 Being a pioneer without the basis for
sustainable competitive advantage is
a trap!