As the speed of change in the marketing environment quickens, time horizons are becoming shorter. What strategies do companies employ to increase market share? Weigh the attractiveness of the various strategies and decide which of the ones are more advantageous for you to pursue.
The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Porter states that a cost leadership strategy is appropriate where a business has a high relative market share and has been able to reduce costs because of economies of scale.
In addition to this, markets evolve, leading to consumers wanting improvements and advancements on products. The market challenger holds the second highest market share in the category, following closely behind the dominant player.
The firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share.
Students can discuss how innovation leads to success and also how the success can be sustained in case of escalating competition.
The strategic objective for this intensive growth strategy is to capture more consumers by attracting them to new products. Also if the business is not well organised and fully equipped and prepared the business will struggle using this strategy.
Focus Strategy The focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation.
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.
These new products may be variations of existing products, or entirely new products. For example, if a firm differentiates itself by supplying very high quality products, it risks undermining that quality if it seeks to become a cost leader.
Finding ways for your company to operate efficiently will help to keep costs low and control your operational expenses. If competing firms are unable to lower their costs by a similar amount, the firm may be able to sustain a competitive advantage based on cost leadership. Firms that succeed in a differentiation strategy often have the following internal strengths: Innovation is one method by which a company may increase market share.
For instance, a five-star hotel can become a foreign exchange dealer, inbound and outbound tour operator, flouriest and so on. They tend to maintain profits by controlling costs. As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage.
If a firm attempts to achieve an advantage on all fronts, in this attempt it may achieve no advantage at all. In addition, firms can conduct analyses of performance, customer analysis, competitor analysisand target market analysis. Here is a look at each of these in detail and how you can use them in your own business model.
Generic Strategies and Industry Forces Industry. Once that decision has been made, implement the right measures and tactics to support that strategy. The company has achieved success, but sustaining the success is a major critical factor.
Maruti Udyog started True Value car division—used cars certified by Maruti engineers—to expand their market in the rural and urban markets well.
Second, the firm must protect its current market share through good defensive and offensive actions.By positioning itself in either broad scope or narrow scope and a low-cost strategy or differentiation strategy, an organization will fall into one of the following generic competitive strategies: cost leadership, cost focus, differentiation, and focused differentiation.
Amazon business strategy can be described as cost leadership taken to the extreme. The global online retailer operates with a razor thin profit margin and succeeds due to a combination of economies of scale, innovation of various business processes and a constant business diversification.
What you get is a picture of the competitive landscape of your market, where all the products above the line command a price premium owing to some secondary benefit customers value, and all those.
can help a firm improve its competitive position, gain market share, and increase profits. In this paper we discuss both defensive and offensive marketing strategies. Competitive strategies for Market Leaders January 20, Sree Rama Rao Sales/Marketing Management We can gain an insight of Marketing firms by classifying firms by the roles they play in the target market: leader, challenger, follower, or nicher.
According to Cohen et al (), porter‟s three set of generic competitive strategies (differentiation, cost leadership and focus) influences customer satisfaction.
There is evidence that the three porter‟s generic strategies can enable an.Download