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Strategies and Challenges of Market Leaders

Explore how market leaders maintain dominance, tackle market challenges, and defend their positions through innovative strategies. Learn about successful defensive and offensive actions used by industry giants. Discover how expanding market demand and defending market share play key roles in staying ahead.

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Strategies and Challenges of Market Leaders

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  1. Market leader. • Holds largest market share. • Many industries contain one firm that is the acknowledged market leader. • Ex.Microsoft (Computer software),Intel (Microprocessor),Gilette(Razor blades),Visa(Credit cards).

  2. Problems • Unless a dominant firm enjoys a legal monopoly, its life is not altogether easy. It must maintain constant vigil. • Product innovations might hurt the leader (Nokia’s and Erricson’s digital cell phones took over from Motorola’s analog models).Maruti Vs Ambassador and premier padmini.)HMT vs Titan • All-Out liquid vaporizers. • The leader might misjudge its competitors and left behind.(Eg. Sears to Kmart and then Wal-Mart, All-out).

  3. To remain no. 1 • The firm must find ways to expand the total market demand. • The firm must protect its current market share through good defensive and offensive actions. • The firm can try to increase its market share even when it is constant.

  4. Expanding total market demand • New customers (market-penetration-sachet marketing,new-market-segments-Dabur Honey,geograhical expansion). • More Usage ( Soft-drinks,500 ml,Qantity,Frequnecy, Colgate,Oral-B,Gillete Mach-3).

  5. Defending market share • Continuous innovations. • Sony.

  6. 6 Six Types of Defense Strategies • Position defense • Flank • Preemptive • Counteroffensive • Mobile • Contraction

  7. Position defense • It includes building superior brand power, and making the brand almost impregnable (Impossible to capture or enter by force ). • Ex.Nescafe,Mercedes,Amul,

  8. Flank(A lateral part or side ) defense • The market leader should also erect outposts to protect weak front or possibly serve as an invasion base for counterattack. • Ex. Smirnoff (Brand of Heublein) which had 23% of market share of vodka market in US was attacked by low-priced Wolfschimdt,Heublein raised the price and put the increased revenue into advertising. • At the same time, Heublin introduced another brand,Relska to compete with Wolfschmidt and Popov ,to sell less than Wolfschmidt.

  9. Preemptive defense. • It’s the more aggressive move with attacking before the enemy starts its offense. • Preannouncements.(Microsoft). • Bank of America (ATM’s).

  10. Counteroffensive defense. • When attacked , most market leaders will respond with a counterattack. • In a counteroffensive, the leader can meet the attacker frontally or hit its flank . • An effective counterattack is to invade the attacker's main territory so that it will have to pull back some of its troop to defend its territory.

  11. Mobile defense • In this the leader stretches its domain over new territories that can serve as future centers for defense and offense through market broadening and market diversification. • Market broadening involves shifting focus from the current product to the underlying need.Ex. ITC ltd (diversification).

  12. Contraction defense • Large companies sometimes recognize that they can no longer defend all of their territory. • The best course of action then appears to be planned contraction (also called strategic withdrawl).Ex. Hindustan motors.

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