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Market Leader Strategies – Complete Explanation

Almost every company follow a market leader who has the largest market share.  Usually, the leader leads the other firms in new product developments, price changes. Distribution systems & promotion event. However,  The leader may not be respected by others. But others may concede its dominance. Companies only follow the leader, take a challenge, imitate or avoid. The best-known market leader is-

  • Walmart
  • McDonald’s
  • Verizon
  • Coca-cola
  • Caterpillar
  • Nike
  • Facebook
  • Google

Obviously, a market leader life is not so easy. It needs to careful every time. Others company always tries to take the advantages of leader weaknesses.
To keep the first position in the market, the leading brand can take any of the three actions.

  1. Expanding total demand
  2. Protect market share
  3. Expand market share

Expanding total demand

Comparatively, the leader firms get the most benefits in the marketplace. For example: as maximum American eat fast food, McDonald’s stands to gain the most. The reason behind this is, McDonald’s has a large market share than its nearest competitors Subway & Burger King. As a market leader, MacDonald’s try to convince its consumer that fast food is the best eating –out choice, if possible then it‘ll benefit more than its competitors.

Selecting a new market segment the market leader can developing new users, new uses & more usage of its product. They can develop them in many places.

Protect market share

At the time of expanding the market growth, the leader firm must try to protect its current business position against competitor’s attacks. For example, Wal-Mart always to protect their current business against Target & Costco.  McDonald’s protect against Wendy’s & Burger King.

What can the market leader do to protect its position?

They want to prevent the weak point as possible; so that the competitors cannot get any advantages. It tries to keep the value proposition that they promise to deliver. They need to work hard to keep strong relationships with valued consumers. They should set their pricing at the moderate level that can be purchased & the price should be consistent with the brand value. The leader should develop “Plug holes” so that the competitors do not jump in.

But the best revenge is to continuous innovation. Market leader continuously develops new products, customers services, distribution, promotion & cutting cost. The market leaders enjoy competitive advantages than others & deliver value to consumers. Sometimes, a leader may attack by the challengers, and then the leader reacts decisively.

Expand market share

Growing market share is one of the ways of keeping the first position in the market. Market share eventually increases as sales are increased. For example: in the shampoo market 1% increase in share is worth $14 million in annual sales.  The carbonated soft drink is worth $757million.

On one study shows that probability rises as the increasing of market share. Based on the probability, companies improved their strategies. For example:  if a company wants to be number one or two in the market position, it needs to develop a unique business plan.

Market challenger strategies

The market challenges are always a second, third or lower position in the industry. Such as PepsiCo, Ford, Hertz, Lowe’s. These firms adopt one or two marketing strategies. They challenge the market leader & other competitors aggressively. They decide which competitors to challenge & what their strategic objective. High risks bring high gain strategy. The challenger wants to dominate the market leader or wants more market share. However,  The challenger takes the second mover advantage.  Besides, The challenger follows what makes the leader lead the market.

Market follower strategies

Sometimes not all the runner-up companies want to challenge the market leader. They only follow the leader on the market. If the challenger reduces its prices, improved their services, add an additional feature in their product then the market leader try to match these changes to attack.

Probably, the leader has some power to encourage customers. For example, Kmart introduced a blue light special product that is containing low price. Because of the low price, Kmart competes with Walmart’s every day low prices. They started a price war but Kmart loses the market. So, there are some companies who don’t want to compete; they only follow the market leader.

A follower may have some advantages. The market leader always needs to expenses huge money for developing a new product, distribution & promotion. In contrast, challenger & the follower can learn from the leader’s experience. The follower can copy or improve the leader’s product.

Usually, they need less investment. A follower may know how to hold the present market share & its customer. Follower gives some distinct advantages to the customers like location, services, financing. The main goals of a follower are to attack the market challenger. They always try to reduce their manufacturing cost & charge low prices. They keep their product quality & services high. However, They must enter the new markets as they open up.

Market nicher strategies

Almost every company has a special segment in which they can serve well. This company chooses only sub-segments. They are called the market nicher. they have smaller firms with limited resources. Through smart niching, the firms can be highly profitable & successful with low shares. The reason behind this is that the market nicher knows all target customers so well & know to meet their needs. The niche always tries to find out one or two segments to enter that are safe & profitable.

The niche market is always in specialization in nature. A market nicher can be specialized in a particular sector that it can serve best like product features, quality, services or marketing mix. One nicher select to serve a small group of people who are neglected by the majors.

Some may choose one or a few specific customers. Walmart is selling only in a certain location, region or area in the world. HP specializes in pricing & quality.

The market nicher has some major risks. The selected segment may dry up, then what’ ll nicher do those situations.  That’s why many companies practice multi-niche. Through this way, nicher can serve the total market.

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