Almost every company follows a market leader who has the largest market share. Usually, the leader leads the other firms in new product developments and price changes. Distribution systems & promotion events. 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-
Obviously, a market leader’s life is not so easy. It needs to care for every time. Others company always tries to take the advantage of leader’s weaknesses. Explore – Interoperability in digital marketing
To keep the first position in the market, the leading brand can take any of the three actions.
- Expanding total demand
- Protect market share
- Expand market share
Expanding total demand
Comparatively, the leading firms get the most benefits in the marketplace. For example: as maximum Americans eat fast food, McDonald’s stands to gain the most. The reason behind this is, that McDonald’s has a large market share than its nearest competitors Subway & Burger King. As a market leader, MacDonald’s tries to convince its consumer that fast food is the best eating–out choice, if possible then it‘ll benefit more than its competitors. Let’s explore – Pricing strategies in marketing.
By selecting a new market segment the market leader can develop 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 leading firm must try to protect its current business position against competitors’ attacks. For example, Walmart always protects its current business against Target & Costco. McDonald’s protects 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 continuous innovation. Market leader continuously develops new products, customer services, distribution, promotion & cutting costs. The market leaders enjoy competitive advantages over others & deliver value to consumers. Sometimes, a leader may attack the challengers, and then the leader reacts decisively. Gather more on – the function of IT.
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, a 1% increase in share is worth $14 million in annual sales. The carbonated soft drink is worth $757million.
One study shows that probability rises with the increase 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, and 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 is. High risks bring a 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. Explore- marketing information technology.
Market follower strategies
Sometimes not all the runner-up companies want to challenge the market leader. They only follow the leader in the market. If the challenger reduces its prices, improved its services, or adds an additional feature to its product then the market leader tries 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 a low price. Because of the low price, Kmart competes with Walmart’s everyday 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 expend huge money on developing a new product, distribution & promotion. In contrast, the challenger & the follower can learn from the leader’s experience. The follower can copy or improve the leader’s product. Let’s discover- Modern Integrated marketing communications.
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, and 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 niche 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 niche. 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 niche knows all target customers so well & knows to meet their needs. The niche always tries to find out one or two segments to enter that are safe & profitable. Therefore, you can use Marketing Automation Strategies for Sustaining Success
The niche market is always in specialization in nature. A market niche can be specialized in a particular sector that it can serve best like product features, quality, services, or marketing mix. One niche is selected 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 niche 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. In this way, nicher can serve the total market. Along with this, you can explore – the importance of information in gaining insights.