Thursday, 10 October 2019

Entrepreneur Growth - Marketing Strategi


from Marketing and Management - A Strategic Decision Making Approach (5th edition)

Marketing 
As a product market enters the growth stage of its life cycle, the competitor with the leading market share is usually the pioneer or at least one of the first entrance. Entrepreneurs must set a firm strategic objective to maintain its leading position in the face of increasing competitions  as the market expands. The dynamic of growth market including the increasing number of competitors, the fragmention of the market segment, and the threat of product innovation from within and outside the industri. Entrepreneurs must maintain its current share position growth market only if its sales volume continues to grow at rate equal to that overall market, enabling to stay even in absolute market share.
            Share maintenance for a market leader involves two important marketing objectives. First, the firm must retain its current customer, ensuring taht those customers remain brand loyal when making repeat or replacement purchased. Second is entrepreneurs must stimulate selective demand among later adopters to ensure that it captures a large share of the continuing growth in the industry sales. In some cases enterpreneurs might pursue a third objective which is stimulating primary demand to help speed up overall market growth. The market leader is the logical one to stimulate market growth in such situation where is has the most to gain from increase volume, assuming it can maintain it relative share of that volume.
            A bussiness might take a variety of marketing action to maintain a leading share position in growing market. Share maintanance involve multiple objective and their specific marketing objectives and different marketing actions may be needed to achieve each one, a strategic marketing programme usually integrates a mix of the actions outlined in exhibit. Not all the ctions are consisted with one another. For example, for a bussiness to invest heavily in new product improvements and promotions to enhance its product’s high-quality image and simultaneously slash prices, unless it was trying to drive out weaker competitor.

 Fortress or Position Defense Strategy
The most basic defensive strategy is to continually strengthen a strongly held current position to build an impregnable fortress capable of repelling attacks by current or future competitors. By shoring up an already strong positions, entrepreneurs can improve the satisfaction of current customers while increasing the attractiveness of its offering to new customers with the needs and characteristics similar to those of earlier adopters.
            Entrepreneurs must retain current customers by maintaining or improving satisfaction and loyalty. The rapid expansion of output necessary to keep up with a grow market can often lead to quality control problems for the market leader. As a new plants, equipment, and personnel are quickly brought on line, bugs can suddenly appear in the production process. Thus, the leader must pay particular attention to quality control during this process. Most customers have only limited, if any, positive past experience with the new brand to offset their dissappointment when a purchase does not live up expectation.
            The most affective way a leader can strengthen its position is to continue to modify and improve its product. This can reduce the opportunities for the competitors to differentiate their product by designing in features or performance levels the leader does not offer. The leader might also try to reduce unit cost to discourage low-price competitions.
            The leader should take step to improve not only the physical product but customer’s perception of its as well. As competitors enter or prepare to enter the market, the leader’s advertising and sales promotions emphasis should drift from stimulating primary demand to building selective demand for the company’s brand. This usually creating appeals that emphasize the brand’s superior features and benefits. While the leader may continue sales promotion efforts aimed at stimulating trial among later adopters, some of those efforts might be shifted toward encouranging repeat purchase among existing customers.
            For industrial goods, some salesforce efforts should shift from prospective for new accounts to servicing existing customers. Firm that relied on independent manufacturer’s reps to introduce their new product might consider replacing them with company salesperson to increase customer service orientation of their sales effort. Firm whose own salesperson introduced the product might recognize their salesforce into specialized group focused on major industries or user segments. Or they might assign key account representatives, or cross-functional account teams, to service their largest customers.
            Finally a leader can strengthen its positions as market grow by giving increased attention to postsale service. Rapid growth in demand can not only outstrip a firm’s ability to produce a high quality product, but it can also overload a firm’s ability to service customers. This can lead to a loss of existing customer as well as negative word of mouth that might inhibit the firm’s abilities to attract new users. Thus, the growth phase often requires increased investment to expand firm’s part iventory, hire and train service personnel and dealers, and improve the information contents of firm’s website.
            Action to encourage and simplify repeat purchasing is one of the most critical action a leader must take to ensure the customers continue buying its product is to maximize its availibility. It must reduce stockout on retail store shelves or shorten delivery times for industrial goods. To do this, the firm must invest in plant and equipment to expand capacity in advance of demand, and its must implement adequate inventory control and logistic systems to provide a steady flow of goods through the distribution system. The firm should also continue to build its distribution channels. In some cases, a firm might even vertically integrate parts of its distribution system to gain better control over order fulfillment activities and ensure quick and reliable deliveries.
            Some market leader, particularly in industrial goods markets, can take more proactive steps to turn their major customers into captives and help guarantee future purchases. For example, a firm might negotiate requirements contract or guaranteed price aggrements with its customer to ensure future purchases, or might tie them into a computerized reorder system or logistic allience.

Flanker Strategy
One shortcoming of fortress strategy is that a challenger might simply choose to bypass the leader’s fortress and try to capture territory where the leader has not yet established a strong presence. This can represent a particular threat when the market is fragmented into major segment with different needs and preferences and the leader’s current brand does not meet the needs of one or more of those segments. a competitor with sufficient resources and competencies can develop a differentiated product offering to appeal to the segment where the leader is weak and thereby capture a substancial share of the overall market.
            To defend against an attack directed at the weakness in its current offering, a leader might develop a second brand to compete directly against the challenger’s offering. This might involve trading up, where the leader develops a hight-quality brand offers at a higher price to appeal to prestige segment of the market.
            More commonly, though, a flanker brand is a lower-quality product designed to appeal to a low-price segment to protect the leader primary brand from direct price competiton. Unilever is officially the world’s third largest consumer goods company with well know product such as Persil, Dove and Lux; however, a substancial number of customer number of customer prefer to pay less for a somewhat lower quality product. Rather than conceding that low-price segment to competitors, or reducing Dove prices and margins in an attempt to attract price-sensitives consumers, Unilever introduce  OMO, a low price flanker brand.
            A flanker strategy is always used in conjunction with a position defense strategy. The leader stimultaneously strengthen its primary brand while introducing a flanker to compete in segment where the primary brand is vulnerable. This suggest that a flanker to compete appropriate only when the firm has sufficient resources to develop a fully support two or more entries. After all, a flanker is of little value if it is so lightly supported that a competitor can easily wipe it out.

Confrontation Strategy
Supposed a competitor chooses to attack the leader head-to-head and attemps to steal customers in leader’s main target market. If the leader has establish a strong position and attained a high level of preference and loyalty among customer and the trade, it may be able to sit back and wait for the competitor to fail. In many cases, though, the leader’s brand is not strong enought to withstand  a frontal assault from a well-funded, competent competitor. If the leader’s competitive intelligence is good, it may decide to move proactively and chages its marketing program before a suspected competitive challeges occur. A confrontal strategy , though, is more commonly reactive. The leader usually decides to meet or beat the attractive features of a competitor’s offering by making the product improvement, increasing promotional efforts, or lowering price only after the challenger’s success has become obvious.
            Simply meeting improved features or lower price of a challenger, however, does nothing to reestablish a sustained competitive advantage for the leader. And a confrontation based largely on lowering prices creates an additional problem of shrinking margin for all concerned. Unless decreased prices generate sustantial new induatry volume and the leader’s production cost fall with the increasing volume, the leader may be better off responding to price threat with increased promotion or product improvement while trying to maintain its rates pr a protracted diffusion process, the leader may be wise to adopt a penetration pricing policy in the first place. This would strengthen its share position and might preempt low-price competitors from entering.
            The leader can avoid the problem of a confrontation strategy by reestablishing the competitive advanted coded by challenger’s frontal attack. But this typically requires additional investment in process improvement aimed at reducing unit cost, improvement in product quality or customer service, or even the development of the next generation of improved product to offer customer greater value for their money.

 Market Expansion
            A market expansion strategy is a more aggresive and proactive version of a flanker strategy. Here the leader defense its relative market share by expanding into a number of market segment. This strategy’s primary objective is to capture a large share of new customer group who may prefer something different from the firm’s initial offering, protecting the group from future competitve threats from a number of directions. Suach a strategy is particularly appropriate in fragmented market if the leader has the resources to undertakes multiple product development and marketing efforts.
            The most obvious way a leader can implement a market expandsion strategy is to develop line extensions, new brands, or even alternative product from utelizing similar technology to appeal multiple market segments. To expand its total market, gain increased experince-curve effect, and protectits overall technological lead.
            A less-expensive way to appeal to a variety of customer segment is to retain the basic product but vary other elements of the marketing program to make it relatively more attractive to specific users. Thus, a lead might create specialized salesforced to deal with the unique concern of different user groups. Or it might offer different ancillary services to different type of customers or tailor sales promotion efforts to different segment. Thus, performing art group often promote reduced ticket prices, transportation services and aother inducement to attract senior citizens and student to matinee performance.

Contaction or Strategic Withdrawal
In some highly fragmented markets, a leader may be unable to defend itself adequately in all segments. This is particularly likely when newly emerging competitor have more resources than the leader. The firm may have to reduce or abondon its effort in some segment to focus on areas where it enjoy the greates relative advantages or that have the greatest potential for future growth. Even some large firm may decide that certain segement are not profitable enough to coninue pursuing.