a Describe the three strategies that are necessary for a mar

Solution

The three primary strategies that may be used by the market leader are:

(1) expanding the total market by attracting new customers and by stimulating more usage of product

Price penetration – The oldest trick in the book is to drop the price of the product thereby possible increasing the attractiveness of the product and taking on the challenge of the competitor. However, the implications of price drop are manifold. If you drop the price, than your margins will drop. Otherwise, you have to do some modifications in the product so that the price is less and you don’t suffer in margins. If these modifications are done, is the product still good? Thus, price penetration is not so easy and requires a lot of thinking before the strategy is implemented. Price penetration will also affect the brand and positioning.

Increase promotions – Another tactic for market penetration strategy is to increase the promotions for the product and thereby increase the pull strategy for the product. However, just plain old promotions might not work at times. You will have to give offers and schemes to the customer to rope them in. By giving trade discounts, sales promotion discounts, and any such additional benefits to the customers along with promotions will ensure that you penetrate the market better.

Increase reach – If your product is channel driven, than increasing the reach of your product is the best market penetration strategy to sell better than the competition. The way to do this is to find more channel dealers and channel partners. The trick here is to keep the channel partner motivated at all times to do business with you. By increasing the reach, and having your products everywhere through channel dealers and retailers, you ensure that the customer does not miss out on your product and is sure to get your product wherever he goes, which is another sure shot way for market penetration

Increase usage – By increasing the usage of a product, you can increase its consumption thereby penetrating the market even further. Thus, if people start eating a packet of chips more often because these chips are marketed heavily in the area, the higher consumption will increase the market penetration.

Attract competition customers and dealers – The cola wars are the best example of attracting competition customers. By dropping the price in a given area for the distributor or targeting the existing dealers of competition products, you can increase your market penetration by decreasing the quantity of competition products sold.

Non users to start the product – Encouraging non users to start using the product is a tough task and this is where the marketing department steps in. Smaller refrigerators or mini bars in bedrooms where not the norm. But by product placement strategies and by increasing awareness, many people have started keeping mini bars in their bed rooms thereby making non users as “users” of the product mini bar.

Thus, there are numerous market penetration strategies and tactics. However, these tactics will implement best when you use multiple tactics together. Like increasing the reach of the product should like be accompanied with increasing the promotions. By increasing the promotions, you are increasing the usage and also attracting competition customers.

(2) defending market share;

Position Defense

Position defense involves occupying the most desirable market space in the minds of the consumers, making the brand almost impregnable, like Tide laundry detergent with cleaning; Crest toothpaste with cavity prevention; and Pampers diapers with dryness.

Preemptive Defense

A more aggressive maneuver is to attack before the enemy starts its offense. A company can launch a preemptive defense in several ways. It can wage guerrilla action across the market— hitting one competitor here, another there— and keep everyone off balance; or it can try to achieve Grand market envelopment. Bank of America’s 13,000 ATMs and 4,500 branches nationwide now provide steep competition to local and regional banks. It can send out send market signals to dissuade competitors from attacking. It can introduce a stream of new products, making sure to precede them with preannouncements deliberate communications regarding future actions

Counter- offensive Defense

When attacked, most market leaders will respond with a counterattack. Counterattacks can take many forms. In a counteroffensive, the leader can meet the attacker frontally or hit its flank or launch a pincer movement.

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 withdrawal) giving up weaker territories and reassigning resources to stronger territories.

(3) expanding market

Market expansion is an attractive strategy if you determine that sales to current customers and markets have been maximized. One restaurant owner grew her business by adding a second market—private catering. She is also considering a third market of selling signature dessert items through local grocery stores.