The Strategy Of Market Challengers Marketing Essay
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 5465 words||✅ Published: 1st Jan 2015|
Companies that are on the second, third or even a lower position in industry are often called companies on the rise and companies that walk pave the way. Some companies, such as Colgate, Ford, Montgomery Ward, Avis, and Pepsi-Cola, have been great in their own areas. These companies on the rise can operate in two modes.
Can attack the leader and other competitors in an aggressive battle for the expansion of its market share (market challengers), or they can cooperate and work without risk (market followers).
There are many cases of market challengers who won position as the market leader, or even abandoned certain leaders of the market. Canon, which was only one-tenth the size of Xerox mid-70s, today produces more than copiers Xerox. Toyota now produces more cars than General Motors, and British Airways carried more international passengers than the former leader, Pan Am. These challengers set high aspirations and coordinate their scarce resources as the market leader conducts its business as usual.
Dolan has revealed that the competitive rivalry and price reductions occurs in industries with high fixed costs, high inventory costs and stagnant primary demand, such as the steel industry, automotive, paper and chemical industries. Now let’s examine the strategy of competitive attacks that are available to market challengers.
1.1.1. Defining strategic objectives and opponents
Market challenger must first define its strategic objectives. Most of the strategic goals of market challengers to increase its market share. These decisions relating to the attacks are linked to deciding whom to attack:
– It can attack the market leader. This is high-risk but also potentially very cost-effective strategy and has a lot of sense if the leader is actually “false leader” that does not serve the market properly.
– can attack firms of the same size which is not going work or lack the financial resources, to attack the company which produces obsolete, which charge excessive prices, and failing consumers in other ways.
– can attack small local and regional firms that do not go deal or they lack financial resources. Several major firms for the production of beer has grown to its current size, no looting consumers from other companies, but “devouring” of smaller firms, or “small fish”.
If the attacking company goes to market leader, her goal would be to be gaining a certain market share. So “Bic” no illusion that it could bring down the Gillette razor in the market, rather than simply seeking greater market share. If the attacking company goes to a small local company, its objective could lead to a company under bankruptcy.
1.1.2. Choosing a general attack strategies
Having clearly identified opponents and objectives, which are options available to attacking enemies? We thrive imagining how it occupies the territory of the market. Five different attack strategies:
Striker says that launches frontal attack when concentrating their forces directly opposite his opponent. Here attack enemy forces, not its weakness. The outcome depends on who is stronger and more durable. The clean frontal attack attacker attacks the opponent’s product, advertising, price and so on. The principle strength of the opinion that the party has more manpower (resources) to win the conflict. This rule is modified if the defender has a greater efficiency in the artillery field strengths (say top holding at the top of the mountain). Military dogma lies in the fact that the successful frontal attack against well-established opponent or opponents who controlled the strategic “high ground”, the attacking force must develop an advantage in the ratio of at least 3:1 in fighting the fire. If the attacker has less human power or inferior firepower than the opposition, frontal attack is nothing more than a suicide mission, and it makes no sense. One such company on the rise, a manufacturer of razor blades from Brazil was attacked by Gillette, the market leader. Attackers asked whether the consumer provides a better razor for shaving. “No,” was the reply. “The lower price?” “No.” “You better pack?” “No.” “Wise advertising campaign?” “No.” “Better benefits at the store?” “No.” “Then how do you expect to take over the market from Gillette? ‘” pure determination. “Was the answer. It is not necessary to say, the offensive failed competitor.
As an alternative to pure frontal attack, the attacker can launch a modified frontal attack, of which the most common means lowering its prices according to the price of it. Such attacks can have two forms.
Something more common procedure is to equalize the offer leaders in other areas, and beat it in price. This can act: (1) if the market leader did not respond by lowering its price, and (2) if the competitor convinces the market that their product is equal to that of the competition, but better because it is sold at a lower price.
Another form of aggressive price strategy entails substantial investment header to achieve low production costs and only then attacked by competitors on the basis of price.
The enemy is the strongest army in the area where expected to be attacked. It is, therefore, less assured in their side and rear positions. Its weak points (blind side), therefore, are natural targets for attack. The main principle of modern warfare concentration of power against weakness. An attacker can attack the strong side of the opponent in order to pull its forces from positions in which they will actually make a real attack on the side or the back. This maneuver will find the opponent’s side of the guard. Flank attack has excellent marketing sense and is particularly interesting that the attacker has fewer resources than your opponent. If an attacker cannot overcome Veterans brute force, can outsmart him.
Sidebar is traditionally the best strategy to discover their needs and satisfying. Side attacks are more successful than frontal assault.
Maneuver is to surround an attempt acquiring a substantial part of the enemy’s territory through a comprehensive “blitz” attack. Coverage includes launching a major offensive on several fronts, so that the enemy is forced to defend his front, side, and the background simultaneously. An attacker can market to offer everything at the same time provides an opponent, and more than that, in this way offer hard to dismiss. Coverage makes sense where attacker has superior resources and believes that rapid coverage break force opposing side
Bypass attack is mostly less directive attack strategy. It means bypassing the enemy and attack easier targets to extend the resources of the company. This strategy offers three approaches: diversification among unrelated products, diversification into new geographic markets, and reorientation to new technologies in order to squeeze out existing products.
Technological advancement is a strategy to circumvent what is widely used in industries with high technologies. Instead of imitating a competitor’s product and taking costly frontal attack, the challenger patiently examining and developing technology and launches an attack, shifting the battlefield on his territory, where it has an advantage.
Guerrilla warfare consists of taking small occasional attacks in different areas of an opponent. The aim is to harass and demoralize opponents and eventually secure permanent footholds. Liddell-Hart delivered the military principles as follows:
The most common reason for using the strategy of limited objective consists in anticipation of changes in the balance of power changes, which is often, achieved through the depletion of enemy forces, weakening it harassment rather risky attacks. The main condition for such a strategy to drain the enemy should be disproportionately greater than their own. Opponent can inflict damage on the influence of its resources, local attacks that cause destruction or causing substantial losses in parts of its power, causing him to unprofitable attacks, causing considerable spread his forces, and, not least, exhausting his moral and physical energy.
Guerrilla attacker uses both conventional and unconventional resources when attacking opponents. These funds include selective price reductions, intensive advertising “blitz” and occasional legal activities.
1.1.1. Selecting specific attack strategy
Strategy five attacks which we have just discussed is very broad. The challenger must unite together an overall strategy that will consist of several specific strategies. Market challengers can choose between several specific attack strategies:
– Strategy at discount prices
– Strategy cheaper products
– Strategy prestige products
– Strategy proliferation of products
– The strategy of product innovation
– Strategy enhanced services
– Strategy innovation in distribution
– Strategy to reduce production costs
– Intensive advertising promotion
Strategy of market followers
A few years ago, Theodore Levitt wrote an article entitled “Innovative imitation” in which he argued that the strategy of imitation products can be just as profitable as well as product innovation. Inventor, such as Sony, carries a substantial burden of developing new products, offering them the distribution, and informing and educating the market. The prize for this great work, and take the risk of the market leadership. However, other companies can copy or improve new products. For example, Panasonic rarely innovate new products. Instead, rather copied Sony’s new products, and then selling them at lower prices. Panasonic earns higher profits than Sony because they did not have to bear the cost of innovation and education. Sony looks at Panasonic as bitter enemies.
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Many companies on the rise, that followers prefer to follow rather than challenge the market leader. But leaders never accept dragging its consumers so easily. Although the company offers attractive emerging low cost, improved service, or additional product features, a leader that can quickly respond to soften the attack. It is likely that the leader has a stable force for its preservation in the entire fight. Because it would be tough fight could either leave the company in a difficult position, firm on the rise must closely consider all the details before they take offense. If the firm cannot start rising earlier coup – in the form of significant product innovation and distribution penetration – then they will often follow rather than attack the leaders.
This does not mean that the market lacks follower’s strategy. Market follower must know not only how to retain current customers, but also to win the satisfaction of the new consumer. Every follower trying to achieve exceptional benefits to your target market – location, service, financing. Furthermore, because the follower is often subject to attack challengers, he has to keep production costs low, and high quality products and services. You must enter new markets when it opens.
Being a follower is usually not the same as being passive or copies leaders. Follower must define the path of growth, but not one that will cause revenge competition. Can be distinguished four broad strategies scholarship:
Duffer duplicates products and packaging leaders and selling them on the black market or through disreputable dealers. Companies such as Apple Computers and Rolex struggling with the problem of counterfeiting, particularly in the Far East, as well as seeking ways to thwart counterfeiters.
Cloner mimics products, distribution, advertising and other segments of the leader. Product and packaging Cloner similar to those of the leaders, but the name brand products is somewhat different, such as “Choco-Cola” instead of “Coca-Cola”. Cloner actually parasitic lives at the expense of investment market leader. In dealing with computers, Cloner is actual facts to be taken into account. Most of IBM’s competitors in the market of personal computers began cloning the IBM personal computers.
Imitator copies leaders in some elements, but keeps diversity in terms of packaging, advertising, pricing, and so on. A leader does not have anything against imitators until this does not attack aggressively. Impersonator actually helps leaders to avoid a possible lawsuit for monopoly.
Adapter takes produce leaders and adapts them, or better. Adapter can choose to sell them in different markets in order to avoid direct confrontation with the leader. But often the adapter grows in the future challengers, as was the case with many Japanese companies after they adapt and improve their products that were developed elsewhere.
DOMESTIC AND INTERNATIONAL MARKETING
According to the classical approach, both in literature and in business practice, international marketing is an integral part of marketing that applies to foreign markets. Marketing activities in foreign markets differ from domestic only as a foreign environment different from the domestic, the elements that are essential for the sale of certain products or services.
Modern approach to international marketing is something different. International marketing can be used in the operations of local companies, because its application is not necessarily the physical movement of goods and practitioner services outside the national market. It can also be applied to national and international markets. However, modern development phase of international marketing – global marketing, in principle, there is no national market because its area of â€‹â€‹activity globally, the global market as a whole. For manufacturers of computers IBM or Digital Equipment, chain hotel Inter-Continental and Sheraton, soft drink manufacturers Coca-Cola or Pepsi-Cola, financial institutions Deutsche Bank and ABN are no such parts of the world market for which they are not interested in the long term and which would not occur.
International marketing can be defined as the coordinated execution of marketing activities in more than one country, in order to carry out the exchange that meets the goals of individuals, organizations and society as a whole.
The forms of international marketing in business practices are very diverse and include simple strategies (export, import, free zone, leasing), complex strategies of international production cooperation (license, assembly, cooperation, contract manufacturing, etc.), franchising, strategic alliances, and most complex investment strategies abroad. The use of each of these strategies applies to different concepts of international marketing, regardless of their level of complexity.
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International marketing does not have to mean selling even the business activity of domestic companies abroad. He appears in the local markets in the subsidiaries of international companies are located and doing business in these markets. Local companies are faced with international marketing in foreign and domestic markets. To the international market is not a prerequisite for the implementation of international marketing.
Likewise, international marketing is not conditional on the physical movement of goods and services across national borders. Slovenian company that exports to Bosnia and Herzegovina applied international marketing because it is about the activities in the two countries. However, when the Slovenian company has a branch in Bosnia and Herzegovina, which operates exclusively in the Bosnia and Herzegovina market, and then the application of the international marketing for the Bosnian-Herzegovinian subsidiary operates under the direction and supervision of Slovenian companies. This means that for the application of international marketing essentially perform marketing activities in more than one country, and not the physical movement of goods and services.
The application of international marketing is not limited to manufacturing companies and companies that are profitable oriented. Today, a number of service companies and institutions, profitable and unprofitable character, involved in international marketing. All the big banks, promotional institutions, hotel chains, airline and other carriers, as well as educational and charitable and religious institutions are used to international marketing.
The practice is quite widespread belief that international marketing can only use large international companies with branch network in the world. This is a misconception. However, many small and medium enterprises successfully applied international marketing and a good and effective method exploits the available resources, and effectively uses taking the opportunity in foreign markets. It is essential that the company develops and implement a marketing concept in their business because of the successful execution of the marketing function is conditioned by adopting marketing concepts.
1.1. Differences between international and domestic marketing
The concept of marketing, and the methods and techniques that the company uses in conducting marketing campaigns and similar foreign and domestic markets. Because of this fact, some authors believe that the differences between international and national marketing irrelevant, and that both marketing the same. The difference comes down solely to differences in the environments of foreign and domestic markets.
There are similarities in the methods and techniques of the foreign and domestic markets. Marketing concept is universal and applicable worldwide. However, the differences between international and domestic marketing are extremely important, and therefore they cannot be the same.
The remainder of this paper will be listed most diff between international and domestic marketing.
International environment. External forces acting in an international environment much more complex than in the domestic market. On each side of the market the company has to face different risks, language, culture, laws, currencies, level of development, which he very difficult, prolonged and more expensive analysis, planning and implementation of marketing activities.
Different usage. In foreign markets is often different use of marketing principles, concepts, methods and techniques (which are the same as in the domestic marketing). This is the result of various activities of certain elements in foreign environments.
Specific methods and techniques that are used in international marketing are not present in the home. This applies particularly to: the selection of a foreign market, the selection strategy on foreign markets, strategies and tactics to keep business negotiations, insurance exchange risks and internationalization of business operations. These are all specific elements of international marketing and Smart are a problem in the implementation of marketing campaigns in the domestic market.
International competition in foreign markets is incomparably stronger than the domestic market. In addition, overseas there is no protection of local governments and public domestic companies. On the contrary, there are no “foreign” government “borrowed domestic” public and “foreign” companies that are often hostile to foreign companies. And on the domestic market to international competition occurs, but it is on the world market even clearer, more numerous and better.
Differences between individual foreign markets are essential, and the company must be taken into account when developing marketing plans and implementation of marketing campaigns. Often the company has to adjust every element of the marketing mix (product, price, distribution, promotion) to each of the selected foreign markets. For example, the three foreign markets the company performs three adaptive products, the three prices, three kinds of different distribution channels, and three promotions. That before the company raises additional problems and increase operating costs.
Coordination of marketing plans on each side of the market. When a group of companies that operates in a number of foreign countries, the application of international marketing involves the coordination and integration of marketing programs in foreign markets into a single global program. Such a joint program to meet global goals groups, prevent duplication in any segment of the Group, and take advantage of synergies and promote the exchange of experiences, knowledge and people from one place to another market.
1.2. Global versus local strategies
The differences between national markets in the world are still extremely important, especially for some products and services. These differences need to know and appreciate them in the preparation of marketing plans. However, the market for other products and services, the differences between national markets are minimal or even negligible, which allows the company to use the international global marketing strategy for all such markets or for the world market as a whole.
Global approach uses the standardization of marketing programs so that international company uses the same product with the same brand name, packaging, price and service, and sells it under the same or similar distribution channels and promotes the same way on the world market. In contrast, the local strategy implies adaptation of marketing programs to local characteristics of each foreign market.
For enterprise are undeniable benefits and direct benefits of such standardization, from cost savings and to simplify the procedures of the majority of production and marketing, and to build a global image. The relative importance of the decision to standardize will vary from activity to activity and from company to company. Selecting local or global strategy is not working according to the intrinsic enterprise, but is conditioned by forces external environment.
Sometimes it is possible that the same company at the same time benefit the local and global strategy that some products in its assortment of standardized marketing program, while the other products adapted. The decision of the management company to use global or local strategy, i.e. standardize or adapt the marketing program in the world market is influenced by many elements. Some of them are in favor of standardization and implementation of the global strategy, while others support the adaptation and implementation of local strategies.
For the enterprise is an important assessment that elements of marketing programs can standardize and to what extent. Most companies are in practice opted for the middle ground. Dilemma companies should not be standardization versus adaptation, but to what extent is in need of renovation. There are some elements that can be easier to standardize (product, brand, promotion) than others, which can be adapted (price, service, packaging). Also, make sure that the competitors cannot always in a foreign market, the application of adaptation strategies, to offer local customers more, and the enterprise has standardized its product could pay dearly: “… replacement of long-term thinking for short-term marketing financial speculation. So global Marketing – yes, global standardization – not at any price. “
ENVIRONMENT INTERNATIONAL MARKETING
The environment in which the company develops its business activities has direct and indirect impact on operating results. Each states their social, political, legal and economic system regulates growth, development and operations of each company in its field. Internationally the company is in contrast to the national, simultaneously exposed to different environments. On each side of the market are different social, political, economic and legal systems, different cultures and competition.
All neither of these elements, which are referred to as external forces outside of the enterprise, as a rule, cannot be changed nor to them, in the short term impact. Internationally the company has external power each foreign environment to explore, recognize and adapt to their marketing activities.
In the last two decades there have been major changes in the environment, creating new opportunities but also new problems. The world economy is globalizes. Global economy and investment has rapidly increased with the opening of many attractive markets in the east and west. Dominant position of the U.S. in world trade has waned, and other countries like Japan and Germany have increased their economic power in the world markets. The international financial system has become more complex and delicate. In the markets of some countries, the company met with increased trade barriers that are designed to protect the domestic market from foreign competition.
2.1. International trade system
Companies that are thinking about the internationalization of its business must first understand the international trade system. When selling a product to a foreign country, the company is faced with a number of restrictions on trade. The most common restriction is a tariff or customs duty, which is in fact the duties imposed by the government for certain, imported products. Tariffs are designed to raise revenue and protect domestic companies. Exporter also meets and quotas, which are restrictions on the amount of goods that the importing country is able and willing to accept a certain product category. The quota has been created in order to limit the country from excessive imports and to protect local industry and employment. Embargo is the strongest form of quotas, which completely prohibits any kind of import. Also, can meet and exchange controls that limit the amount of foreign exchange and the exchange rate of the local currency against other currencies. The company also can meet and non-tariff barriers to trade as a defense against foreign companies offer or restrictive standards favoring or completely reject certain products. At the same time, certain forces accelerating trade between countries. An example of this is the General Agreement on Tariffs and Trade (GATT) – General Agreement on Tariffs and Trade (1993rd year has been replaced by the World Trade Organization – WTO), as well as numerous regional FTAs.
WTO and GATT
General Agreement on Trade and Tariffs (GATT) is an international treaty designed stimulating world trade by reducing tariffs and other restrictions on international trade. Since the establishment of GATT 1948th year to date was eight rounds of negotiations. The last round of negotiations had GATT and the Uruguay Round (1986-1994. Year), when the rest of the world reduced tariffs by 30%, promoted the long-term growth of global trade, and as a facilitator of GATT and WTO is responsible. It also adopted three major changes in the rules of world trade:
– Liberalization in agriculture and textile industry as most protected industries,
– Rules in international trade are extended to services, and
– Created a new system for resolving disputes – this is considered to be the most important change, because in the past the country, with no big fear, violates the rules of GATT. Under the new system, the decision can be blocked only by consensus of all WTO members. Once a country is accused of violation of the rules will be punished by the other members.
2.3. Regional free trade
In recent years there has been an increase in the number of regional free trade zones or economic communities – groups of nations organized in order to ensure common goals in the regulation of international trade. One such community is the European Union, which intends to create an independent European market by reducing the physical, financial and technical barriers to trade between member countries. There are other communities of free trade.
2.4. Competitiveness in the world market
Globalization of business in the international market is significantly affected by the structure and the main features of the competition. How is the activity of international companies taking place in the markets of many countries, the ability of the organization, management and Leadership Company in various countries has become an important element of competitive advantage. Strengthening international competitiveness brings benefits to consumer’s greater choice, better quality products and services and lower prices. However, while local producers brings loss of markets, poor management and staff reductions.
Global strategies of international companies must contain studio sources of competition, and the likely responses of competitors in global markets. Competitiveness Analysis includes: determining strengths and weaknesses of the company, competitor’s objectives and assessing response to the activities of the company.
In global competition, a special place some national leaders who dominate the domestic market, and often enjoy the support of the government. So Fiat in Italy and Renault and Peugeot in France have a dominant share of the domestic market, which have partly contributed to the restrictions on imports of Japanese cars.
Data on the international market, which in recent years, more accessible and of higher quality, enabling determination of the attractiveness of the individual market segments. However, the analysis should include at least four basic elements: market size, market growth, government measures and economic and political stability. Competitive power companies must be defined within the international context.
2.5. Economic Environment
International marketers must study the economy of each country separately. The two most important economic factors that reflect the attractiveness of the country as a potential market the country’s industrial structure and income distribution within a country.
Industrial structure of the country formed the need for products and services, and the level of income and employment. I can see four types of industrial structure of the country:
Low income countries (GDP pc <750 USD). In these countries, most of the population is employed in agriculture. Use them and spend most of their output, and the rest sold to the satisfaction of the needs of other goods and services. These economies offer little market opportunities.
Countries with below average income (3,000> GDP pc> 750 USD). These countries are rich in one or more natural resources, but poor in other ways. Most of the country’s income comes from the export of its raw materials, such as Chile exports copper, Saudi Arabia oil. These countries represent a lucrative market for heavy equipment, tools and trucks. They live a rich and high class people of this country an attractive market for luxury goods.
Countries with above average income (13,000> GDP per capita> $ 3,000). In these countries, production is 10% to 20% of the economy of the country. With the increase of production, these countries require increased imports of raw materials, steel and heavy machinery, on the other hand reduces imports of finished textile products, paper products and motor vehicles. Industrialization creates a new rich class of the population, which in turn requires new kinds of imported goods.
High income countries (GDP per capita> $ 13,000). These economies are major exporters of goods, services and capital. Mutual trade with products and exporting them to other economies in exchange for raw materials and semi-finished products. A variety of manufacturing activities and a large middle class make this country rich markets for various types of products. This category includes new industrialized Asian economies, such as Taiwan, Singapore, South Korea and Malaysia.
Another economic factor is the distribut
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