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NINE

Strategies for
Growth Markets

McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Growing Markets are Attractive

o Because:
o Gaining share is easier
o Share gains are worth more
o Price competition is likely to be less
intense
o Early entry may be necessary to keep
pace with technology

9-2

Exhibit 9.1

$ Sales Volume

Market Shares of the Leader and Followers over the Life Cycle of a
Hypothetical Market

Introduction

Growth

Early
Maturity

Maturity

Life cycle stages

9-3

Share Maintenance and Facts

o Dynamics of a growth market
o Increasing number of competitors
o Fragmentation of market segments
o Threat of product innovation from within
and outside the industry

o Firm can maintain its current share

position in a growth market:
o If its sales volume continues to grow
9-4

Marketing Objectives for Share Leaders

o Maintaining/improving satisfaction and
loyalty
o Encouraging/simplifying repeat
purchase
o Reducing attractiveness of switching
o Head-to-head positioning against
competitive or potential offerings
o Differentiated positioning against
competitive or potential offerings
9-5

Maintaining/Improving Satisfaction and Loyalty

o Increase attention to quality control as

output expands
o Continue product modification and
improvement
o Increase salesforces servicing of
current accounts
o Expand postsale service capabilities

9-6

Encouraging/Simplifying Repeat Purchase

o Expand production capacity in
advance
o Improve inventory control and logistics
systems
o Continue to build distribution channels
o Consider developing automatic
reorder systems

9-7

Reducing Attractiveness of Switching

o Develop a product line with appealing
features
o Develop multiple-line extensions
o Meet or beat lower prices

9-8

Head-to-head Positioning against

Competitive Offerings
o Develop a product line with more
features
o Make product modifications
o Meet or beat lower prices
o When resources are limited consider
withdrawing from smaller segments

9-9

Differentiated Positioning against

Competitive Offerings
o Develop multiple-line extensions
o Build unique distribution channels
o Design multiple advertising

9-10

Strategies for Share Leaders

o Fortress defense
o Flanker defense
o Confrontation
o Market expansion
o Contraction or strategic withdrawal

9-11

Exhibit 9.4

Strategic Choices for Share Leaders in Growth Markets

Flanker strategy Proactive
Flanker strategy - Reactive

COMPETITOR
OR
POTENTIAL
COMPETITOR

Confrontation
strategy
Proactive
Reactive

Fortress
or position
defense
strategy

Contraction
or strategic
withdrawal

LEADER
Market
expansion
Source: Kotler and Achrol, 1981

9-12

Marketing Actions to Achieve Share-Growth

Objectives
o Head-to head positioning against
competitors offering in primary target
market
o Technological differentiation from target
competitors offering in primary target
market
o Head-to-head positioning against target
competitors offering in established market
segments
o Differentiated positioning focused on
underdeveloped segments
9-13

Strategies for Followers

o Frontal attack
o Leapfrog
o Flank attack
o Encirclement

9-14

Exhibit 9.8

Strategic Choices for Challengers in Growth Markets

Leapfrog strategy
Flanking attack

Guerrilla
attacks

TARGET
COMPETITOR

Frontal
attack

CHALLENGER

Encirclement strategy
Source: Kotler and Acrhol, 1981

9-15