Hypothetical Market Structure for Market Leaders
40% – under a Market Leader
30% – under a market Challenger
20% – under a Market follower who maintains its share and the harmony of the market.
10% – under a Market Niche that serves the smaller segments that large firms don’t reach.
Examples of Market Leaders
- Red Bull
Note – The market was lost by Market leaders like Xerox and Nokia.
Market Leader Strategies
There are 3 Main Market leader strategies which can be used by market leaders to defend their market share and to ensure they do not lose to competition.
1. Expand Total Market
- New Users
- New Uses
- More Usage
2. Protect | Defend its Current Market Share
- Position Defense
- Flank Defense
- Pre-emptive Defense
- Counter-Offensive Defense
- Mobile Defense
- Contraction Defense
3. Increase its Market Share
1. Expand Total Market
Maximum gain is obtained by Market leader firms on the expansion of the total market. The product’s position in its lifecycle is the basis of the focus of expansion in the total markets.
This strategy is generally used when the product reaches its maturity.
1. New Users
Example – IKEA
An investment of INR 10,500 crore was made by the world’s largest furniture retailer in 2012 when it first announced its arrival in India. It took the company six years to complete policy approval, finalize large parcels of land and figure out local sourcing. After which, in 2018, it launched its first store in Hyderabad.
Example – Nike Hijab
The extremely breathable fabric of the Nike Pro Hijab is soft, lightweight and durable. The long back and the pull-on design ensures that it fits well and doesn’t untuck while working out or while competing.
The style of Muslim countries and the cultural function of the garment was taken into consideration while working on its new design. Promotion of new product uses can help expand markets.
Example – Apple Watch Series 6
The watch was launched as “the future of health in your wrist”. In today’s changing environment, the watch attributes to the pandemic by Measuring blood oxygen level with its ground-breaking new sensor and app. Enabling the user to take an ECG at any time, anywhere. [It’s a headlining accomplishment for a wearable device]
Enhancing the Always-On Retina display for showing fitness metrics at a glance
3. More Usage
Companies persuade customers to use more of a product than they generally use on an occasion.
Coca Cola- Open Happiness” & “Share a Coke” campaign by Coca Cola
Netflix – Netflix Personalization Strategy
2. Defending Market Share Strategy
A leader should continuously defend its business against the attacks of its competitors in order to successfully expand the total market size. A dominant firm can use six defence strategies to protect its market position:
1. Position Defense
Building superior brand power helps make the brand impenetrable. Constant innovations must be used by firms to make replication impossible.
Maximum resources are provided to current successful brands in this strategy.
Red Bull sponsors events that involve high adrenaline rush and dangerous, death-defying stunts.
“Google Search Engine” and “Google Maps” is promoted by Google.
2. Flank Defense
Weak fronts should be protected by leaders in order to use them for counter-attacks. This strategy protects the market position of leading brands. It also presents as a defensive corner to either guard a weak front or to aid in a counterattack by forming an invasion base.
Example – Nestle India
Hot Heads, the sub-brand of Maggi 2 minute noodles, was launched by Nestle in 2016 to broaden its consumer base and attract young adults.
3. Pre-emptive Defense
In the pre-emptive defence strategy, an enemy is attacked by a leader before the enemy can start an attack. Here, a leader launches an offence against an enemy before the enemy starts an offence.
Example 1 – Ola Shuttle
In India, Ola launched Ola Shuttle in September 2015 to outsmart its competitor Uber. Ola shuttle offered bus shuttle services to commuters in urban areas.
Example 2 – Nike Fit
Nike’s new app setting scans your feet with the camera in your smartphone and helps provide “hyper-accurate” sizing recommendations. It solves the problem of customers having to buy and wear the wrong size shoes. This tool – Nike Fit- is a part of the already existing Nike app.
4. Counter-Offensive Defense
A leader forces the competitor to pivot its resources to defend its own territory. This is done by attacking the competitor’s weakness aggressively.
Example – Starbucks
Starbucks appealed to the local taste and outsmarted its competitors by launching the Alphonso Mango Frappuccino in India.
Example – Apple Watch Series 6
Apple tries to take on the Samsung smartwatch with the features in Apple Watch Series 6
5. Mobile Defense
A leader diversifies in order to broaden and expand its presence in new market areas.
Example – Coca Cola
VIO flavoured milk was Coca-Cola’s attempt to enter India’s dairy market.
Example – Apple
Apple’s attempt to expand the “Wearables, Home, and Accessories – includes AirPods and Apple Watch etc.” category and the broadening of Apple Services – Apple Music, Apple Pay, iCloud, App Store, iTunes
Example – Amazon
Amazon Prime Now Delivery, Amazon Web Services (AWS)
Cloud Computing Services
6. Contraction Defense
In strategic withdrawals, the leader reassigns its resources to stronger departments by taking them from weaker departments.
Example 1 – Maruti Kizashi
Maruti discontinued its Maruti Suzuki Kiashi luxury sedan since it didn’t get a good response from the consumers and sold only 396 units from 2011 and 2012.
Example 2 – Nike Fuel Band
The Fuel Band by Nike was a wearable brand released in early 2012 and was a success in the market for two years.
It made up 10% in the market behind Jawbone and Fitbit. But it decided to discontinue its brand after competitors started increasing and the market became saturated.
3. Expanding Market Share Strategy
Increasing market share can improve a market leader’s profitability. Market share profitability is increased and the current market territory is defended by market leaders who want to maintain their position and expand the total market.
Example- According to a report by Strategy Analytics on May 7th, 2020, a share of 55 percent in the global smartwatch market in the first quarter of the year has helped Apple Watch maintain its lead.