Brand: Gaining and Defending Market Position

Question 1

The constantly evolving nature of the competitive landscape calls for developing dynamic strategies to manage a company’s market position. There are three basic strategies to gain market position:

Answer 1

1 steal-share strategy
2 market-growth strategy (growing the market by attracting new customers to the category)
3 market-innovation strategy (creating new markets)

Question 2

Gaining market position often involves pioneering new markets. The key benefits of market pioneering include:

Answer 2

include the 
1 opportunity to shape customer preferences
2 create switching costs
3 preempt scarce resources
4 create technological barriers to entry
5 and reap learning curve benefits

Question 3

The key drawbacks of being a pioneer include:

Answer 3

free riding by competitors, incumbent inertia, and uncertainty associated with the offering’s technology and with customer demand.

Question 4

There are three basic ways in which a company can react to a competitor’s actions:

Answer 4

1 by not taking an action
2 by repositioning its existing offerings (increasing benefits, decreasing costs, and moving upscale or downscale)
3 by adding a new offering to its product line.

Question 5

To gain and defend market position, a firm needs to develop core competencies that will give it a competitive advantage over the competition. Core competencies involve expertise in one or more of six key areas essential to the company’s business model:

Answer 5

1 business innovation,
2 operations management
3 technology development
4 product development
5 service management
6 brand building.

Question 6

Blue Ocean Strategy:

Answer 6

Term coined by Chan Kim and Renée Mauborgne suggesting that instead of competing in overcrowded existing markets (red oceans), a company should focus its efforts on uncovering new, uncontested markets (blue oceans). Consistent with the concept of product life cycle, the Blue Ocean Strategy argues that mature markets are red oceans that should be avoided and priority given to the search for the blue oceans—new markets that a company can shape and in which it can be the dominant player. According to this strategy, technological innovation is most often not the key driver in discovering uncontested markets; instead, it is the company’s ability to find an innovative way of creating value for target customers that determines its success in discovering blue oceans.

Question 7

Strategic Group:

Answer 7

Competitors that target the same customers and follow similar strategies to serve the needs of these customers. Competitors in the same strategic group often have similar products and services, similar branding strategies, similar pricing and incentive strategies, similar communication campaigns, and similar distribution channels. As a result, competition among companies within the same strategic group tends to be more intense than competition among companies from different strategic groups.

Question 8

Product Market Growth Framework

Strategies for grow in market opportunities

Answer 8

1 Market-penetration strategies: aim to increase sales of an existing offering to a company’s current customers. (airlines stimulate demand from current customers by adopting frequent-flyer programs)

2 Market-development strategies: aim to grow sales by promoting an existing offering to new customers. Popular market-development strategies include price promotions (e.g., price reductions, coupons, and rebates), new distribution channels, and communication strategies focused on new customer segment(s).

3 Product-development strategies endeavor to grow sales by developing new (to the company) offerings for existing customers. The two most common product-development strategies include developing entirely new offerings or extending the current product line by modifying existing offerings.

4 Diversification strategies aim to grow sales by introducing new offerings to new customers. Because both the offering and the customers are new to the company, this strategy tends to be riskier than the other product-market strategies. The primary rationale for diversification is to take advantage of growth opportunities in areas in which the company has no presence.