This document discusses strategies for pioneers and followers in growth markets. For pioneers, the primary objective is share maintenance through retaining existing customers and capturing new customers. Strategic options for pioneers include fortress defense, flanker defense, confrontation, market expansion, and contraction. For followers, the objective is to build share faster than market growth by stealing customers from competitors and gaining more new customers. Strategic options for followers include frontal attack, leapfrog, flank attack, encirclement, and guerrilla attacks. The best strategy depends on circumstances and competitors' strengths. Differentiation is important for followers to capture customers.

1. Strategies for Growth Markets
PPT9
Prof. S.Venkat

2. Discussion Question
1. Why are growing markets attractive?

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

6. Discussion Question
2. Once a pioneer’s market becomes
attractive to others, what are the
pioneer’s strategic options?

7. • The primary objective of the early share leader
(usually the market pioneer) in a growth market
is share maintenance.
• The share leader must accomplish two tasks:
– Retain repeat or replacement business from
its existing customers
– Continue to capture the major portion of
sales from the growing number of new
customers entering the market for the first
time.

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Growth stage strategic options for pioneers
Fortress defense
Flanker defense
Confrontation
Market expansion
Contraction or strategic withdrawal

11. Market Leader Strategies
• Fortress or Position Defense Strategy
– Continually strengthen a strongly held current
position
• Flanker Strategy
– Develop a second brand (a flanker) to compete
directly against the challenger’s offering (a
flanker strategy is always used in conjunction
with a position defense strategy)
– Has to have resources to support both brands

12. • Confrontation Strategy
– Meet or beat the attractive features of a challenger’s
offering by product improvements, promotional
efforts, or lowering price. The challenger is attacking
the leader head-to- head and is attempting to steal
the leader’s main target market.
• Market Expansion or Mobile Strategy
– The leader defends its relative market share by
establishing positions in a number of different market
segments. The leader is trying to capture a large
share of new customer groups who may prefer
something different that the firm’s initial offerings.
(This is a more aggressive and proactive version of
the flanker strategy)

13. • Contraction or Strategic Withdrawal Strategy
– The leader is unable to defend itself
adequately in all segments. Consequently, the
firm reduces or abandons its efforts in some
segments to focus on areas where it enjoys the
greatest relative advantages or that have the
greatest potential for future growth.

14. Discussion Question
3. Under what circumstances might each
option be more likely to succeed?

16. Discussion Question
4. How do you retain current customers?
Maintain or improve satisfaction and loyalty
Encourage or simplify repeat purchase
Reduce the attractiveness of switching

17. Discussion Question
5. If you want to be a follower, what are
your strategic options?

18. • The challenger’s strategic objective in a growth
market is usually to build its share by
expanding sales faster than the overall market
growth rate.
• The challenger does this by:
– Stealing existing customers away from the
leader or other competitors
– Capturing a larger share of new customers
than the market leader (or other
competitors)

20. • Deciding Who to Attack
– Attack the market share leader within its
primary target market [frontal assault,
leapfrog or guerrilla attacks]
– Attack another follower who has an
established position within a major market
segment [frontal assault]
– Attack one or more smaller competitors who
have only limited resources [frontal assault]
– Avoid direct attacks on any established
competitor [flanking or encirclement]

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Strategic options for followers
Frontal attack
Leapfrog
Flank attack
Encirclement
Guerrilla Attacks

23. Challenger Strategies
• Frontal Attack Strategy
– Tackle a competitor head-on by lower costs or
differentiated position
• Leapfrog Strategy
– Offer a far superior product based on advanced
technology or a more sophisticated design.
Possibly a new generation of products.

24. • Flanking Strategy
– Capturing a significant share of the total market by
concentrating primarily on one large untapped
segment and developing product features or
services tailored to the segment’s needs and
preferences.
• Encirclement Strategy
– Targeting several smaller untapped or
underdeveloped segments in the market
simultaneously. Surround the leader’s brand with a
variety of offerings aimed at several peripheral
segments.

25. • Guerrilla Attack Strategy
– Making a series of surprise raids against
competitors.
– Use of sales promotions, coupons (drops),
advertising blitz, legal action, and short-term
price reductions

26. Discussion Question
6. Under what circumstances might each
option be more likely to succeed?

28. Discussion Question
5. How do you capture competitors’
customers?

29. Some Advice for Followers
• Differentiation is key for
followers
– Better benefits
– Better service
– Better marketing
– Lower price
• Beware of competing on price,
however, unless your costs really
are lower than competitors’