Lecture Notes Vol. 7 for Management Strategy, 2006

7Market Position

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Genre of Market Position◆Leader-Largest share◆Challenger-Medium share-To challenge the leader◆Nicher (niche player)-Small market size-Segmentation other firms cannot think of-Small share ≠ nicher◆Follower-No offensive posture against the leader■Matrix of Market Position/Managerial Resources

Quantity

Relative Position ofManagerial Resources
Quality

Large

SmallHighLEADERNICHER

Low

CHALLENGERFOLLOWER

Quantitative managerial resources: number of sales force, input financial power, production
capacity, etc.
Qualitative managerial resources: corporate/brand image, marketing power, technological power,
leadership of top management, etc.
Origin: Shimaguchi, Mitsuaki, Integrated Marketing, Nihon Keizai Shimbun, Inc., p.99

2

Strategy by Market Position

2.1 Leader’s Strategies
2.1.1 Strategic Objective◆Expand the current share-To consider a marginal revenue with the share expansion◆Maintain the current share-Direct confrontation: Price competition －the ¥390 Combo-Interception: Pressures on parts/associated suppliers －MS-No blind side －full line, price/ P-Innovation －New products
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◆Expansion of the whole market-New users
Electronic notebook: Females, young people-New application
Nylon: From military production to nonmilitary uses
-To Increase the quantity consumed per usage
AjinomotoMichelin
2.1.2 Leader’s Marketing Mix◆Product-Plural targets/full line
-Quality at world standard◆Distribution channel-Open-type channel policy◆Sales promotion-Aggressive◆Price-Somewhat higher than the industrial average
2.1.3 Leader’s Homogenization Strategy◆Thorough homogenization (imitation)-To instantly implement a thorough imitation when a competitive firm shows some sign ofsuccess with certqain growth product. … Walkman, RV cars
-Victory by the leader with a larger scale-Preparation for a swift imitation (research and development)◆Complete homogenization strategy-To completely imitate products/marketing of competitors◆Improved homogenization strategy-To improve the first-mover’s products/marketing leveraging the late-entrant’s advantage
2.2 Challenger’s Strategies
2.2.1 Strategic Objective◆Expand the share and get to the top-To deprive upper-rank firms of their shares-To deprive lower-rank firms of their shares◆Confrontation with upper-rank firms- Head-on confrontation?
-“Differentiation”
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◆Guard against the leader’s homogenization-To utilize managerial resources that is not possessed by the leader-To implement the differentiation that the leader cannot homogenize◆Examples of challengers
Casio’s digital watch-Low price-Differentiation by multifunction-Discount stores-TV commercials (Momoe Yamaguchi “Digital is Casio”)-Seiko countered with “Alba “.

(Homogenization strategy)

2.2.2 Conditions for Success
Challenger not to be homogenized◆Usage of managerial resources not possessed by the leader-Kao challenged Shiseido with Sofina utilizing a reservoir of its “dermatological research”.
◆Differentiation of which the leader cannot take its homogenization action-J & J’s toothbrush “Reach”: Its brush part is smaller than that of ordinary toothbrushes.
leading firm Lion could not follow because it was also the top-rank maker of toothpaste.
-Cecile: Door-to-door sales of underware
Strategies for the successful challenger“For the leading firm, its advantageous resources per se constitute the constraint.”◆Customer property, customer network-Lens mount for single-lens reflex cameras-NEC98-Xerox’s big client, rental sale◆Distribution channel-Direct marketing of personal computers: Dell
-Home delivery of books-Clock shops → Stationary/mass-sales stores◆Brand power- Kirin of lager beer
- Nikon of single-lens reflex camera
2.3 Nicher’s Strategies
2.3.1 Strategic Objective
Maintain a high profit ratio in the limited niche segment

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2.3.2 Nicher’s Marketing Mix◆Marketing Mix-To provide a specific segment with a limited product line of the quality above the medium levelat the price above a medium level-Closed-type channel policy-Not requiring any large-scale promotion◆Notabilia: To prevent other firms’ entry into the niche market-The niche’s market size appears too small for other firms to find attractive.
-To enforce a segmentation that no other firms can think of-To leverage own unique capacity no other firms possess
2.3.3 Examples of Nicher◆Okamoto Glass Co.
Dental mirror for dentistry-Domestic share at some 90%-Product differentiation
Astral-light effect, “Cold Mirror”, natural light
To evaporate on the glass surface many layers of membranes with the variant
refractive index in unit of 1/10000-Product evolution
Reflecting mirrors for liquid-crystal projectors: Number one share in the industry with
80% within the home country and 55% around the world◆Tokyo Keikyubin－Home delivery of flowers-Limited to the 23 Wards of Tokyo-What is a service that major home-delivery firms cannot provide?
Flowers are not only likely to deteriorate during the transportation to require
special treatments, but also smear other packages, thus major transport firms
were reluctant to handle them.
-Training of all drivers on flowers
Drivers give their extra consideration in accordance with characteristics of flowers
during the transportation, and are capable to answer names of flowers if questionedby their receivers.
◆Kyoden Co.－Experimental manufacture of printed-circuit boards at free of charge
2.4 Follower’s Strategies
2.4.1 Strategic Objective◆Keep on surviving
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-To target at a market segment which is not attractive to high-ranking firms, hence avoiding
their competitive challenges◆Set sequence: To imitate the leader’s marketing mix by downgrading it by one level◆Thorough cost reduction is indispensable.
2.4.2 Example of Follower◆Sanyo Electric Co.
-Weak brand power-Whereby price discounts at electric-appliance shops-Thorough cost reduction in production sites

3Summaries of Strategies by Market Position
Market Positions and Fundamental Strategies
Market Position

Characteristics

LeaderFirm with the largest share

Challenger

Objective

Fundamental Strategy

Maintain/expand the largest share full line, full coverage, homogenization, open-type
Highest profit in industry

channel policy, demand expansion, aggressive

Reputation

promotion, innovation, brand establishment

To challenge the leader firm To gain top sharedifferentiation (4Ps the leader cannot realize), semi-fullcoverage policy, brand appeal and function appeal

NicherTo provide specific market

High profit

full coverage of specific market, closed-type channel

with strong & unique product Reputation

policy,securement of advantage in specific market,

service

Followerquality and price above medium level

Not large share

Profit for survivalresponsive to low price, price-appeal-type channel,

Imitation-oriented

Accumulation of managerial

target at economy segment, imitation of the leader

resources

firm's 4Ps

Origin: Shimaguchi, Mitsuaki and Ishii, Jyunzo, Contemporary Marketing , Yuhikaku Publishing, p.186

Edifice of Competitive Strategies by Market Position
Competitive Market Position Fundamental Strategic
Competitive Domain
Position
PolicyMarket share
Omni-directionality
Managerial creed
LeaderProfitReputation
Challenger Market share

Strategic Set-Sequence
Expansion of peripheral demand
Homogenization
Nonprice response
Policy other than the above(differenciation from the leader)(standardization)(focus on cliental functions)Differentiation

To narrow down cliental functions
and own unique capacity(vs. the leader)
To narrow down cliental functions, Mini leader in specific market
own unique capacity, andmarket segment coverage(vs. the leader and challenger)
Vulgar philosophy (e.g., good stuff aCheck on policies of the leader &cheap price)
challenger for swift imitations

NicherProfitReputation

Centralization

Follower

ProfitImitation

Origin: Wada, Mitsuo et al., (1989), Rise and Fall of Leading Companies, Diamond Co., p.20

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