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Marketing Strategy Important notes:

Segmentation and targeting strategies:


Segmentation is the process of identifying distinct yet homogeneous group of buyers having similar
needs, wants and benefit area expectation from category of product based on certain descriptors.
Post identification, firm need create highly customise and differentiated products offerings against
each benefit area expectation in order to make price a non limiting factor.
1) Demographic descriptors:
a) Age /Gender:
Expectation from a category bearing based on the age of consumers. e.g. in the oral care
category, kids expect excitement in terms of flavour arising out of chewing am or candy,
if they are expected to engage. Youth who are more into social acceptability, look for
fresh breath from the tooth paste offering while more mature elder people in category
stick to have 12 hours dental protection. Hence firm participating in this category need
to opt for broad differentiation strategy and create multiple SKUs.
Very often certain categories like cosmetics have male and female in the same segment
seeking completely different solutions from the same category. e.g. shampoos and face
washes and fairness cream.
Further some categories are typecasts based on gender. eg. Motor cycle for men and
scooter for women.
b) Education / Occupation:
A segment education defines their ability to understand marketing communication
based on which they could adopt and participate in new categories. Hence marketing
communications should be created and directed to the audience based on educational
background.
c) Monthly household income / Per capita income:
This is an economic indicator of the earning potential in a nation. The higher it is, it
indicates the ability of consumer in that region to have more disposable income and
hence purchasing power / affordability to buy higher price brands. As monthly
household income increases, disposable income increases and consumers likely to trade
upwards in a choice of brands and products.
d) Religion:
Marketers need to understand and respect ethical culture and local religious beliefs in
designing and delivering products in a region. Eg. Macdonalds is beef and cone
company completely relooked their product design in India, come up with chicken and
vegetarian options with local flavour in order to succeed.

2) Geographic descriptors:
It refers to physical location of consumer segment and hence the key factor to be taken into
account would be reaching goods and services to the chosen segment.
The next segmentation variables to be considered is the urban / rural divide where in
because of:
a) Deferring per capital income
b) The nature of the income which in urban markets is a lump sum monthly and of a higher
denomination as compare to daily wage or seasonal income in rural areas.
Due to lack of affordability and higher per capital income, marketers need to address rural
segment also known as bottom of the pyramid with smaller pack denominations and
economical entry level price points. eg. In personal care and package food industry, entry
level price point could be Rs. 2,5 & 10, while in mobile telecom industry it could be below Rs.
5,000/-.
Climatic conditions often influence what products can we actually sold based on climatic
conditions. eg. Nylon in apparel used in tropical countries, air cooler in humid areas.
3) Psychographic descriptors:
Refers to the mental make-up disposition and approach / adoption of a consumer segment
into a category.
Since different customer group have different need / wants expectations from the same
product category, it is important for marketers to understand their needs and aspirations
that need to be fulfilled in the product category.
Further various consumers have their own definition of value which the firm needs to
understand and fulfilled.
Attitude / belief / perception:
In every product category different classes of consumers based on their educational
background develop multiple and diverse needs and wants from the same product category
based on their attitudes, beliefs and perceptions.
Such diverse needs if they have to be made are done on the basis of a differentiated
segmentation strategy to different product often with a different brand hierarchy.
Occasion / Location behaviour:
Different consumer often exhibit where in expectation from the same product category
based on different occasion / location. eg. softdrinks.

The product line strategy includes a 300 ML turner glass bottle for on ground consumption,
500 ML a mobile pack, 1 LTR as fridge bottle and 2 LTR as an economical party pack.
Zodiac

Office ware
Party ware
Casual ware
Where product design customised to suit the occasion.
Eg. Cadbury:
Sales chocolate bars to retail customers and created a separate occasion brand celebrations,
seeing the Indian ethics and sentiments market as an opportunity to be displace for Indian
festive occasion. Keeping in Indian attitude and belief, celebration had dry fruits as part of
the base ingredient.
Peer pressure / Social Class:
Marketers realise that all consumers pays huge peer pressure while participating in multiple
reference groups. To keep pace with rising social class pressure about other members of
reference group trading upwards in goods and services motivate the consumer to follow
suites. Hence marketers need to participate across the brand hierarchy, aspiration value
points and straddle multiple price points in order to facilitate the next level of upgrading.
Brand should improve the consumers social acceptability levels and while improving their
social status within the reference group.
Family Values:
Young dependant consumers are force to buy in to various products categories based on
their experiences of elders in the family who make relevant purchase decisions.
After becoming a financially independent consumer, the individual still bases his beliefs on
his original family values but based on reference group dynamics, he may start to alter his
behaviour and attitudes within the category. It is therefore no surprise that the young adult
/ youth category is seen as a single largest business opportunity in most product category
since this is the period where the individual has disposable income as well as huge
aspirations arising out of peer pressure.
4) Buyer behaviour:
New users: Attract
Existing users: Captive consumption, retain, attract, convert
Potential users: Attract
Non users: Forget or create product line
a) New users:

Buyer status is defined aspect for creating a viable strategy to manage different buyers
status levels in any product category. The broad strategic intents are as follows:
o Attracting, retaining, converting customers or any consumer
engagement model arises out of a broad product line strategy which
intern has depth in the number of SKUs.
o

Research finding will through up newer needs / wants and benefit areas
and the firm using a broad differentiation strategy need to develop
newer variance that address such need gaps in order to attract new
users, engage existing users as well as convert users from competition
by an extra value proposition.

The other way to attract / retain / convert users is for the firm to
participate at multiple price points across diverse need gap areas with
differentiated brand and pack sizes.
b) Buyer readiness:
Consumer adoption process.
The first dotcom burst was attributed to
a) lack of internet penetrations and bandwidth
b) Potential buyers not showing readiness to adopt into category because of lack of
trust since touch, sense and feel was denied.
Similarly as companies offered deodents as advance body under control mechanism
over conventional talcum powder it was urban cities that adopted category initially
as availability of talcs push to rural markets.
c) Frequency of usage:
The firm need to understand usage / consumption patterns as well as disposal tends of
post usage by the consumer.
This helps the firm to create appropriate packaging denominations in the product line.
Further based on the replacement cycle / disposal process the firm can influence
perfection in the consumer on how often disposal need to be done to ensure more
repeat purchases.
Eg. Gillette blades, Godrej mats for mosquitoes.

Targeting Strategies:
a) Concentrated Strategy.
In concentrated strategy, the entire product line can address the need, wants, benefit of a
highly specialised single target segment. Eg. Johnson & Johnson is segment specialist
wherein all products have special attributes and branding which are highly relevant for the

target segment which is highly psychographics of the mother and her aspirations for the
baby.
b) Broad differentiation strategy:
In fast growing markets, it is often found that customer needs evolved on different groups of
customer segment start showing a variety of need different from each other as expectation
from the same category.
Under such circumstances the firm need to create a product line consisting of unique
differentiated product offerings often under different brand name at multiple price points in
order to create a viable market share. Eg. In oral care business, Colgate follows the strategy
in tooth paste.
c) Undifferentiated strategy:
In an undifferentiated strategy, the firm supplies the same product irrespective of the
demographic segment, the only variation being pack sizes. This is largely due to the inability
of firm to create different physical form and hence unique attributes. This is largely seen in
generic / commodity products. Eg. Tea, Package water, soft drinks, oil, sugar.

Segmentation & targeting strategies of Asian Paints


Segmentation:
On the whole Asian Paints has segmented its market based on utility of the products, recognizing 3
major segments (i) Decorative Coating, (ii) Industrial Coating and (iii) Automotive Paint.
The Decorative Paints sector encompasses a wide variety of interior as well as exterior paints,
including Asian Paints Royale, Asian Paints Premium Emulsion etc. These are used primarily by
homeowners, builders, developers, interior designers etc.
The 2nd sector, Industrial Paints, targets the industry where paint is used as a protective coating on
machinery, as lubricating agents for machinery, for road marking and for other industrial uses.
Automotive Sector is a fast growing market for paints with products such as Aluminium Paint and
Fibre Paint available in different colours for painting vehicles and their spare parts.
Focusing on the Decorative Paints sector, Asian Paints has established itself at the No. 1 position
through a strong brand equity and large distribution network. Due to a high brand awareness and
presence since 1942, customers tend to lean towards Asian Paints even in the face of competition.
CONSUMER BEHAVIOUR IN DECORATIVE PAINTS SECTOR:
The foremost factors that consumers consider while purchasing paint are durability, price, health
and environment, in that order. The quality of paints is a prime pre-purchase factor.
Since years Asian Paints has been delivering high quality and differentiated products in this sector. It
has managed to create its own brand value and presence in the Paint Market. Hence home owners,
decorators and developers tend to favour this brand over its competitors.
As far as the Indian market is concerned, the frequency of repainting walls is still around 5 years, and
hence consumers are on the look-out for better quality and hence branded paint.

Asian paints offers varied products at a wide range of prices, which caters well to consumers of
different income groups. For instance, UTSAV, a low-value paint, is fast penetrating the lower
income group, helping the company to move from metros to small towns for branded products.
An efficient Customer Service and a novel concept of Colour Stores greatly helps widen customer
base as far as Decorative Paints sector is concerned as it helps consumers visualize and plan their
wall shades before purchase. Such a service has gone a long way in enhancing image and awareness
of Asian Paints in the recent years.
SEGMENTATION OF DECORATIVE PAINTS SECTOR
The Decorative Paints Sector has primarily the following product offering on which the market could
be segmented.
Exterior Paints - ACE, Apex, Apex Ultima, Apex Duracast and more, based on the specific demand of
surface area.
Interior Paints Distempers, Enamels, Emulsions
Wood Finishes
Metal Finishes
Ancillary Products primers, putties etc.
Segmentation of the market could be carried out on the basis of the following parameters
Buyer Characteristics / Economical Status of the buyer
Up market buyers and high quality seekers
Upper Middle class - High income group and socially conscious
Middle Class - Low income group and rural market
Key Factor for Purchase
Quality and Finish of paint
Colour variety
Cost and economical worth
Mode of purchase
Purchase from showrooms and Colour Stores
Purchase influenced/ made by painters/contractors/carpenters etc
Buying in bulk by developers
TARGETING
Exterior paints are targeted at builders, real estate developers and contractors. An exterior finish
known as gattu or cement paint, is used on walls as it is extremely economical and durable. The
main requirement for such customers is the durability rather than smoothness or colour.
Interior Paints on the other hand are targeted primarily at home owners, interior designers, as well
as carpenters and contractors. Here stress will be layed on the smoothness, texture, colour and
finish of the paint. The colour stores go a long way in promoting the Interior Emulsions.
The primars, putties and the other such ancillary products would be purchased by contractors and
carpenters as a part of the painting process.

Targeting maybe based on the quality and pricing of the paints. Within each segment, Asian Paints
offers innumerable products.
In the Exterior Emulsions Asian Paints Apex Ultima is a premium, high-performance brand which
caters to the economically higher class and is used on premium buildings. Asian Paints Apex is a Mid
Range brand catering to the next segment of society.
Similarly, in the Interior Paints sector, the products are price-differentiated in the following way
EMULSIONS :
These are water based paints Acrylic Emulsions are extremely durable
Eg: Asian Paints offers three brands to choose.
Premium - Apcolite Royal Acrylic Emulsion.
Medium - Apcolite Super Acrylic Emulsion.
Economical - Super Decoplast
DISTEMPERS:
These are also water based paints but their binders may be very natural or synthetic. Distempers are
economically priced, they offer good value for money as they are durable.
Eg: Asian Paints has
Tractor Acrylic washable Distemper.
Tractor washable Synthetic Distemper
Asian Paints can follows a V-Tier Customer Target Strategy
Tire 1 - On the recipient end there are strategic solution seekers. Company thinks of cost
reductions, performance & productivity improvement for clients, improving customers &
shareholders profitability.
Tier 2 Here the customers can be considered as value or brand sensitive. Asian paints targets
these customers with value added VDS integration customer level service.
Tier 3 These consumers are price sensitive. They are least bothered about the service. These are
mainly middle or low income group people Asian paints have several brand like UTSAV to serve
them.
Tier-4 Here the company targets the small manufacturing & local companies, which can generate
revenue. Company utilizes its business & telesales technology to address & satisfy their needs.
Tier-5 This tier is composed of specific targeted companies that although small in size, deserve
special attention because they are highly innovative in nature. Asian paints has a good prospect over
here.
POSITIONING:
From 1999, Asian Paints has undergone a transformation and repositioning, thereby emerging as a
consumer oriented, value added paints company. The consumer market had steadily been changing,
and repainting of houses primarily during festival seasons was becoming a less dominant trend.
Painting became less seasonal and utility based. Instead, consumers became more aware and
conscious about home dcor and home making.

The rise in colour consultants and Interior designers also contributed greatly to this trend. As a
result, Asian Paints began to position itself as a part of this high voltage emotion of home creation.
Core Thought : Asian Paints is about people who invest emotional energy in creation of their
homes
This sentiment is captured even in the advertisements where painting a wall is associated with a
number of different events or emotions.
Change in Visual Identity
Asian paints revamped its image as well as its packaging to get a more contemporary and
international look and enhance the visual appeal of the brand.
Service Offering
Asian Paints introduced a new dimension of service offering where it finally delivers not just paint
but a painted home.

Differentiation:
It is the firms ability to create product and services having a set of distinguish attributes that
address specific need / wants, benefits, thus giving customers a preferential reason to buy
the products / service often at a price premium.
The differentiated / distinguish attributes arise as a result of the firms ability to access
technology which allows it to invent / innovate products that customers perceive as cutting
edge thus giving them compulsive reason to buy due to the Extra Value Proposition which
meets aspiration, surpasses expectations in the benefit area sought, improves quality of life
and social acceptance while promoting well being.
If the attributes selected in differentiation represent credibility and value for the chosen
segment, the firm could charge price premium commensurate / in line with the brand
equity, brand power. For customers when buying into highly differentiated products, price
often becomes a non limiting factor.
Differentiation helps upon to move away from competition and create a unique niche which
improves perception value proposition as well as brand personality.
Differentiation can be address at three levels:
a) Level 1 differentiation:
At very basic level e.g. Anti germs, bathing bars, which is basic technology and hence the
segment is populated with multiple players and the firm acquires a me too status
which is generic in the category. In such a scenario, none of the competing firm could be
able to charge price premium and the market dynamics would be largely a push market.
b) Level 2 differentiation:
When a firm tries to raise the bar by instituting state of desirable features and attributes
in the product with better ingredient/formulations/technology, that address a higher
benefit area in the minds of the customer.
Aromatherapy
Skin Care
Moisturing
Anti germs
Bathing bar / toilet soap
Antacic category, Gelusil up. The differentiation by moving away from the perception
by moving away medically prescribed product by creating chewing tablets with flavours
while moving it to OTC segment away from doctors.
c) Level 3 differentiation:

Unexpected / leading to customer delight ENO using a physical form differentiation


surpass customer attitudes, beliefs and expectations in the category by creating the
product in crystalline powder from in convenience sachet packs with tasty and easily
identifiable soft drink flavours at a Rs. 5 price point.
This completely change the beliefs and perception of participating consumers where
curing acidity has become easy and acceptable despite being late entrant ENO soon
become a market leader.
Generally new technology allows for new ingredients / formulation, newer
manufacturing processes that gives better/superior products which remain unique till
replicated by competition. Sustainable differentiation arises only if the technology is
difficult to replicate or the competition does not manage to achieve a similar value
delivery. For the pioneer firm, sustainability arises if they can realise a higher
incremental realisation over the raw material input.
Differentiation strategies:
1) Product differentiation:
a) Physical form / Shape
Physical form is largely used to create an enhanced product line by way of extending the
brand usage in allied application areas. E.g. Shampoos, conditioners, soaps, shower gels.
As regards shape, it is used to create a distinct brand personality e.g. Fanta spin bottle,
conical tetrapacks for milk
b) Technology / Quality / performance:
Discovery of new technology generally raises the bar in the category w.r.t. quality and
performance and represent an extra value proposition leading to competitive
advantage.
Business inventors like SONY continuously adopt product innovation as a top line
business driver while fast followers like SAMSUNG replicate new technologies in a better
way at a lower price leading to advantage.
c) Reliability / Serviceability / Durability:
Reliability FEDEX, DHL, Blue Dart
Due to adoption of global tracking systems and investment in state of the art aircrafts.
Serviceability Maruti
Durability Ambuja Cement
d) Warranties / Guarantees
Car - Toyata

2) Services differentiation:
After sale service
Availability of spares
Annual maintenance contract
Ownership experience
Finance options (relevant for durables)
Competency of personnel
Service levels Banking industry
Multi level capabilities
3) Channel differentiation:
Ease of availability Multi channel options:

ATM

Phone banking

Mobile banking

Branches

Private Banking

Internet Banking

Multi level Marketing AMWAY


Direct Marketing

Acquaguard

Insurance

Eureka Forbes

Delivery Model DOMINOs


E- marketing

Flipkart

Myntra

Amazone

Snapdeal

Teleshopping

TVC

Asian sky shop

4) Logo Differentiation:
Where the logo / symbol over a period of time starts to constitute a form of brand
recognition.

Amul

Pepsi / Thumps up

Chemist / Hospitals +

Marlboro Man

Pilsberry

Nike shoes

Positioning:
Positioning is the act of creating a unique space in the minds of the consumers through continuous
communication generally through creative advertising advocating the core values of the brand.
Through effective positioning, the brand is able to get through top of mind recall a place in the
consideration set of the target segment whenever they seek to participate in the category.
Positioning positively influences the mind map of the potential consumers by enabling recall of the
brand promise in the minds of the target group.
Positioning variables:
1) Single / Double / Triple point positioning:
When the firm chooses one / two / three differentiation variables which seen as credible by
consumers.
Single point positioning Headache Saridon, Disprint
Double point positioning Maggie, Noodles Test, Health
Triple point positioning Aquafesh Read for anti germs , Blue for Freshness, White for
White teeth.
2) Application positioning:
Based on the nature of uses desired by the consumer and the area of application on the
body or on the object desired, brands has positions themselves in various physical
application forms in order to be unique in consumers minds.
Example: In pain category brands have made its belief that different products are required
based o the areas on uses and the type of pain.
MOOVE: Back pain specialists
IODEX: Sprain specialists
Wintogen: Joint pain specialists
Amrutanjan: Headache specialists
3) Competitors positioning:
When brand creates an SKU in the category as an imitation to the competitor with a similar
physical form differentiation with the same positioning statement as the leader in the
category generally at the lower price which is what create a additional value.
Brooke / Nescafe
4) Price positioning:
NIRMA which utilises scale and cost leadership arising out of scale to be able to sell their
products at economical price points in the mass market where price sensitivity is high. Eg.
Big Bazar, Walmart Cheapest
5) Value positioning:
When the brand creates the perception with brand promise that gives more for less.
E.g. NIRMA More whiteness at lower price
Hyundai More features per model at lower price than their German rivals.

6) EST Positioning:
e.g. Air Deccan Simplest way to fly
ENO Fastest acidity gone in seconds
BIG BAZAR Cheapest yet best
Cheapest, Best, Largest
7) Premium / Leadership positioning:
This is when a brand reinforces its market leadership and industry dominant status from
time to time to reassure existing customers while creating doubts in the minds of consumers
who are with competition.
e.g. LIC Largest insurance company, Large assets under management.
SBI : Largest number of branches
This is also a form of brand reinforcement and signifies ongoing customer commitment.
8) Benefit area positioning:
The positioning statement utilised clearly indicates for the customer the need / want /
benefit area that is being addressed by the brand as well as the superior technology that is
being used for value delivery.
e.g. shampoo category Has SKUs that cater to different types of hairs
In the cosmetic category, SKUs with specific ingredients take care of ailment like Dandruffs
or hair fall.
9) Over positioning:
Reliance Dunia karlo muthime
Mountain Dew
10) Under positioning:
Sprite
11) Image positioning around the brand personality :
e.g. RAYMOND
12) Quality positioning / Innovator quality leaders:
ARIEL positions itself as best quality detergent, high on technology and performance, selling
at higher price realisations.
These are focused differentiation players catering exclusively to the top of the pyramid.
SONY is an example of an innovative brand positioning while SAMSUNG is perceived as a fast
follower who does a better job of replication at lower price points.

Theory of brand extension:


The basic underlying idea of a brand extension is to capitalise on the positioning equity created by
the mother brand over the years in the consumers mind and extending the same platform into a
different physical form in allied application areas / benefit areas / occasion / location.

The original mother brand e.g. Dettol with its antiseptic positioning created an iconic brand as a
liquid used by young mothers for disinfecting a childs wound. For such a need benefit area,
demographics become irrelevant and dettol was universally used across age groups & SEC classes as
a disinfectant. Over the years, it got used in other application areas by consumers like in the shaving
wash waters, to sterilize diapers, in hospitals to sterilize equipment and even to sterilize baby
bottles.
The firm hence decided to cash in on all available opportunities around the positioning equity i.e.
antiseptic / disinfectant & to use this platform in different physical forms to serve allied application
benefit areas WHERE THE CUSTOMER PERCEIVED THE VALUE PROPOSITION AS RELEVANT.
DETTOL

Hand
Talc
Sanitizers
Kitchen Cleaner
Floor Cleaner
Toilet Cleaner

Soap

As Liquid

Band Aid

Hand Wash

Saving Cream

Ansoffs matrix:
Ansoffs matrix outlines core competitive strategies that form avenues for a company to grow both
organically and in-organically.
This matrix also helps the company to understand STATEGIC GROWTH OPTIONS for their
businesses in various stages of their PLC.
Current
Current Market penetration strategies

New
Product development strategies

Arising out of current products in current


market. The key strategies could be:

a) Launching new improved products


with cosmetic upgrades.

a) Increase share of market by


snatching
business
from
competitors largely using BTL
activities.

b) Increase the width and depth of the


product line.

b) Increase product usage, frequency


of purchases.
c) Increase the quantity of usage
d) Enter new application areas.

c) Extending the brand


application areas.

to

allied

d) Creating new product categories for


the some target markets which are
aimed to cover:
i)

New need gaps

ii)

New benefit areas

iii)

Repositioning
brands

existing

New

Market expansion
strategies

development Diversification strategies

a) Take
existing
product
on
geographic expansion mode i.e.
new countries.
b) Create new target segments. e.g.
Horlics brand expand usage in the
category.

a) Vertical integration
i)

Forward integration

ii)

Backward integration

b) Related diversification / Concentrate


diversification:
Expanding the business within the
same industry where the firm
acquire another similar business that
is catering to the different segment
within the same industry. It adds to
the scale and synergy of operation
since many of the value chain
activities get shared.
c) Unrelated diversification:
Is perceived by a firm that does not
seek to extend any value chain or
competencies which are currently
uses but switch to enter any
category that is seen as profitable
and sustainable. However like in the
case of ITC, they were able to extend
scale and scope despite choosing
unrelated diversification.

Strategic marketing options for pioneers.


Pioneers / First market movers / Inventors / Innovators are those firms that create new categories or
new product offerings in existing categories. Such firms also identify new products and market
opportunities in terms of identifying new segments, new need gap areas (benefit areas) while
creating product improvement on the existing product ideas.
Pioneer, inventors firms also launch new product lines as well as brand extension ideas. Pioneers
take the lead in re-positioning current product offerings in terms of
a) Offering new value proposition
b) Expanding the usage areas e.g. kellogs chacos being moved from breakfast cereal to any
time snack for kids.

c) Addressing new usage areas and new target segments.


Product modifications to reduce prices and perceive cost for new customers. e.g. refill packs in
coffee, hand sanitizers, shrink wraps in pet soft drink bottles.
1) Market pioneers are inventors who create completely new products offerings in a industry
categories.
2) They often end up catering to latent demands of customers with their new to the world
products.
3)

Pioneers are known to create new variance in the product line and also to extend the
brands in new physical forms and allied application areas.

4) Pioneers are knows to create regular product improvements to increase the life cycle of
existing products.
5) Pioneers often used the leap frog strategy to disrupt the competition.
6) Pioneers often repositioned existing brands in the portfolio either with
a) New value proposition
b) Expanding uses
c) New usage application area
Strategy options for pioneers:
1. Mass market penetration:
a) This type of strategy is intended to help the firm create a quick market share; establish
early benchmarks and dominant leadership position, hence increasing the risk
perception for subsequent entrants. They should look at quick customer acquisition
among the innovators and early adopters which will be the base to command future
market share.
b) They should look to create scale and start to leverage the advantages of scale by driving
down costs and while building market share as high price points before the entry of
competitors.
c) If the pioneer is market protected (IPR, Patent filed), the pioneer would have enough
time to built up business competencies. (Raw material supply chain, technology, access
to markets, blocking competition) while building on volume.
d) In case there is intending threat from competition, the pioneer firm may adopt a rapid
skim policy while launching product lines at lower price point in order to accelerate the
diffusion / adoption process, especially in cases of lifestyle and necessity products.
e) The pioneer should look to increase the customers willingness to buy by investing a
heavy expenditure in advertising sampling / trials along with personal selling.

f)

The pioneer should look to reduce the entry barrier for a new product trial e.g. sachet or
a test drive in the automobile category.

g) Around the time competition enter, the pioneer should use the learning curve
experience to quickly plan and execute a rapid go to market strategy for serving broad
industry segments, multiple SKUs at multiple price points serving multiple price points ,
need gap benefit areas, each being highly differentiated.
h) The pioneer should attempt in the monopoly phase to launch high price value added
variant aimed at extracting market share from innovators and early adopters and at later
stage bring out variant at lower price point while bringing the broad differentiation
strategy approach to attract the next level of buyers.
i)

While offering extensive sales service right from the beginning, the pioneer firm would
look to offer trade promotion schemes and higher level warrantees / guarantees
whenever the first sign of competition exist.

j)

To retain and encash the early advantage, the pioneer would look to block supply lines
and distribution channels with exclusive arrangements, thus creating a deterrent for
new entrant.

2. Niche penetration strategy:


a) The niche penetration strategy is adopted generally by a firm of smaller size and having
limitations in resources. Finance and technology capabilities.
b) Instead of mass market approach, the firm uses limited technology / specialised
technology; it has to customise its offerings on a narrow front to one or two segments.
c) An additional benefit of this is that the next level of entrant may not choose to confront
the niche pioneer in this speciality segment and will instead choose to by-pass for more
mass market segment.
d) Though multiple need gap area may exist, the niche pioneer firm attempts to exploit a
couple of segment with highly customise offerings arising out of the niche proprietary
technology expertise.
e) The niche pioneer will directly select advertising and promotion to attract buyers from
the niche segment chosen while inducing sampling and trails initiation around the focus
segment.
f)

As life cycle progresses, the pioneer firm will indulge in product improvements within
the narrow front to increase the appeal amongst the target group.

g) The pioneer firm will offer liberal terms of trial and exchange and also offer trade
promotions to seek consumer engagement at all levels.
3.

Skimming & early withdrawals:

a) Even when the firm has capabilities and resources to sustain a leadership position in a
category, it may not choose to do so since it may have reason to believe that the future
competitive landscape may drive down prices and margins which endangers
shareholders value.
b) Under the circumstances, the pioneer may adopt the skimming strategy while planning
an early withdrawal. This involves setting up high price initially while engaging
innovators and early adopters to buy into the category in the monopolistic phase. This
helps to maximise per unit sale profit and accelerate ROI.
c) While having created a method to recover investment, the pioneer firm concurrently
develop new application / new technologies as a part of reactionary leap frog strategy.
d) As and when the first wave of competition strikes, the pioneer firm does the following
two initiatives.
i.

Defuse the current technology and product SKUs with broad differentiation
strategy where it address all possible need gap areas in preparation of
competition launching.

ii.

They concurrently prepare to leap frog by launching the next generation


products at higher price points by defusing the price points of earlier technology
offers with price cuts to deter competition and retain competitive advantage.

Conclusion:
It is easier to attract customer and share of market in the growth phase since there is no
established brand loyalty behaviour amongst the customers. Further many new need gap /
benefit areas are arise as the life cycle progresses which constitutes new business
opportunities.
It is easier to attract a new entrant in a fast growing market than brand loyal customer in a
mature market.
In fast growing market demand exceeds supply and hence price cuts are not necessary.
Hence share gains in a fast growing market are more profitable due to high price realisation
as compared to the mature phase where price cuts occur to gain share.
An early entry in the category ensures that the firm gets access the supply chain, technology
and forward distribution channels.

Key features of growth markets.


Features of growth markets:
1. It is during the growth phase that firm need to create sustainable strategy to ACQUIRE
CUSTOMERS since customers themselves are going through learning and experiential phase
within the category and in absence of any perception or bias towards any brand loyalty is yet
to be established.
2. Since the pioneer has only created a basic position arising out of his proprietary technology,
there exist many need gap / benefit areas / price points that remain vacant and comprises a
viable business opportunity for late entrants.
3. Based on buyer readiness, it is easier to attract new customers in the growth phase rather
than a brand loyal customer in a mature market.
4. In fact growing markets (the pace of which can be dictated by the competitive moves of
various industry rivals) the demand far exceeds or equals the supply and hence industry
players can sell in the new category big volumes at handsome prices to achieve breakeven
and move towards ROI. Profit per unit is also good since price cut are not necessary since
demand keeps rising as new customers enter the category due to the launch of multiple
SKUs by multiple brands servicing diverse need benefit areas in a broad spectrum price
band. Hence share volume growth in the growth phase of the PLC is more profitable than
gains made in a mature market.
5. However for followers, they need to gain a quick entry into the category after the pioneers
launch, in order to gain access to technology, supply chain, distribution and to occupy all
available positions with similar substitute or leap frog technology.
Strategies for market leaders:
The leaders in most cases, the pioneer inventor has reached an industry dominant position by
creating technologically advanced products as a first market mover and then using that technological
edge to create a broad product line serving multiple consumer segments in serving multiple need
want benefit area at a variety of price point. This broad differentiation strategy has been successful
creates distinct industry leadership leading to competitive advertising. The primary objective of the
leader would be market share maintenance, objective where he would employ multi prompt
strategy approach.
1. Position defence & fortification:
a) The leader should ensure that the product line is complete in terms of SKUs, price
points and need benefit areas.
b) The brand loyalty created should be maintained by the leader brand by maintaining
product quality and ownership experience as part of brand promise delivery.

c) As the life cycle progresses, the leader firm should reinforce its position with continuous
product improvement that increase benefits or reduce cost which intern increases a
value proposition. e. g. Refill packs in hand wash, coffee.
d) Continuous advertising to enforce and stress superior products attributes.
e) Increase service levels along with warranties and guarantees to key account customers
while offering to roam their staff, train dealerships for better capabilities, create
customer helpline and improve availability of spares.
2. Simplify ownership experience / Repeat purchases:
a) Expand production capacities to meet growing demand and prevent stock-out.
b) Improve inventory control and logistic support, thus reducing delivery time and waiting
period.
c) Consolidate and expand existing distribution channels while considering a multi channel
approach.
3. Reduce switching:
a) Flanking:
Create a flanking strategy. e. g. a second brand product line with relevant features and
attributes with different brand positioning at a lower price point. (Nescafe & Sunrise)
b) Develop product line extension and brand extension to meet need of multiple uses
segment in the same field or an allied application area. This is a market expansion
strategy.
c) Aggressively advertise and promote each offering while differentiating and positioning
each offering specific to the chosen target group.
4. Confrontation strategy:
a) Adopt a head to head stand against the competitors while providing superior offering in
terms of attributes and technology that increases the value proposition.
b) Meet or beat the competitors prices by leveraging the cushion generated from supply
chain to scale.
c) Increase advertising and promotions sense while outspending competition.
5. Encirclement strategy:
As an alternative, the firm may choose to introduce another brand with next gen technology
& leapfrog at higher price points. This strategy when employed in conjunction with the
flanking strategy is known as encirclement strategy.
Flank below - confront flank below

6. Contraction defence:
a) Prune/cut off unprofitable product lines.
b) Withdraw operations from unprofitable geographies.
7. Leap frog:

Short notes:
Growth strategies for followers:
Not all late entrants in high growth market need to beat or surpass the leader. Follower need to map
analyse, create business resource capabilities with:
Industry competitiveness
Product development strategy

Imitate

Imitate + beat innovation

Beat + Leap frog

The followers immediate strategic intent should be to create formidable yet sustainable business
size in terms of market share with above average profitability that delivers customers value and
shareholders value rather than looking to beat the leaders.
In fact some late entrants with limited resources may build a small profitable business in a niche
segment which the leaders have ignored.
Strategy option for followers:
a) Develop superior product designs and processes for value delivery. Also lies with suppliers to
improve quality and yield and leverage scale to reduce costs. Money saved here can be used
for price wars to neutralise competition.
b) Followers need to adopt any one of the following three strategic positions.

Quality leader ARIEL

Cost leader NIRMA

Value for money RIN/TIDE

c) Often penetrate price points if a low cost position can be achieved.


d) Create superior advertising appeal directed to improve brand imaginary and perception as
against the leader. At times cash rich followers have to outspend competition to improve
brand perception levels.
e) Followers need to create a low cost of entry for the trial / sampling process that will
encourage switching from the leader.
f)

Outspend target competition in BTL activities to create distribution coverage and retail
ability.

g) Outperform competition either through superior physical form delivery, customer service,
credit periods or extended warrantees / guarantees.

h) Adopt a confrontation strategy with the leaders with head to head positioning but with
higher differentiated attributes or a lower price points that increases value perception.
i)

j)

Flanking / encirclement

Need gap / benefit areas

Price points

Geographic areas

Guerrilla attack
Niche need gap areas
Select geography
Focus areas of strength
By pass strategy

Conclusion:
A successful strategy for a follower will be based on:
a) Resource capability matrix V/S product development strategy
b) Selecting whom to attack
The leaders
Regional Players look for merger acquisition with financially weak regional players when
are in market for funds. This allows the late entrants to get foothold in terms of production
facilities, supply chain, distribution and customers that can ramp up operations quickly.
Attack other late entrants who have created sizable business model.

Growth to Maturity Transition Phase


1) In any new category, the industry experiences its transition phase where the markets
continue to grow year on year with a following CAGR.
2) Some firms fail to recognise the advent of the mature phase and continue to invest in the
capacities.
3) A particular inflation point comes in a particular year where the CAGR drops drastically and
the firm find itself sadeal with over capacity under such circumstances the firm will
a) Cut price to increase volume

b) To offset increase cost per unit, the firm will commit new terms with suppliers and use
the cost cushion undertakes BTL activities that will raise volume further to match
capacity.
4) However in such a situation, there is no evidence of creating competitive advantage since
under cutting price seldom leads to value addition. Further as market mature and new
customers are hard to come by, competitive forces within the industry intensity giving the
firm STUCK IN THE MIDDLE with a strategy. i.e. more of compromise between broad
differentiation and price cuts simultaneously which rarely add to shareholders value.
5) Early entrant should ensure constant innovation in order to retain advantage as markets
mature since it is easier and cheaper for late entrant to replicate the pioneers strategies.