The choice of competitive strategy and the specifics of its application are largely determined by the company’s position in the market. In other words, whether it belongs to the number of market leaders or challengers for leadership, is a follower or specializes in a market niche, avoiding direct competition.
Depending on the position of the enterprise in the market, its actions to preserve its competitive advantages can be active, proactive or passive (tab. 1).
\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t
| \Market position. | \The passivenature of the strategies. | \The proactivenature of the strategies. |
| \The market leader. | \Responding to competitive challenges | \Protecting market share and expanding market share and protecting the market ahead of the market |
| \A contender for leadership, a market follower. | \Following the leader. | \Offensive strategy, flanking strategy, frontal engagement. |
| \Firms that avoid direct competition. | \t\t\tСтатус-кво\t\t\t | \A guerrilla marketing strategy to outmaneuver the competition. |
Thus, to maintain competitive advantage, companies can resort to two groups of strategies: active (offensive) and passive (defensive).
Marketing strategies of the market leader
Market leaders with leading competitive positions, can develop such active marketing strategies:
- market expansion strategy;
- A strategy to protect its market share;
- and an anticipatory defense strategy.
The strategy of expanding the market boundaries is focused on finding ways to increase demand for all assortment groups of goods by positioning the properties and characteristics of goods rather than the advantages of brands, attracting new groups of buyers, price leadership, increasing the intensity of consumption, etc.
The leader’s actions may be dictated by his desire to maintain market share and be characterized by a defensive marketing strategy (protection of market share). In this case, such methods as increasing the promotion budget for large-scale advertising, sales promotion, service, etc. can be used to maintain competitive advantages.
Preventive strategy is focused on forecasting and anticipating the actions of competitors in order to prevent them from creating competitive advantages in the area of marketing complex: product, price, promotion, sales, etc.
Along with active strategies, the company should also resort to passive strategies, which provide for a symmetrical and adequate response of the company’s management to the actions of competitors, for example, when introducing a new product to the market.
Marketing strategies of followers after the leader
Enterprises, whose competitive position can be classified as medium, apply strategies of followers of the market leader, which in turn can be both passive and active.
An offensive strategy can manifest itself in the form of:
1) frontal competition – consists of a direct frontal attack on the leader, when the competitor enters into an open competitive confrontation with the market leader, challenging him and betting in the struggle on his competitive advantage (product, price, etc.);
2) flank strategy, which involves attacking the weak positions of the competitor in those areas in which it acts as an object of competition.
3) encirclement strategy – consists of identifying the weaknesses of the leader and synchronized aggressive attacking actions on his most vulnerable points, akin to bypassing the opponent from different sides. The weakness of the competitor can be evidenced by:
– presence of regions where the rival has a small market share;
– neglecting certain market segments or ignoring the needs of customers;
– lagging behind in the quality of products and the presence of gaps in the product lines of the market leader;
– the lack of the possibility of relatively easy provision of a higher level of customer service;
– the presence of bottlenecks in the distribution system, in the promotion of goods, etc.
The strategy of following the leader is referred to as passive. This strategy is aimed at minimizing the risks that arise when challenging the leader (for example, in the field of pricing policy). At the same time, marketing programs that provide advantages for consumers in stimulation, service, etc. are implemented.
Marketing strategies of companies with weak competitive positions
Enterprises conditionally assigned to the third group (with weak competitive positions), as a rule, avoid involvement in direct competition, and as active ones use guerrilla marketing strategies: search for a niche in the market and maneuvers to bypass competitors.
- Finding a narrow market segment (market niche) does not attract the attention of key competitors because of narrow specialization or small size.
- Competitor avoidance strategy focuses on evading competition by using unsightly sales channels, offering non-competitive products, etc.
The use of passive status quo strategy allows to avoid direct competition.Thestatus quo strategy is oriented on preservation of the occupied position in the market, on realization of activity without attraction of competitors’ attention.
The competitors’ response to the company will depend on their ability to adapt their current strategy in time to changes in the market, as well as their existing marketing capabilities, strengths and weaknesses.
The choice of a company’s competitive strategy is made taking into account:
- The advantages and disadvantages of competitive strategies;
- of alternative enterprise strategies;
- the possible reaction of competitors;
- the likelihood of a particular reaction;
- The impact of an enterprise’s strategy on its profits.
Competitive behavior
Competitive strategies determine the types of competitive behavior.There are several types of competitive behavior:
- creative;
- opportunistic;
- enforceable (i.e., guaranteed).
Creative competitive behavior involves activities aimed at creating new components of market relations that would provide a competitive advantage: new technology, new goods (including substitutes), new distribution system, new sales methods, new means of communication, etc.
Adaptive competitive behavior is aimed at taking into account innovations in production and implementing them in an attempt to get ahead of competitors’ actions related to modernization by copying their achievements in a short period of time.
Ensured competitive behavior is based on the desire to maintain competitive positions by improving the quality of goods, expanding their assortment, providing additional services and guarantees.
Summary
To choose a marketing strategy, you need to consider the company’s position in the market, the possible reaction of competitors to the strategy you have chosen, and the possible profits from using a particular alternative strategy.
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