Financial and Strategic Management

What is Market Position and Strategy?

Strategic planning is concerned with identifying the business opportunities that are likely to be successful and evaluates the firm’s capacity to leverage such opportunities. It seeks to identify the strategic gap; that is the difference between where a firm is currently situated where it should be situated for sustainable, long-term growth.

Market Position and Strategy

In terms of market position, firms may be classified as market leaders, market challengers, market followers, or market niches.

• Market leader: The market leader is the one who controls a significant market share. The goal of a market leader is to reinforce its prominent position through the use of branding to develop and maintain its corporate image and to restrict the competitor’s brand. Market leaders may adopt unconventional or unexpected approaches to building growth and their tactical responses are likely to include: product proliferation; diversification; multi-branding; erecting barriers to entry; vertical and horizontal integration and corporate acquisitions.

• Market challenger: The market challenger holds the next highest market share in the industry, following closely the most dominant player. Their market posture is generally offensive because they have less to lose and more to gain by taking risks. They will compete ‘neck to neck’ with the market leader in an effort to grab their market share. Their overall strategy is to gain market share through product, packaging, and service innovations; new market.

• Market follower: Followers are generally content by taking a backseat and follow the policy of wait and watch. They rarely invest in their own funds in R &D and sit and relax to watch market leaders bring out novel and innovative products and afterward adopt a “me-too” approach. Their strategy is to maintain its market position by preserving the existing customer base. T hey strategy is to maintain steady profits by controlling costs.

• Market niche: The market niche occupies a small niche in the market in order to avoid ‘neck to neck’ competition. Their objective is to build strong ties with the existing customer base and develop strong loyalty with them. Their strategy is to develop and build a smaller segment and protect it. Tactically, niches are likely to improve the product or service offering, leverage cross-selling opportunities, offer value for money, and build relationships through superior after-sales service, service quality, and other related value-adding activities.

A key aspect of the marketing strategy is to keep marketing consistent with a company’s overarching mission statement. Strategies often specify how to adjust the marketing mix; firms can use tools such as Marketing Mix Modeling to help them decide how to allocate scarce resources, as well as how to allocate funds across a portfolio of brands. In addition, firms can conduct analyses of performance, customer analysis, competitor analysis, and target market analysis.

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Shreya Kushwaha

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