Page 305 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes should stimulate selective demand among later product adopter groups and makes sure of
capturing larger product-market share of the growing market.

Market Share Expansion: One of the most attractive strategic options for a market leader is often
to grow its market share. Coca Cola has managed to grow its volume at the rate of 7-8 per cent.
In large industries, an increase of one share-point is often worth millions in monetary terms.

Did u know? One share-point in soft drinks is in excess of US$ 120 million and for this
reason the competition intensity among colas is of the highest order.
David Zymanski, Sunder Bhardwaj, and Rajan Verdarajan report that many factors influence a
company’s ability to grow market-share and earn profits.

Example: The cost of gaining share growth might far exceed the revenue gains. It is easy
to get caught up in share wars without considering the unprofitable possibility of winning the
battle of market share but losing the war for revenues. A business should consider four major
factors:
1. Possibility of Competition Act 2002, or similar laws such as Anti-trust Action in U.S.A.:
The merger of Jet Airways and Sahara Airlines drew investigation. Similarly, the protracted
investigation of Microsoft is well-known. The risk reduces the attractiveness of increased
share gain.
2. The cost involved in market share gain may rise and exceed the revenues: Robert D. Buzzell
and Bradly T. Gale found that 31 per cent of the 877 market-share leaders in the PIMS
database experienced loses in relative share, and leaders were particularly likely to
experience losses when their market share was very large. This may happen, for example,
because of additional expenses involved in public relations exercise, existence of
unattractive market segments, customers refusal to accept what is offered leading for
disliking the business and their loyalty to competitors, and customers unique product
feature preferences etc. Sometimes market leaders find it more appropriate to decrease
their market share by taking it easy in less profitable segments and cutting down on
maintaining market share.
3. Selecting and using an inappropriate marketing mix strategy: Apple computers introduced
its Cube but could not sell much despite advertising and other communications. Avanti
Garralli Moped did not sell because its advertising was addressing the wrong segment.
Robert D. Buzzell and Frederick D. Wiersema identify three areas to excel in order to gain
successfully, increased market share: (1) New Product Development, (2) Product Quality,
and (3) Marketing Expenditure.
4. Increased number of customers may put a strain on the company’s resources and hurt
service delivery and product value: Linda Hellofs and Robert Jacobson found that share
growth might affect customer perceptions of product quality.
A business leader can adopt defensive or offensive strategies to maintain share-position, increase
market share, or expand product-market. Depending on the situation a market leader faces, the
strategic move options include:
Position Defence Strategy: Almost always, the market share leader adopts position defence strategy.
This strategy focuses on perpetually strengthening an existing position like a fortress and
repulsing attacks by existing or future competitors. The share leader must take care not to leave
any area exposed to a flank attacker, and determine which areas are most important to defend.
By investing to support and maintain existing leadership position, the business can improve the

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