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Marketing Management/Essentials of Marketing




                    Notes          A challenger has two basic strategic options to consider. In markets where the share leader and
                                   others have already cornered a very large portion of the potential market, there is no choice for
                                   a challenger but to capture some demand from other competitors’ existing customers. A
                                   challenger could try head-on confrontation with chosen competitor by adopting various
                                   marketing activities aimed at giving it an advantage. Or a challenger can decide to leapfrog over
                                   the share leader by offering new generation products with more benefits to encourage existing
                                   customers to trade in their existing brand for a new one. This could also bring to fold a large
                                   share of late adopters in the mass market.
                                   There are five major competitive strategies for a challenger that may be used singly or in
                                   combination and include frontal attack strategy, leapfrog strategy, flanking attack strategy, encirclement
                                   strategy, and guerrilla attack strategy. Most of these strategies seem similar to share maintenance
                                   strategies.



                                     Case Study  India: A Tough Competitor in the Textile and
                                                 Apparels Market

                                            lobal trade in textiles and apparel is expected to increase from US$ 356 billion in
                                            2003 to US$ 600 billion by 2010. The textile industry accounted for 22% of India’s
                                     G` 2,551 billion exports in 2002-03 and 17 per cent of India’s total exports of
                                     ` 1,070 billion during April-July 2004. It has been predicted that post-January 2005. India’s
                                     share in apparel exports would increase from 2.5 per cent in 2003-04 to 5 per cent by 2008.
                                     In 2003-04, 75 per cent of India’s apparel exports were to USA, the European Union and
                                     Canada. India’s share in the global textile trade was forecasted to grow the fastest of all
                                     countries, post-MFA, as its quota allocation in developed countries during the MFA was
                                     among the lowest.

                                     India has a proven advantage in raw material availability as the world’s third largest
                                     producer of cotton, second largest exporter of cotton textiles among low cost countries,
                                     and fourth largest exporter of synthetic yarn and fabric. India produces all varieties of
                                     cotton. In 2003-04, the industry accounted for 21 per cent of global spinning capacity and
                                     33 per cent of global weaving capacity. The industry contributed about 25 per cent share of
                                     the world trade in cotton yarn. The industry has high levels of operational efficiencies in
                                     spinning and weaving: Around 96% for spinning and 85-90% for weaving. The skilled
                                     manpower available in India has been relatively low-cost in an industry where labour
                                     contributes the largest component of manufacturing cost in textiles. “India has a cost
                                     advantage of 40% over the US and 30% over ‘garment conversion centers’ such as Mexico
                                     due to lower labour cost,” said Rajinder Gupta (Rajinder), Managing Director, Abhishek
                                     Industries Ltd.
                                     The wide availability of skilled labour in India has been another differentiator. India has
                                     been adept at traditional apparel-making skills like embroidery, mirror work and beading,
                                     design and at making complex garments. Some Chinese buyers are planning to manufacture
                                     part of their value added products in India.
                                     Export orders from major retail companies have risen only by 5-6%. Moreover, these
                                     orders have been contracted at prices 5% lower than the existing ones. While slackening
                                     retail sales in the US has been cited as a reason, there are several other reasons why
                                     overseas buyers like Wal-Mart, Target, GAP and J.C. Penney have not increased sourcing
                                     from India for the season beginning January 2005. There is a lack of clarity in the price
                                     ranges that Indian players can offer to the buyers, and they are also unsure of the volumes
                                                                                                         Contd...



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