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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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