Strategies for defending market share


Position Defense

Position defense involves occupying the most desirable market space in the minds of the consumers, making the brand almost impregnable, like Tide laundry detergent with cleaning; Crest toothpaste with cavity prevention; and Pampers diapers with dryness.

Preemptive Defense

A more aggressive maneuver is to attack before the enemy starts its offense. A company can launch a preemptive defense in several ways. It can wage guerrilla action across the market— hitting one competitor here, another there— and keep everyone off balance; or it can try to achieve Grand market envelopment. Bank of America’s 13,000 ATMs and 4,500 branches nationwide now provide steep competition to local and regional banks. It can send out send market signals to dissuade competitors from attacking. It can introduce a stream of new products, making sure to precede them with preannouncements deliberate communications regarding future actions. Preannouncements can signal to competitors that they will have to fight to gain market share. If Microsoft announces plans for a new product development, smaller firms may choose to concentrate their development efforts in other directions to avoid head-to-head competition. Some high-tech firms have even been accused of engaging in “vaporwareâ€? — pre announcing products that miss delivery dates or are not even ever introduced.

Counter- offensive Defense

When attacked, most market leaders will respond with a counterattack. Counterattacks can take many forms. In a counteroffensive, the leader can meet the attacker frontally or hit its flank or launch a pincer movement. An effective counterattack is to invade the attacker’s main territory so that it will have to pull back to defend the territory. After FedEx watched UPS successfully invade its airborne delivery system, FedEx invested heavily in ground delivery service through a series of acquisitions to challenge UPS on its home turf . Another common form of counteroffensive is the exercise of economic or political clout. The leader may try to crush a competitor by subsidizing lower prices for the vulnerable product with revenue from its more profitable products; or the leader may prematurely announce that a product upgrade will available, to prevent customers from buying the competitor’s product; or the leader may lobby legislators to take political action to inhibit the competition.

Contraction Defense

Large companies sometimes recognize that they can no longer defend all of their territory. The best course of action then appears to be planned contraction (also called strategic withdrawal) giving up weaker territories and reassigning resources to stronger territories. Diageo acquired most of Seagram’s brands in 2001 and spun off Pillsbury and Burger King so it could concentrate on powerhouse alcoholic beverage brands such as Smirnoff vodka, J&B scotch, and Tanqueray gin.