Defending market share


The dominant firm must continuously defend its current business while trying to expand total market size. The leader is like a large elephant being attacked by a swarm of bees. Referring to some of the popular brands Tropicana must constantly guard against Minute Maid orange juice; Duracell against Energizer batteries; Hertz against Avis rental cars; Kodak against Fuji film. Sometimes the competitor is domestic; sometimes it is foreign.

The most constructive response the market leader can do to defend its terrain is continuous innovation. The leader leads the industry in developing new product and customer services, distribution effectiveness, and cost cutting. It keeps increasing its competitive strength and value to customers.

Consider how Caterpillar has become dominant in the construction equipment industry despite charging a premium price and being challenged by a number of able competitors, including John Deere, J. I. Case, Komatsu, and Hitachi. Several policies combine to explain Caterpillar’s success.

Ø Premium performance: Caterpillar produces high-quality equipment known for its reliability and durability—key buyer considerations in the choice of heavy industrial equipment.

Ø Extensive and efficient dealership system: Caterpillar maintains the largest number of independent construction equipment dealers in the industry, all of whom carry a complete line of Caterpillar equipment.

Ø Superior service: Caterpillar has built a worldwide parts and service system second to none in the industry.

Ø Full-line strategy: Caterpillar produces a full line of constructing equipment to enable customers to do one-stop buying.
Ø Good financing: Caterpillar provides a wide range of financial terms for customers who buy its equipment.

In satisfying customer needs, a distinction can be drawn between responsive marketing, anticipative marketing, and creative marketing. A responsive marketer finds a stated need and fills it. An anticipative marketer looks ahead into what needs customers may have in the near future. A creative marketer discovers and produces solutions customers did not ask for but to which they enthusiastically respond.

Sony exemplifies creative marketing. It has introduced many successful new products that customers never asked for or even though were possible: Walkmans, VCRs, video cameras, CDs. Sony is a market-driving firm, not just a market-driven firm. Akio Morita, its founder, once proclaimed that Sony doesn’t serve markets; Sony creates markets. The Walkman is a classic example: In the late 1970s, Akio Morita was working on a pet project that would revolutionize the way people listened to music: a portable cassette player he called the Walkman. Engineers at the company insisted there was little demand for such a product, but Morita refused to part with his vision. By the twentieth anniversary of the Walkman, Sony had sold over 250 million in nearly 100 different models.

Even when it does not launch offensives, the market leader must not leave any major flanks exposed. It must consider carefully which terrains are important to defend, even at a loss, and which can be surrendered. The aim of defensive strategy is to reduce the probability of attack, divert attacks to less threatening areas, and lessen their intensity. The defender’s speed of response can make an important difference in the profit consequences.