“The leader is like an elephant being attacked by a swarm of bees. It’s always the biggest and most annoying bee that hovers around him.” This phrase perfectly reflects the constant attrition a leader endures in his struggle to maintain his privileged position. But what can he do to assert himself successfully against his adversaries To defend?
Protect your market
The leader must develop a two-pronged strategy to maintain dominance. You have to defend your territory and conquer the market. No more and no less. A double objective that can be achieved by combining several countermeasures:
Strengthen your position. You have to defend your image space and trading space and consistently strengthen your positioning. In the positioning that has allowed it to be a leader, it has two very important strengths: its products and its brand.
flank defense. The competition may try to enter an area not occupied by the strongest with the idea of later attacking their main market. To avoid this threat, the leader must discover the possible niches and occupy them before the others.
It should try to cover all possible aspects and forms of demand in order to avoid introducing competition in certain markets. Expanding the brand to include decaffeinated, skim, sugar-free, organic… are examples of how leading companies are trying to block other brands from taking that spot. In this way, they expand the scope of the brand without having to create new ones.
But the price offensive should not be forgotten in flank defense either. Competitors may try to attract segments of consumers who want access to products of similar quality at a lower price. Or vice versa, you can try to attract consumer segments with higher purchasing power if you have a higher quality product than the market leader.
Prepare your attack. If there’s one point on which all experts agree unreservedly, it’s that in marketing, like in war, the best defense is a good attack. Therefore, the leader must be the first to act, rather than waiting for the other to begin their offensive.
Conformism is one of the main risks of the leader, who often forgets that all competitors are dangerous and can hollow him out. Although it enters the market with an advantage, it must always be able to surprise by anticipating the needs of its customers. He must be the first to bring news about products, services and advertising.
In this sense, the leader must be the generator of change that satisfies the consumer through the offer that he is ready to offer as a manufacturer.
This strategy should not always be used in underdeveloped markets. If you have developed a very innovative product with very high launch costs, you can wait a bit so as not to burn up the still very lively markets. It is what they do.
counteroffensive. Counterattacking is a tactical necessity for any leader as it is impossible to anticipate all of the competition’s actions. But whoever takes the first position in this confrontation must avoid giving the applicant more opportunities and exposure than necessary.
Mobile Defense. The leader’s defense must not be limited solely to his territory, but must also encompass its extent. In other words, it must protect future markets that can serve its expansion, but without weakening its main sources of income.
A common way to increase quotas is to anticipate potential future consumer interest in certain markets. In Spain for example we are not as aware of organic products as in other countries but we know it is a growing market. Working in this direction is a way to anticipate markets that will thrive in the future.
contraction defense. Sometimes even large corporations have to shed ballast because they cannot fully defend their territory. As such, some leaders defend themselves against competition by abandoning their weakest and least important areas in order to reallocate resources to defending the most important domains. The problem with devalued or dispersed brands is that each product must defend itself and is more vulnerable to the vicissitudes of business.
Once the protection of its main market is secured, the leader can allocate some of its resources to increase its share. It generally does this by focusing its efforts on product innovation or increasing its marketing budget and sales force. However, increasing market share is not always the most desirable strategy. This will only be the case if this increase is accompanied by greater profitability. The first must remember that not only must he defend his market leadership, but he must also be a leader in profitability.
In this sense, some experts confirm that once a limited market share is exceeded (which they put at around 50%), profitability starts to decrease. Any increase in market share beyond this limit is at the expense of profitability.
It all depends on factors like atomization, presence of white marks, penetration rate, etc. Above a given quota, the critical mass of consumers decreases and, above all, fragments. From this turning point, the strategy should not be based on growth, but on the development of new products for emerging target groups.
negotiate in court
In addition to the economic risk of increasing market share, market leaders may face another problem: the courts.
The competition can react to the threat of strong expansion of a brand by trying to equate this approach with the search for a monopoly. These conflicts are fought out in the competition court, which can ruin the entire growth strategy.
The three principles of defensive marketing
There are three principles that the leader must never forget in order not to lose his position.
– Only the leader can play defense. In every market, be it an industry, a local market or a specific segment, there is only one leader who is positioned as such in the minds of consumers. He’s the one who needs to develop defensive strategies.
– The leader must have the courage to attack himself. It strengthens its position by introducing new products or services that make existing ones obsolete in the market. Even if this strategy can lead to a loss of profits in the short term, it always offers the advantage of securing market share. Those who hesitate to attack themselves always lose market share and ultimately market leadership.
– Energetic movements of competition must be blocked. If the leader misses the opportunity to attack themselves, they can almost always recover by copying the competitor’s move. To do this, you must act quickly before the attacker manages to consolidate. It’s safer to cover than to be exposed.