15-1 Chapter 15 Themes for Class Discussion Strategies for New and Growing Markets Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

15-2 Exhibit 15.1 Categories of New Products Defined According to Their Degree of Newness to the Company and Customers in the Target Market High Low High Newness to the market Source: New Products Management for the 1980s (New York: Booz, Allen & Hamilton, 1982). Newness to the company 26% 20% New product lines Revisions/ improvements to existing products 11% Cost reductions 7% Additions to existing product lines Repositionings 10% New-to-the world products

15-3 Key question: Is it better to be a market pioneer or a follower?

15-4 So, when and for whom does it make sense to pursue a pioneer strategy?

15-5 When and for whom does it make sense to pursue a follower strategy?

15-6 If you want to be a pioneer, what are your strategic options? Under what circumstances might each option be more likely to succeed?

15-7 How might introductory marketing plans differ under each of these pioneering strategies?

15-8 Once a pioneer’s market becomes attractive to others, what are the pioneer’s strategic options? Under what circumstances might each option be more likely to succeed?

15-9 Exhibit 15.8 Strategic Choices for Share Leaders in Growth Markets POTENTIAL COMPETITOR Contraction or strategic withdrawal Market expansion Flanker strategy - Proactive Flanker strategy - Reactive LEADER Fortress or position defense strategy ConfrontationstrategyProactiveReactive Source: Adapted from P. Kotler and R. Singh Achrol, “Marketing Warfare in the 1980’s” Reprinted with permission from Journal of Business Strategy, Winter 1981, pp Copyright © 1981 by Warren, Gorham & Lambert, Inc., 210 South Street, Boston MA All rights reserved.

15-10 If you want to be a follower, what are your strategic options? Under what circumstances might each option be more likely to succeed?

15-11 Exhibit Strategic Choices for Challengers in Growth Markets TARGET COMPETITOR Flanking attack Frontal attack Encirclement strategy Leapfrog strategy Source: Adapted from P. Kotler and R. Singh Achrol, “Marketing Warfare in the 1980’s” Reprinted with permission from Journal of Business Strategy, Winter 1981, pp Copyright © 1981 by Warren, Gorham & Lambert, Inc., 210 South Street, Boston MA All rights reserved. CHALLENGER

15-12 Some Advice for Would-Be Pioneers First mover advantage is trumped by followers who are better. Best beats first. Concentrate on being best.First mover advantage is trumped by followers who are better. Best beats first. Concentrate on being best. Being a pioneer without the basis for sustainable competitive advantage is a trap!Being a pioneer without the basis for sustainable competitive advantage is a trap!

15-13 Some Advice for Followers Differentiation is key for followersDifferentiation is key for followers –Better benefits –Better service –Lower price Beware of competing on price, however, unless your costs really are lower than competitors’Beware of competing on price, however, unless your costs really are lower than competitors’