Go to Market Strategies – B2B Market Position
B2B Market Position – Market Leader (~40% Market Share)
The market leader occupies the dominant position in its industry with the largest share of the market. Usually, the market leader is the industry leader in developing innovative new products and business methods, and as such, has a significant impact on the direction that the market takes.
Companies may be the first to develop a product or service but that does not necessarily mean that they will be the market leader. It does allow however for them to set the tone for messaging and functionality, at least in the short term. While companies that are first to market are typically referred to as pioneer brands, they can be surpassed by companies that enter the market at a later date.
Market leaders are typically faced with trying to:
- Expand the total market by finding new users or new uses of the product (same market or different market)
- Expand the total market by encouraging more usage on each use occasion
- Protect market share by developing new product ideas, improving customer service and improving distribution effectiveness
- Expand market share by targeting one or more competitors (same market or different market)
B2B Market Position – Market Challenger (~ 30% Market Share)
A market challenger is an organization in a strong, but not a dominant position in the market while following an aggressive go-to-market strategy to gain market share. These companies typically target the industry leader as the primary competition with the focus on taking market share from them. They focus on finding or creating differentiators to exploit opportunities.
Market challengers invest time and money into finding differentiators from the market leader and develop their unique selling proposition to communicate their brand value. Differentiation may be unique to the market challenger, or it can be a comparative advantage based on the market challenger’s approach. Or, it can be realized through the market challenger’s eco-system. Also, come challengers successfully use fear, uncertainty and doubt based upon qualitative or unsubstantiated claims.
B2B Market Position – Market Follower (~ 20% Market Share)
A market follower seeks to gain market share but is less interested in differentiating its brand from the market leader. Instead, the market follower effectively rides on the market leader’s coattails while positioning its brand just far enough away from the market leader to be different. Usually market followers are not focused on becoming a market leader and are content in the market follower position.
The rationale of a market follower is that by developing strategies similar to those of the market leader, they will gain a good share of the market while being exposed to very little risk – it is a play it safe strategy. Some advantages of this strategy are:
- No expensive R&D failures
- Ability to capitalize on the promotional activities of the market leader which significantly lowers the cost of customer acquisition
- Low risk of competitive attack
- Significant cost savings by avoiding a head-to-head battle with the market leader
To be effective, the market follower needs to copy the market leader while positioning its brand slightly differently. Below are three approaches that market followers may choose:
- Clone: this is where a follower imitates the market leader by going to market with similar advertising, products, and distribution.
- Imitate: in this scenario, an imitator copies some things from the leader but maintains an element of differentiation.
- Adapt: to be a successful adapter, a company would slightly change and improve its products and predominantly sell them in a different market.
B2B Market Position – Market Niche (~ 10% Market Share)
A niche market is a subset of the market for a specific product. The market niche defines its product as a subset of features aimed at satisfying a set of needs for a very specific market. This is in addition to the price range, production quality and the demographics that the product is intended to impact.
Companies that compete in market niches try to dominate specific segments. These are generally smaller companies that can’t effectively compete against market leaders for a variety of reasons, but can reach their business goals through focusing on differentiating factors that speak to highly specific and targeted consumer groups.
Pursuing a market niche strategy (also called a focus strategy) means concentrating on a select few target segments. The objective is to focus go-to-market resources on one or two narrow market segments and tailoring the marketing mix to better meet the needs of that smaller targeted market. The goal is to gain a competitive advantage through effectiveness rather than efficiency.
The most successful market niche competitors tend to have the following characteristics:
- They tend to be in high value added industries and are able to obtain high margins.
- They tend to be highly focused on a specific market segment.
- They tend to market high end products and are able to use a premium pricing strategy.
Go to Market Strategies – B2B Market Position – Advantages / Disadvantages
Advantages of Being a Market Leader
- Greatest market share
- Brand awareness is high
- Shortlisted or defect standard
- Thought leader
- More power than the customer
Disadvantages of Being a Market Leader
- Large installed base comes with baggage (legacy users)
- Always being attacked by editing and new players
- Large infrastructure s usually associated with more fixed costs
- Niches are vulnerabilities
Advantages of Being a Market Challengers
- Always waiting to capitalize on the market leaders mistakes
- Usually, a smaller organization equates to lower infrastructure costs
- Sampler user base may allow for significant changes to offering
- A smaller organization may lead to faster go to market
Disadvantages of Being a Market Challengers
- Always viewed as second best
- Always need to prove why not to chose the leader
- Changes in direction are harder to sell to the mass market
- Customer put pressure on price not to choose market leader