Post on 08-Apr-2018
8/6/2019 pioneers vs late arrivals
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URUMURTHY KALYANARAM AND RAGU GURUMURTHY
Presented By:
Bhakti Thakkar 17
Disha Shah 22
Hiren Bhanushali 29
Kaustubh Satanekar 37
Mrityunjay Singh 48
Nitesh Amin57
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Does it pays to be first with a product or service?
Is being an innovator worth the risk?
Is it better to wait and learn from the experiences of the first
entrant to the market? What is the proper balance between risks and rewards?
If you are a pioneer what can you do to prevent share
erosion when a new player enters the market?
If you are a late entrant, what strategies should you adoptto make your entry successful?
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Reduce price to penetrate an existing market.
(introducing a product at a lower price than pioneers)
Case e.g. wireless services
Improve a product or a service, with focus on niche market
(innovation may be radical or incremental)
Target new geographic markets for existing products.
Develop new channels to distribution to access new markets or better penetrateexisting ones
Case e.g. Dell
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The product innovation requires high investment in R & D
Heavy expenditure on advertising and promotion educating consumers for
greater market share
A second entrant enjoys the fruits of the pioneer labour
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Majority of market share & higher returns on investment
Case e.g. HP, 3M
Entry
order
1986 (%) 1992 (%) 1994(%)
First 1.00 1.00 1.00
Second 0.71 0.76 0.70
Third 0.58 0.64 0.57
Fourth 0.51 0.57 0.49
Fifth 0.45 0.53 0.44Sixth 0.41 0.49 0.40
Consumer Goods
Business
ROI (%)
Market Pioneers 25
Early Followers 19
Late Entrants 16
Industrial Goods
Business
ROI (%)
Market Pioneers 24
Early Followers 19
Late Entrants 15
Source: Kalyanaram et al & Lambbkin, M.B.(1988)
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Nestle has the potential to expand the Rs 1,300-crore instant
noodles category which itself is growing at a rapid 15% annually.
Maggi instant noodles (minus vermicelli) had a 90.7% share in
December '09, the share dropped to 86.5% in July '10 on an all-India
basis.due to late entrants
86.5%
2%
5%7.5 %
Market share(Aug,2010) in % age
Maggi
Foodles(GSK)
Knorr (HUL)
others
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Consumers are risk averse
Pioneer becomes a prototype Case e.g. Xerox
Consumers learn the best attribute of earlyentrants
Early entrants are able to secure the bestpositioning
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Lack of customer service
A new technology might have changed the equation(shift from
typewriter to computers)
New entrant might have found an innovative way of distribution
(selling variety of products through vending machines) dell
New entrant might be pricing aggressively targeting selected
segments E.g.
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Differentiate themselves substantially positioning in the
minds of consumers
Case e.g. Caravan-GM
Windstar-Ford
Higher trial penetration Case e.g. HomeStop shop
Introduce product through new channels
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Attack high growth markets at the time of significant shift in the industry
RX 100 bikes logo
Micro segmenting customer base(targeting high value customers)
Position themselves as variety enhancers rather than replacements
Case e.g. Competition between IBM, Dell & Compaq.
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Increase barriers to entry for late entrants
Innovate faster than the late comers
Build a market responsive and flexible organisation.
Differential pricing scheme
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Lock up key channels of distribution
Offer special type of enhanced customer
service
Remain innovative-Case e.g.intel corp
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Framework for both late entrants and pioneers to formulate
strategies, for growth , penetration or share retention
3 components of the framework
UnderstandMarket
dynamics
CapabilityAssessmentand offering
trategyformulation
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Areas to be analyzed
Technology drivers
Changes in governance
Size and growth of thepotential market
Competitors' profile
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Product/Service Offering
Non-product relatedsources of differentiation
Economics Assessment
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Develop product marketstrategic options
Assess options andselect optimal option
Develop core benefitproposition
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