What are some marketing strategies that helps to increase the market share of the company? One of them is…?
Filed in Marketing Strategies on Nov.26, 2009
to buy small companies then consolidated them. Others like playing monopoly game, to monopolize the market. What are the names of these strategies called? Can someone think of somemore? Thanks!
November 26th, 2009 at 11:12 am
The most common used call USP. It stands for unique sales proposition. There are off-line marketing and on-line marketing. Direct mail order marketing and telephone markeing and so on. I hope it helps.
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November 26th, 2009 at 11:47 am
There sometimes is some confusion between increasing market share and increasing sales (revenue). They aren’t necessarily the same – you can easily increase market share by lowering prices but this will decrease your sales numbers.
Product differentiation, adding or enhancing service, adding or improving advertising, branding, changing or improving distribution channels – all of these tactics can also add to your market share.
Monopoly tactics include undercutting the competition (a “price war”) to the degree where they have to withdraw, at which point the price-cutting firm can raises its prices again.This is a classic monoploly tactic, is anti-competitive & may be illegal in some circumstances- Standard Oil did this quite a bit.
Other monopoly tactics include buying out suppliers/vendors, distributors, or other firms that relate to the customer market. An example would be a firm buying all the railroads that ship their products and their competitors’ products (another Standard Oil method, before pipelines were invented).
Simply buying out the competition may work, but this can add a ton of debt and then your profits & cash can be erased by big interest payments, the hit to your credit ratings, other distress costs, and the risks that adding leverage entails. Acquisitions of this kind can also be blocked by regulators in the US Justice Department, the FTC, or the European Union. With any M&A you can get into a bidding war with the firm’s controlling interests, current management, or other interested parties (investment banks, arbitrageures, speculators, etc.) M&A can frequently be very expensive & has ruined otherwise healthy companies on a number of occaisions; sometimes acquisitions add a lot to the bottom line (“accretive” to earnings) or M&A can lower earnings (“dilutive”).
If the firm has an effective sales & distribution force, a desirable clientele/customer base, effective management, a superior or unique product and/or service, and a sound capital structure, it will outlive firms that are missing these components.
Cutting prices, buying out other firms, using excessive leverage, or other cutthroat tactics may work, but they’re risky strategies and tend to be damaging in the long run.