The market is like a battlefield, which always shows the occupation and defense of the market.
Every year, there are many new products on the market. After entering a competitive market, the latecomers in these markets usually challenge the existing brands and products.Especially in today's era of rapid technological change, new products often have the advantages of better performance, more humanized design, lower price, etc., which will soon shake the original market share.
For challenged brands and products, how to defend their "position in the Jianghu" is a consideration for almost all brands and products in this era of rapid change, because today's newcomers will have "challengers" in the future.
John Hauser, MIT Sloan School of ManagementMarketingProfessor, head of MIT Marketing Group.
John R Hauser, professor of marketing at MIT Sloan School of ManagementcaseData, analyzed the market positioning of the product after changes in pricing, advertising, repositioning and channels, and proposed“Defensive marketingDefensiveMarketing Strategy.
Defensivemarketing strategyIt aims to help brands and products maximize profits in the new market structure through pricing, repositioning and channels when facing challenges.However, Professor Hauser stressed that under the new market pattern, no matter what strategy is taken, defensive brands or products cannot return to the previous profit points.
When confronted with a challenger, the product usually responds from the aspects of price, advertising, channels and product image.How to react to maximize product profit?Through years of research, Professor Hauser has summarized the principles that should be followed when using various elements for defense.
Price defense
Price mainly affects the profit of products from two aspects, one is to change the position of products in the market, the other is its impact on marginal profit.When using price for defensive marketing, there are two principles: 1. If the market is not highly segmented, the best price defense strategy is price reduction;2. If the market is highly segmented, the best price defense strategy is to increase the price.
Professor Hauser explained that in a highly segmented market, before the emergence of new products, the product may have occupied multiple market segments by reducing prices.At this time, the emergence of new products will occupy a part of its market segments. At this time, if it still occupies those market segments through price reduction, it will be unprofitable.Therefore, the best strategy is to give up the occupied market and concentrate on those markets that still belong to it.
Professor Hauser suggested that the product can increase the price of the market segment it has occupied and form a small monopoly to improve its profits.
"After the emergence of new products, no matter how the pricing strategy changes, the profits of the products will not return to the past," Hauser stressed, "although this is very intuitive, it should be mentioned because some managers still want to restore the previous profits, but the result is that they spend too much time looking for this strategy."
Why can't the previous profits be realized?Professor Hauser's answer is: "If its profits still have room for growth, why take measures to improve profits before competitors appear?"
Reposition
Products can be repositioned in the market in two ways: one is to use advertising to reshape the product image, and the other is to change the product itself.However, the cost of these two approaches is very high, and they are usually used together to have the best effect.
However, Professor Hauser believes that after the product repositioning, the market share will also change, and it is necessary to balance the change of market share with the cost of advertising and product redesign.Through his research, he came to two principles: 1. Choosing to avoid new products will improve defensive profits;2. Choosing a new product to face up to and fight against it may or may not increase profits.This depends on the advantages of new products, but in general, the more obvious the advantages of new products are, the smaller the profit generated by confrontation will be.
BrandConsideration
Advertising has many functions.What, how, where and how often the product advertisement says, these micro choices will affect consumers' perception of the product.For example, some advertisements aim to promote sales, and some advertisements can cause consumers to consider their brands.
For advertisements aimed at arousing consumers' brand consideration, Professor Hauser believes that after the new products have been established in the market, if the advertising of defensive products only affects consumers' brand consideration, and does not reposition the brand, the expenditure on such advertisements can be reduced.
He explained that, as previously emphasized, after new products enter the market, some consumers will lose their jobs, and among the remaining consumers, the products can no longer make profits.Therefore, at this time, this group of marginal consumers will be affected by advertising. Without increasing profits, advertising costs will be invested, and the actual profits will be reduced.
For the advertisement at this time, Professor Hauser suggested that the focus of the advertisement should be on the advantages of the product, or counter attack the advantages of the new product.
"It is difficult to say whether the net expenditure on advertising should increase or decrease, which depends on the ability and cost of brand repositioning," Hauser said.
Channel construction
In marketing, channels play the role of providing product information, persuading consumers, services, image maintenance, delivery, etc.When a product or brand meets the challenge of newcomers in the market, should it expand its channels and improve the availability of products?
Professor Hauser's suggestion is that if the new product has been established in the market, do not increase investment in expanding channels to maximize profits.If the product is sold in multiple markets, the same principle should be followed, because the investment at this time cannot increase profits, but there will be new costs.
Balance through competition
The brand or product is not an isolated individual in the market. In fact, in the real market, more than one brand or product is doing defensive marketing at the same time, and the brand or product is not just changing one of its elements to defend itselfmarket position And may change both the price and the positioning at the same time.In this case, is the defensive marketing strategy still feasible?
Professor Hauser said that in the real market, these basic principles can also play a role.Moreover, the multi brand game in the market will achieve a balance through mutual competition.
For example, when brands or products choose to relocate to the market center, the price war will become extremely fierce.The reason is that when the difference between products is not obvious, the only difference between them is the price.In this case, the extremely fierce price war will lead to a general decline in prices.
The price drop means that it may not be profitable.Therefore, products or brands will choose to look for their own market segments, and "work independently" in their own markets to form "local oligarchs" in the market segments.In this case, each product or brand has its own characteristics. For example, A can play the high performance brand, and B can play the people friendly brand.In this way, the price war slows down and each can maximize profits in its own market.
Source: Successful Marketing Original author:Zhou Ruihua
