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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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