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GURUMURTHY 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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þ Does it pays to be first with a product or service?

þ Is being an innovator worth the risk?
þ Is it better to wait and learn from the experiences of the first
entrant to the market?
þ What is the proper balance between risks and rewards?
þ If you are a pioneer what can you do to prevent share
erosion when a new player enters the market?
þ If you are a late entrant, what strategies should you adopt
to make your entry successful?
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þ Reduce price to penetrate an existing market.

(introducing a product at a lower price than pioneers)
Case e.g. wireless services

þ Improve a product or a service, with focus on niche market

(innovation may be radical or incremental)

þ Target new geographic markets for existing products.

þ Develop new channels to distribution to access new markets or better penetrate

existing 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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þ Majority of market share & higher returns on investment

Case e.g. HP, 3M
Consumer Goods ROI (%)
Business
Market Pioneers 25
Entry 1986 (%) 1992 (%) 1994(%)
order
Early Followers 19
First 1.00 1.00 1.00
Second 0.71 0.76 0.70 Late Entrants 16
Third 0.58 0.64 0.57
Fourth 0.51 0.57 0.49
Industrial Goods ROI (%)
Fifth 0.45 0.53 0.44 Business
Sixth 0.41 0.49 0.40 Market Pioneers 24

Early Followers 19
Source: Kalyanaram et al & Lambbkin, M.B.(1988)
Late Entrants 15
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þ Nestle has the potential to expand the Rs 1,300-crore instant

noodles category ² which itself is growing at a rapid 15% annually.
þ 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

Market share(Aug,2010) in % age

7.5 %
5%
Maggi
2% Foodles(GSK)
Knorr (HUL)
86.5%
others
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þ Consumers are risk averse

þ Pioneer becomes a prototype Case e.g. Xerox

þ Consumers learn the best attribute of early

entrants

þ Early entrants are able to secure the best

positioning
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þ Lack of customer service

þ A new technology might have changed the equation(shift from

typewriter to computers)

þ New entrant might have found an innovative way of distribution

(selling variety of products through vending machines) dell

þ New entrant might be pricing aggressively targeting selected

segments E.g.
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þ Differentiate themselves substantially positioning in the

minds of consumers
Case e.g. Caravan-GM
Windstar-Ford

þ Higher trial penetration Case e.g. HomeStop shop

þ Introduce product through new channels

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Position themselves as variety enhancers rather than replacements

Case e.g. Competition between IBM, Dell & Compaq.

þ Attack high growth markets at the time of significant shift in the industry
RX 100 bikes logo

þ Micro segmenting customer base(targeting high value customers)

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þ Increase barriers to entry for late entrants

Innovate faster than the late comers

þ Build a market responsive and flexible organisation.

þ Differential pricing scheme

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þ Lock up key channels of distribution

þ Offer special type of enhanced customer

service

þ Remain innovative-Case e.g.intel corp

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þ Framework for both late entrants and pioneers to formulate

strategies, for growth , penetration or share retention
þ 3 components of the framework

Understand
Market
dynamics

trategy
formulation

Capability
Assessment
and offering
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þ Areas to be analyzed

Technology drivers

Changes in governance

Size and growth of the

potential market

Competitors' profile
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Product/Service Offering

Non-product related
sources of differentiation

Economics Assessment
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Develop product market

strategic options

Assess options and

select optimal option

Develop core benefit

proposition
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