The rule of business is that when you are a market leader, there are definitely going to be market followers. Many companies come out with a market follower strategy. In fact, in today’s world, the competency of all companies are so high that innovation is quickly copied or imitated in different formats.
For example, Apple came out with the multi touch smart phones, but today Samsung is leading that market in terms of total turnover. Thus there are several market follower strategies in effect in today’s business environment.
Market followers are bound to exist in a mature market. The market followers are wider in case of online marketing because online marketing has lower entry barriers and higher returns. Thus, in online commerce itself, you will see that companies like Snapdeal, flipkart, amazon, jabongg have all started one after the other. Off course, the market leaders were Ebay and Amazon. But they are facing stiff competition nowadays.
So what are the different ways that market followers enter a market and what are market follower strategies?
There are 4 strategies of Market followers.
Adapter is white collared market follower strategy. Automobiles use the adaptation form of market follower strategy. Cars like Maruti 800, Alto, Zen, brio, etc are all adapters and they adapt the best qualities from each other by changing the style of the automobile. Similarly, there are technology adapters like the Dell laptop and Sony Vaio laptop. These market followers have similar products but they try to adapt from their closest competition. Adapters can soon become leaders as well because they can adapt, learn and make a better product than the higher competition.
Imitation is the best form of flattery. But such a flattery can cause a huge dent in your profit margins if you are a product manufacturer. Imitators make use of your hard earned brand equity and give a product which has the same characteristics as yours, albeit at a lower price.
The difference might be that the new product is made from poor material or that it does not have the service or promise that your brand can offer. Nonetheless, there is a huge market for imitators where people want to buy products at lower cost as they cant afford the higher one.
Imitation jewellery is probably the best and largest example of imitation as a market follower strategy. Second example can be the imitation of Tata sky, where Tata sky is the market leader and brought digital TV revolution to India but was soon imitated by Videocon, Airtel, Reliance and others.
There is a silver lining between an imitator and a cloner. An imitator might copy some of your product qualities, but it maintains its own product qualities as well. For example – timesjobs.com is an imitator of naukri.com, but then timesjobs has its own unique product characteristics as well.
However, if you get watches made from Rado, or bags of Gucci, with Rado spelled as RADA and Gucci spelled as GUCCA, than that’s cloning. Cloning means making the same product as yours, but with very subtle difference. Cloning makes advantage of the top brands and makes same to same products.
The next time you are in Bangkok, try to get the clones of Samsung phones. You will be surprised how similar the original and the clone looks.
The best example of counterfeiting is selling the originals via piracy. Where cloning involves manufacturing of slightly altered products, counterfeiting involves thieving and is a black market follower strategy. The best example is pirated DVDs and CDs of movies and music.
If you notice, time and time again the movie industry wakes up against piracy. This is because, piracy and counterfeiting steals their work. Similarly, you can find shoes from Reebok and Adidas as well as numerous other products in the market which are counterfeited.
These are the four main market follower strategies existing in the market. In these four categories, it is the adapter and possibly the imitator who has a chance to take over the market leader. However, the cloner and counterfeiter can never overtake the market leader because they are not present in the market with their own manufactured products or with their own brand equity.
However, all market leaders know that they are going to be followed and that market followers will exist forever. What strategy the market follower uses, white or black, is completely dependent on the vision of the market follower.