When a company has the resources to expand its business and begins to consider the possibility of capturing new markets, it asks itself one question: “Do I need to enter the markets where I will be the only player, that is, to develop the market “from scratch”, creating pre-favorable conditions for yourself? ” or “Do I get into existing proven industries and start aggressively capturing market share?” There is no single correct answer to that, it is necessary to analyze and weigh all the facts to build New Marketing strategies.

In world practice, there are only 2 approaches to entering new markets and capturing market share: the strategy of the innovator and the strategy of the follower. Each of the strategies has its advantages and disadvantages, its characteristics, and conditions for effective use. In this article, we will consider the accumulated world experience in using such New Marketing strategies for entering new markets and describe each approach.

Briefly about the strategies

The pioneer strategy is a marketing strategy for entering new markets, which involves creating an absolutely new product for the industry, developing new product groups, and solutions. The innovator’s strategy is a high-risk strategy, as the company does not have 100% confirmation of the availability of demand for which a new product is being created. But if the product is gaining popularity, then the innovator receives a high return on sales for a certain time, as he is the only market participant.

The late arrivals strategy is a marketing strategy for entering new markets, which involves partial or full copying of the product of the innovator, the use of ideas, technology of the innovator when selling goods. The follower displays the product after the innovator, thereby reducing the cost of developing the product, can take into account all the shortcomings and errors of the innovator, and improve the product.

Advantages and disadvantages

An innovator always spends more (than followers) on the development of a new market: the costs of finding ideas and development (money and time), the costs of creating the habit of consuming a product, and conducting an educational advertising campaign. The development of the need for a product from scratch, training the consumer to use the product, the formation of consumer culture are the main costs when promoting a new product in New Marketing strategies.

The follower always uses the results of the innovator, his technological achievements, discoveries, and approaches to solving problems. A follower can always improve a product and thereby gain a competitive advantage. A follower can copy the product of an innovator and sell it cheaper, find a better solution in the distribution of the product, and subsequently gain an advantage.

But the innovator always has the advantage of the first move, he has a temporary handicap for the formation of knowledge and the creation of high loyalty to the product. Having gained leadership, the innovator uses the time to create innovations and strengthens entry barriers to a new industry, protects all his inventions from copying.

In any case, if the newly created market begins to grow, we should expect tougher competition and the emergence of new players who will resort to dumping, completely copy products, or create new offers. Therefore, the innovator should always be ready for such actions and lay in the New Marketing strategies programs aimed at maintaining the existing market share.

The experience gained in capturing new markets suggests the following: each new participant in a new industry receives a smaller market share than its predecessor. This table shows the results of studies on the achieved market share depending on the time the company appeared in the industry.

Time to market Urban data (1986) % Urban data (1992), % Berndt (1994), %
The first (innovator) 1.0 1.0 1.0
The second (follower) 0.71 0.76 0.70
The third (follower) 0.58 0.64 0.57
The fourth (follower) 0.51 0.57 0.49
The fifth (follower) 0.45 0.53 0.44
The sixth (follower) 0.41 0.49 0.40

There are 2 significant reasons why innovators reach a higher position in the industry. First, consumers in their mass are not risk-averse and (when satisfied with the product) are not inclined to switch to new products. Secondly, the innovator, with the right advertising support, acquires the status of a “standard” and sets requirements for all subsequent market participants.

How to achieve the maximum

  • Follow the reports: study consumer behavior and the latest industry trends. Do this every day and make the staff to do the same.
  • Find real competitors for the customer’s wallet. If you work in the b2c segment, most likely it will be a grocery store and a school. Learn at work or make an agreement.
  • Do not run around to earn. Follow your long term strategy. If there is none, then it is time to work it out.
  • When reducing staff, do not leave cheap or expensive, but the strongest. Such employees will help you.
  • Collaborate on outsourcing with ordinary executives and strong marketers. In a crisis, they are cheaper.
  • Keep loyal customers at all costs. True expectations, honesty, and loyalty programs will help you out.
  • While others save on marketing, invest in it. Then you will survive the recession and leave the recession by industry leaders.