Consider selling products in locations across the world.
Types of Markets
The nine types of markets are:
- Local Market
- Neighboring Market
- Strategic Market
- Equal Access Market
- High Leverage Market
- Highly Competitive Market
- Rapidly Changing Market
- Vulnerable Market
- Desperate Market
The tactics, deployment of resources, and the nature of the people involved are matters that the CEO must examine with the greatest care.
A local market is selling product in your own backyard, state, or country.
Be sure to insure that your company has a common purpose and determination.
Selling product in a neighboring state or country.
Do not restrict yourself to a neighboring market. Press onward to markets in which true global competition will occur. Be sure to keep your forces well focused on the overall objective.
- For a U.S. firm, neighboring markets are Canada and Mexico.
A strategic market offers significant strategic value to either you or your competitor.
- Consider Coca-Cola and Pepsi making tremendous efforts to enter China, India, and Russia, as quickly as possible, due to their long term strategic importance.
Be certain that adequate resources are provided to ensure success in entering these markets.
Equal Access Market
A market which is equally accessible to the competing companies. The U.S. market is often considered such a market, tariffs in other markets are typically much more onerous.
In such situations, be careful not to divide up your resources. Make sure that you can respond to actions taken by your competitors.
- The U.S. market is an example of such a market. Europe and Japan are less free. Russia and China have been very difficult in the past, but are becoming more open.
High Leverage Market
A market which provides the entry to several other countries. It may also be a market of great visibility which provides a large public relations benefit to the image of the company.
- Many U.S. firms have found that manufacturing in Ireland facilitates selling into the European Common Market. This has been particularly advantageous to 3Com, over its competition.
It is important in such situations to strike and strengthen alliances within these countries.
Highly Competitive Market
A market in which a company has established numerous sales offices and is obtaining significant sales in a market dominated by a competitor.
- Sony is an example of a Japanese company that has steadily obtained sales in the United States market, a market that was once dominated by its competitors.
Make sure that you are keeping a steady stream of product coming to these sales offices, and that adequate support is being given to allow them to expand.
Rapidly Changing Market
A market in which conditions are rapidly changing. It is a market which is difficult to compete within.
- The PC and disk drive businesses are two examples of markets in which conditions are rapidly changing.
Grit your teeth, accept your losses, and press onward.
A market in which the competitors have significant hidden advantages which can be exploited against your product. Competitors can set great ambushes for you.
Devise a strategy for responding to your competitors and implement it. Strengthen your defenses, because this market may evolve into desperate ground.
A market condition in which if no action is quickly taken, all will be lost.
- U.S. semiconductor manufactures joined forces and formed Semitech. It helped them achieve gains in yields and the use of new semiconductor fabrication technology.
In order to survive, you must fight. Make it clear to the employees of your company the seriousness of your struggle.
Divide and Disperse the Enemy
It is desirable to cause your competitors to be unable to cooperate both with each other, and within their own companies.
- Hewlett-Packard repeatedly moved its CAD software operations back and forth from Palo Alto to Fort Collins. This facilitated the growth and dominance of firms such as Cadance.
Surprise your competitors and force them to react by taking them unaware.
- Japanese automobile manufacturers provided superior quality and pricing in the 1970s and 1980s. General Motors was forced to react, but focused on automating its plants to insure quality, learning much latter to its surprise, that its management was actually the fundamental factor in improving its quality
Move with Great Rapidity
Speed is the essence of marketing. By taking advantage of your competitors not being prepared, you will be able to penetrate deeply into a market held by your competitor, and they will not be able to win back the market share that you have taken.
Sun Microsystems entering Artificial Intelligence market, took share from Symbolics. Acted a year before Apollo Computers.
Principles for Invading
Insure that the company remains well united as it penetrates a market. The initial products should have sufficient profits as to enable you to fund your continuing efforts in the market. Do not push your employees to unnecessarily fatigue them. Make plans for deploying your salesforce which are unfathomable.
Nothing will divert the attention of a competitor about to threaten you like attacking something that he values.
- An example is be the acquisition of a company valued by a competitor. Consider the acquistion of Chipcom by 3Com, which Cabletron desired.
Don’t Dilute your Force Needlessly
A good CEO is able to use the employees that he has to their best advantage. If one has a very strong product line and position in the market, one can use ones weakest employees to support it, while ones best employees are used where they are most required.
Keep the Effort Well Funded
When someone performs in an outstanding manner, recognize their achievement immediately and reward them. Don’t wait for weeks and months to pass first.
Success or Death
Nothing unites a company like an external threat. You will get the maximum results from your employees when they are in a literal position of do or die.
- International Harvester. Companies having to recover from being almost bankrupt.
The Need for Tenacity, Unity, and Cooperation
Those who are skilled at the art of business, make it impossible for a competitor to act in an unified manner. Internal dissensions within a competitor are provoked, so as to discourage management from working in harmony with workers, cause experienced workers to not work well with newly hired workers, to cause different divisions such as field service and manufacturing to be at each others throats.
- Nothing like provoking an union to do its worst!
If you succeed in getting your competitor to go in every which direction, do your best to help this situation along. Stimulate his confusion by deception.
- Effective use of public relations can be very helpful in accomplishing this.
As you enter a market, you should make a profit on your sales in order that you be able to substain yourself without additional funds. Do not continually push your workers such that you unnecessarily fatigue them. Otherwise, they will have no reserves to pull upon when asked for their greatest efforts.
When your company and its workers are fighting for its life, there will be no need to ask people to work harder. Without asking you will gain the support, affection, and trust of your employees.
- This is particularly true of startups. If the startup is to survive, everyone must act in concert, or it will be doomed to failure.
Be flexible in responding to an action by a competitor upon a given portion of your company. Don’t respond head on, rather threaten him in a different area.
- If he offers service prices that are lower than yours, you can offer a trade-in allowance for his equipment. If he offers lower prices on his products, you can offer a longer warranty on yours.
If your managers are paid exceedingly well, than their motivation for working becomes driven by only money. If they have no other reason for working than money, why will they remain with your company when times become difficult?
Golden parachutes are counter-productive to the long term interests of a company.
Incentives such as stock options, profit sharing, and stock purchase plans, are not sufficient by themselves to retain employees. Rather you must be sure to make the proper use of them by putting them in the correct positions. Put your least capable people on the products which are least vulnerable to your competitors, and your best people in the areas which are experiencing the greatest difficulty.
Be calm, collected, and in control. By not demonstrating your emotions, you will provide less anticipation of your intentions. As much as the rest of the company may join in celebration of its successes, the plans which lead to these successes can only be made by its leaders.
Prevent Anticipation By Competitors of Plans
In making plans, make sure that they cannot be anticipated by not implementing them in the same previous manner. Do not reveal your plans. Your competitors cannot learn from your employees what they do not know.
As much as possible, restrict the flow of information of how you are implementing your strategies.
Requirements for a CEO
If you can’t answer the following questions, you are not fit to run a company.
- Do you know the plans of your competitors?
- Are you aware of the conditions of the marketplace?
- Do you have assistance and guidance of knowledgeable people?
Prevent Alliances by Competitor
Whatever you do, insure that your competitors don’t unite forces together. Your objective should be to cause your competitors to divide their forces. Creating a good public relations image can be very useful in this regard.
- Adobe Systems was particularly effective in establishing PostScript as a standard, placing its competitors, Imagen and QMS on the defensive.
Do Not Base Decisions on Old Customs
When you make a decision, do not be bound by precedent stating that “we’ve always done it this way in the company”. Reward people without regard to previous custom. In this manner you can run a large company as you would manage a single individual.
Study Your Competitor, Exploit Weaknesses
Ideally, you can defeat your competitors before you even enter the market by the proper techniques. Getting the capable CEO of a competitor to be replaced by an incompetent is one such technique.
When your competition presents a opening, moving quickly to exploit it.
- At one time, Xerox owned the market for low end copiers, but its products were unreliable and costly. Japanese competitors recognized this opportunity and took full advantage of it.
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