Answers:
A company has a number of ways for penetrating into the
existing markets and generating growth. The most obvious way to grow is to
increase market share.
Companies like Bajaj Auto have
successfully penetrated the existing market and sustained their market share.
But, this generally happens in a high growth market or industry (like
two-wheelers). Also, one company’s share gain is another company’s share loss.
Therefore, market share battle increases competitive pressures, and, market
share gain may soon be neutralized, or, in the least, may be difficult to
sustain.
An alternative strategy which may pose
lesser threat from competitors (and which may also ultimately lead to increase
in market share) is to increase the product usage. There are three ways to
increase product usage, namely, the frequency of use, the quantity used and new
applications and users. Cadbury had shown this. Cadbury Dairy Milk Chocolate
(CDM) was the market leader. But, with a market share of already 70 per cent,
winning away customers from competitors in the slow-moving market was almost impossible.
Cadbury found the solution in new users among parents (elderly people) who were
earlier keeping away from CDM.
The best way to identify new uses or
applications is to conduct market research or surveys. Such research or survey
would include ascertaining details about applications of competing products and
brands, that is, substitutes. Cost of such research or studies, and, also,
subsequent advertising and promotion should be taken into consideration to
determine the cost effectiveness of such programmes. Investment in research
should be justified by returns in terms of results or findings, and,
applicability of the results.