Types of Defensive Strategies

The defensive strategy is mainly to discourage the challenger firms to attack and is further divided into the pre-entry (protecting a firm by making it difficult for another firm to enter in the same industry – increase the entry barriers or it takes place before the market leader firm is attacked by the challenger firm) and the other one is the post-entry (making the life difficult for the competitor firm once it has entered the market).

Pre-Entry Defensive Strategies

  1. Fortify and Defend: This mainly works by convincing the challenger firm that it is absolutely unprofitable to enter the market or it decreases the profit expectations of the about-to-enter firm. This is done by creating entry barriers like location, capital requirements, access to raw materials and distribution channels etc. The related firms as an example that can use this strategy would be — aerospace and automobiles.
  2. Covering all Bases: This mainly deals with the fact that the existing firms should not leave any stone unturned. That is the company comes up with all the possible variants and the product lines such that there is no room for the competitor’s to introduce a new product and be outflanked by them. These kind of brands are known as blocking brands which identify a niche or a unfulfilled need in the market which could have possibly proved to be a reason for the competitor’s to enter.
  3. Improving continuously: This includes playing on the existing strengths of the established firms. By continuously improving in due course of time the firms will develop a considerable immunity against the other firms. The firms should play on their USPs. A company that is best known for its distribution efficiency should look for another channel. And similarly can play on with innovation, new product developments, product promotions etc.
  4. Signalling: The established firms in the market mainly announce or signal its next action that deters the competition to enter. This announcement can be made through the internet, news, television, speeches or in trade fairs etc.
  5. Increase the capacity: This strategy mainly aims at building the excess capacity in a way that will deter the competitors to enter. This is because they will see that if they enter their volume will simply add to the already built excess capacity in the industry which will practically be of no use.

Post-Entry Defensive Strategies

This is implemented by the firms to protect their existing market share from the competitors who have entered.

  1. Defend the position before the entrant is established: Whenever the firm enters the market it mainly goes through three phases- establish itself, hold on to the success and sustain it and then later expand into other markets, The existing firm can attack the challenger firm right in the middle and not letting it go to the second stage.
  2. Introducing the fighter brands: This strategy aims at introducing fighter brands which is as a threat to competitor’s major brand. It is mainly to give a good competition to the competitor’s price-cutting brands since the competing products are many less-priced versions from the competitor claiming to have the same quality at a lesser price. This has the risk of cannibalization though.
  3. Engage in different markets: The established firms operate in various industries and sectors. This strategy aims at attacking the competitor in a different area than where they have attacked the leading firm. So here rather than giving it back to the challenger in the core area, the leading firms attacks the challenger where their strength lies (in some other domain).

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