Understanding Market Followers
A market follower is a company or organization that adopts a strategy of imitating or emulating the actions, products, or strategies of a market leader or other competitors within an industry. Rather than innovating or pioneering new products or approaches, market followers observe the moves of industry leaders and aim to replicate their success by offering similar products or services. Market followers typically focus on efficiency, cost-effectiveness, and capitalizing on existing market trends rather than taking significant risks with innovation.
Key Characteristics of Market Followers
- Emulation of Market Leaders: Market followers closely observe the strategies, products, and actions of market leaders within their industry. They aim to emulate the success of these leaders by imitating their approaches, positioning, pricing, and marketing tactics. By replicating the strategies of market leaders, followers seek to capture a share of the market without the high costs and risks associated with innovation.
- Cost-Effective Strategy: Market followers often adopt a cost-effective approach to business operations, focusing on minimizing expenses and maximizing efficiencies. Rather than investing heavily in research and development or pioneering new technologies, followers aim to leverage existing resources and market trends to achieve profitability. This may involve streamlining production processes, optimizing supply chain management, and maximizing economies of scale.
- Risk Mitigation: Unlike market leaders who take on significant risks with innovation and pioneering new products or services, market followers prioritize risk mitigation and stability. By observing the successes and failures of industry leaders, followers can learn from their experiences and avoid costly mistakes. This risk-averse approach allows followers to capitalize on proven market trends and opportunities while minimizing uncertainty and exposure to potential setbacks.
- Adaptability: Market followers must demonstrate adaptability and agility in responding to changes in market conditions, consumer preferences, and competitive dynamics. As industry leaders or competitors introduce new products, services, or strategies, followers must quickly assess and adjust their own approaches to remain competitive. This may involve making incremental improvements to existing products, adjusting pricing strategies, or refining marketing tactics to better align with market demands.
Example of Market Follower
Let’s consider a hypothetical example of a market follower in the smartphone industry:
XYZ Electronics is a company that specializes in producing smartphones and other electronic devices. Rather than investing heavily in research and development to pioneer new technologies, XYZ Electronics closely monitors the actions and strategies of industry leaders such as Apple and Samsung. When Apple releases a new iPhone model with innovative features such as facial recognition technology, XYZ Electronics quickly follows suit by introducing a similar feature in its own smartphone lineup.
Similarly, when Samsung launches a marketing campaign to promote its latest flagship smartphone, XYZ Electronics emulates the campaign’s messaging, imagery, and promotional tactics to attract customers. By closely following the strategies of market leaders, XYZ Electronics aims to capture a share of the smartphone market without the high costs and risks associated with innovation.
While XYZ Electronics may not be the first to introduce groundbreaking technologies or revolutionary products, it leverages its position as a market follower to offer competitively priced smartphones with features and capabilities that appeal to consumers. By focusing on efficiency, cost-effectiveness, and adaptability, XYZ Electronics successfully competes in the smartphone market and maintains profitability despite intense competition from industry leaders.
References:
Kotler, P., & Armstrong, G. (2016). Principles of Marketing (16th ed.). Pearson.
Lamb, C. W., Hair, J. F., & McDaniel, C. (2019). Essentials of Marketing (8th ed.). Cengage Learning.
Conclusion
Market followers are companies or organizations that adopt a strategy of imitating or emulating the actions, products, or strategies of market leaders or competitors within an industry. They closely observe the moves of industry leaders and aim to replicate their success by offering similar products or services. Market followers prioritize efficiency, cost-effectiveness, risk mitigation, and adaptability to compete effectively while minimizing the risks associated with innovation. By leveraging existing market trends and resources, market followers can capture a share of the market and achieve profitability in competitive industries.