What should a company do when a competitor penetrates it’s stronghold, slash price and start taking away their customers? Sit and watch or just lament about it? Not at all. There’s something they should do. It is called cross-parry strategy.
The truth is that you cannot avoid competition. When other firms discover that you are making huge profit, they will likely join the fray and compete with your firm. That is why I insist that wars are won in the boardroom not in the marketplace. If you have a superior strategy, you won’t be afraid of competition in the first place. That is why I want to share this secret with you today.
When one firm initiates a move in one area and a competitor responds in a different area with one that affects the initiating firm, the situation can be called a cross-parry. This situation occurs not infrequently when firms compete in different geographic areas or have multiple product lines that do not completely overlap.
An incident like this occurred in the U.S. roasted coffee industry. Maxwell House has long been strong in the East, whereas Folger’s strength is in the West. Folger’s, acquired by Procter & Gamble, moved to increase its penetration in the eastern markets through some aggressive marketing. Maxwell countered, in part, by cutting prices and raising marketing expenditures in some of Folger’s key western markets.
A company that sells cosmetic products in the North may decide to penetrate the South East market with an aggressive marketing. One of the ways to counter that the moment they start taking away your customers is to open an outlet in the North, slash the price and start taking away their customers too. Normally, the company will withdraw and start fighting for survival in its original market.
The cross-parry response represents a choice by the defending firm not to counter the initial move directly but to counter it indirectly. By responding indirectly, the defending firm may well be trying not to trigger a set of destructive moves and countermoves in the encroaching-upon market but yet clearly to signal displeasure and raise the threat of serious retaliation later.
In doing this, you must know this; if the cross-parry is directed toward one of the original initiators’ important market, it may be interpreted as a serious warning. If it is directed toward a minor market, it may signal a warning of things to come. A response in a minor market may also signal that the defender will raise the ante with a more threatening cross-parry later if the initiator does not back off.
The cross-parry can be a particularly effective way to discipline a competitor if there is a great divergence of market shares. For example, if the cross-parry involves a price cut, the cost of meeting this price cut for the firm with the bigger share may be a lot greater than for the firm sending the signal. This fact can increase the pressure placed on the original instigator to back off.
Fighting with New Brands
Another signal related to the cross-parry is fighting with new brands. A company threatened or potentially threatened by another firm can introduce a brand that has the effect—whether this is the only motivation for the brand or not—to punish or threaten the source of the threat.
For example, Coca-Cola introduced a new brand called Mr. Pibb in the mid-1970s which tasted very much like Dr. Pepper, a brand that was gaining market share. Maxwell House introduced a coffee brand called Horizon, which had similar characteristics and package design to Folger’s, in some markets where Folger’s was seeking to grab market share.
Recently, I saw Lucozade Cola in Nigeria. I was shocked because I know that Lucozade is not necessarily in the soft drink market—they are in the energy drink market. But it is possible that Coke and other soft drinks are taking away the market share of different Lucozade brands, and the only way to fight back is to create fighting brand.
Fighting brands can be used to warn a potential new entrant or a competitor that is encroaching into your territory. Fighting brands can be meant as warnings or deterrents or as shock troops to absorb the brunt of a competitive attack.
Fighting brands are also often introduced with little push or support before any serious attack occurs, thereby serving as a warning. Fighting brands can also be used as an offensive weapon as part of a larger campaign.
The challenge is that many firms simply complain whenever they are facing a barrage of attack from their competitors. In my book, 360 Degrees Business Management, I emphasized that business leaders must learn the art of surprise attack. Taking your competitors by surprise will surely make them to be wary of you.
Your business will never grow if you don’t know how to compete and win in the marketplace. Running from competition means you want to close down your organization. If you want your company to survive you must learn to compete with superior strategy.
We have several strategies you can engage to gain market share, drive away new entrants or bigger competitor, and maintain your leadership in the marketplace. You can get in touch with us right away via [email protected] [email protected] or call 0703 268 1154 or send a message to me on any social media platform and we will get back to you immediately.
Smart business owners and leaders compete in the boardroom not in the marketplace. If you are armed with superior strategy, dominating the market will become very easy. So, get in touch with us immediately to help you win the war at the marketplace.
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