Make it difficult for your competitors to succeed: Create tough barriers to entry

Barriers to entryWritten by Chipo Mapungwana

Making your market impenetrable is one of the best defences against  competition. When you don’t want your competitors to succeed, a key strategy is to make is impossible for them to enter and succeed in the market that you are trading in.

So what can you do, to discourage  competitors from entering your markets?

1.       Reduce your costs of production.

Black and Decker has mastered the science of leveraging on its economies of scale  accruing from its use of research and development, technology and its strategic manufacturing and production systems. Each  of Black and Decker’s factories around the world produces one product for the global market. The production costs thus become unbeatable  and as Black and Decker is not keen to increase its prices, there is not much room for copy cats to  manoeuvre.

2.       Master technology and quality.

This is the strategy being used by companies like Procter and Gamble as well as Gillette , L’Oreal cosmetics and 3M. These companies are  top of their game in utilising technology for competitive advantage. They constantly innovate and have therefore remained the benchmark and reference point  in their markets  in terms of quality. Technology , in the long run reduces your operating costs and enhances the quality of your products.

3.       Dominate through image and communication.

No brand has managed to beat Coca Cola in the game of brand communication. As a world- wide brand, Coca cola has access to  the sponsorship of the Olympics, football and other major sporting events. The communications weapon has also been successfully used by Nike, Reebok and Adidas. Domination in the area of marketing communication does not have to be the preserve of  financially sound companies.  With a great product, clever marketing strategy, and the use of cheaper and more creative advertising channels, even smaller companies can make a memorable impact.

4.       Use up  all aspects of a concept, through product range  extensions.

In the USA and in Europe, the Snapple brand is dominating the “New Age” drinks market by offering a wide variety of tea based soft drinks including Peach tea, Diet lemon tea, Raspberry tea, Mango madness, Green tea and Grapeade. This strategy ensures that Snapple covers the range of possible fruit tastes from their customers. Your company should therefore stop focusing on one type of product , but try and cover a whole range of products within that product group.

5.       Put a name on a product making it unique to your company.

All the giants of the chemical industry produce elastane, a fibre which makes stockings and undergarments soft and shiny. On the other hand, only Du Pont de Nemours has lycra, a name that has been used as a sales ploy by Du Pont and all lingerie brands. Lycra is  the trademark used by Du Pont to sell elastane. It is ten years of world -wide communication about the glamour linked to the Lycra name that  gives the brand its attractiveness. Other brands that have successfully made their names into reference names include Colgate for  toothpaste, Surf for washing powder  and  Coca cola for soda drinks.

6.       Control the relationship with opinion leaders

Brands can do this by developing a close relationship with customers. This may include organising competitions, funding community events and supporting a cause that is dear to your community.

7.       Control your distribution channels and suppliers.

McDonald has over 1000 restaurants in France and Wal-Mart has over 8500 store world-wide, with more than 2500 stores in the USA alone. These sheer numbers close the market to their competitors. These companies have also mastered the  science of sourcing for and distributing their products through dedicated suppliers and growers.  Nur Die, a leader in hosiery in Germany dominates the market by having and managing its own shelves in supermarkets. The display units belong to the company and are branded by it. If a competitor wants to enter the market, beyond the advertising cost required to make itself known, it will have to invest millions to create thousands of display units  from scratch. Your company can also create barriers to entry by controlling distribution and supplier channels. In the UK, Tesco does this successfully by having exclusive contracts with farmers and other producers.

8.       Make your brand elements legally yours

Your  brand can also defend its exclusive image  against counterfeit  products and models. You should not hesitate to defend  the exclusive character of your distinctive signs, logos etc against imitation and copycat brands. Therefore it is prudent to register your trademarks and patents.   If your product is good enough, there will be no end to the number of copycats who will try to take your market share. Dior, Chanel and Cartier invest heavily in lawsuits against counterfeit  networks. In recent months we have witnesses lawsuits between Apple and Samsung for alleged copycat product components. When all else fails, you can always take your copycats to court.

For Marketing research, contact Chipo on chipomaps@gmail.com

 

 

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About chipomaps

A brand reputation, marketing and new media trainer and consultant. Constantly curious, constantly learning.
This entry was posted in Branding, Marketing and tagged , . Bookmark the permalink.

5 Responses to Make it difficult for your competitors to succeed: Create tough barriers to entry

  1. dongrgic says:

    Extremely well researched. This is a great post. All entrepreneurs should be striving to achieve this level of market dominance. Thanks for sharing Chipo.

  2. Excellent advice and refreshingly new content. This has been a successful go-to strategy for several of our clients. Understanding the market, the players and the points of entry is absolutely intrinsic to market share protection and sustainable profit margins.

    I seldom reblog posts on WordPress, however this one is worthy of note, and will be reblogged into our “articles we like” category. Well done!

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