Market entrance and new competitors
Whenever new competitors plan to enter a market, the incumbents must reconsider their market positions and pricing and decide how to deal with this new situation. Incumbents ask themselves whether they can still block the entry or it is smarter to attempt to steer the entry into a certain direction. Entrants usually want to understand how they can enter without damaging the value pool. We have seen that in many cases, strategic actions will often initiate chain reactions, both for the new entrant and incumbents, and can thus alter market dynamics permanently. Furthermore, other stakeholders, such as powerful customers or distributors, may complicate the evaluation of distinct action plans, and regulators may control market access.
With our approach, we have helped our clients in create strategic action plans to meet the challenge of handling new competitors, as well as in finding a smart and sustainable way to enter the market.
Selected cases: Market entrance and new competitors
Portfolio/repositioning strategy for a drug at the end of its product lifecycle
In a large but saturated segment with many similar drugs/treatments (prescription), a competitor launched a new drug that was expected to quickly gain a great deal of market share. As a consequence, our client’s well-established, high-volume product in the second half of its lifecycle was seriously challenged. At the same time, their new product did not receive the approval of additional benefits from the authorities.
During the project, we helped our client develop a value-maximizing repositioning and partial pullback strategy by focusing our attention on specific patients.
Countering a copycat attack
Our client was in a systems B2B business, building manufacturing systems and selling consumables. In this industry, which contained only three competitors, an Asian copycat found a way to copy the technology, break up the system, and sell consumables outside of the system. This broke up the traditional logic of the industry, which had earned money mainly through consumables.
During the project, we developed a new approach to pricing the portfolio of machines and consumables to defend against the copycat, as well as diverting the attack to the two established competitors.
Three-year strategy checkup: after the entry
During the initial project, an entrant into a technology-driven monopoly attacked our client by copying a production technology.
Three years later, we conducted a strategy checkup with the client team, widening and deepening the original model to adapt to a new strategic move the entrant had taken recently.
Coping with competitor overreaction
In a market with significant overcapacities, prices had recovered due to an unforeseen capacity shortage. After a period of disciplined capacity and pricing policy, a new competitor showed aggressive behavior once more. In analyzing the action-reaction patterns, we discovered that the greatest danger to industry profitability was not the aggressive behavior of the new competitor but a resulting overreaction on the part of a larger player, and we came to conclusions regarding actions to mitigate part of the risk.
Strengthen own market position despite facing multiple disruptives
In a highly competitive chemical market, our client was an established global supplier who faced multiple potential disruptive elements: potentially upcoming political regulations in the world’s biggest market segment; the possible entry of two new suppliers; rumors about shut-downs of some unprofitable smaller suppliers; and technological innovations that would create various new product applications and change customer demands drastically. With our analyses, we helped our client to identify the most impactful of those disruptives, to understand their interplays, and to develop a suitable action plan how deal with them best.