Market Followers

The majority of companies in industry are merely market followers, which present no threat to the leader. Many market followers concentrate on market segmentation: finding a profitable niche in the market that is not satisfied by other goods or services, and that gives the company a differential advantage. A market follower, which does not establish its own niche, is in a vulnerable position: if a product doesn’t have a “unique selling proposition” there is no reason to buy it. In fact, in most established industries, there is only room for two or three major companies: think of soft drinks, soap and washing powders, jeans, and so on. Although small companies are generally flexible, and quickly respond to market conditions, their narrow range of customers causes problematic fluctuations in turnover and profit. They are also vulnerable in the period of arecession when distributors, retailers and customers prefer to buy from big suppliers.

Ø Comprehension:

1. How do market leaders increase their market share?

2. What are the two ways for market challengers?

3. What do market followers concentrate on?

4. When are market followers in a vulnerable position?

5. What is the reason for fluctuations in turnover and profit in small companies?

Ø Text organization.

The Nationalments below express the main ideas of the text. Number them so that they are in the same order as the ideas in the text. The first one is given for you:

Ø Viewpoint:

Can you name companies that are leaders, challengers, and market followers in the market?