Strategy Analysis 2: Maintain Strategy
President and CEO, CSSP, Inc.
In an earlier article, we discussed the Expand strategy - Growing our selected market segment much faster than the overall segment is growing. Because we will be grabbing a competitor's share, it is an aggressive strategy, often involving considerable expense and time of key people.
In this article, we will explore the characteristics of a Maintain strategy. The book definition is to grow our market segment about as fast as the entire market is growing. To many people, this appears to be a passive strategy. This may be partly because they misinterpret the word Maintain to mean "keep the same volume". Maintain means "protect your current percentage market share" against competitors who want to Expand at your expense. That's not easy. In reality, the Maintain strategy can also be one which requires a large investment and possibly an extensive amount of time for key personnel.
One example of a Maintain strategy is found in the "Cola Wars." Remember the blind taste tests? Fundamentally, the cola market is made up of products from Coca Cola, Pepsi, Diet Rite, Fanta and other regional bottlers and store brands. A large percentage of people who drink colas drink either Pepsi or Coke. The rest of cola drinkers drink the regional colas or are strictly price buyers, purchasing whatever is low in price when they go shopping.
How do Coke and Pepsi market their products? Generally, one can state that they are aggressive in marketing their colas. They use a lot of in-store promotions, coupons, sales and extensive advertising and marketing investments to assure that they keep their core drinkers. Both companies spend a lot of promotion money to keep their names in front of potential buyers. One example is the Coca Cola 400, a NASCAR race held at the Atlanta Motor Speedway near Atlanta (Coca Cola's headquarters). A different approach is Pepsi's Super Bowl ads - a recent Super Bowl had six different ads shown.
They each realize that many people form a lasting allegiance to their preferred cola. Most people who like Coke strongly prefer Coke, and most people who prefer Pepsi strongly prefer Pepsi. Few Coke drinkers will knowingly drink Pepsi, although many will drink it on occasion when Coke is not available, and, in all likelihood, the reverse is probably true. But, whenever their preferred cola is available they will order it.
So why are Coke and Pepsi involved in marketing wars? Our understanding is that Coke and Pepsi generally have two major objectives for their investments in promotions, advertising and marketing expenditures: First, they want to maintain their core product drinkers. Second, they want to attract new cola drinkers to their product, so they may, at a minimum, keep their market share. Of course they would like to grow their share, but keeping their share will still result in modest but real growth in volume of sales.
What are the lessons we can determine from this analysis? A Maintain strategy is seldom a passive strategy. Like the Cola Wars, it can be very expensive due to the high levels of spending on promotions, advertising campaigns, sales and coupons. For you, it might mean having to invest in major changes to counter a competitor's major move to capture some of your share.
As long as your goals are clearly stated, with rational approaches to the tactics taken, a Maintain strategy will make good sense for a number of your market segments. Just don't expect to accomplish it by going on "cruise-control". What doesn't make good sense is to plan an Expand strategy in all of your segments. Very few companies have the resources to afford that. If you are having trouble deciding on your strategies for some or all of your market segments, the Center for Simplified Strategic Planning stands ready to help you with your strategic planning.
Dana Baldwin is Senior Consultant at the Center for Simplified Strategic Planning, Inc. He can be reached at .