Marketing warfare analysis

The entrance of Re/max has been defined as being a frontal attack on the position of market leaders.

Given this situation, there are two primary objectives that need to be fulfilled before the attack can be categorized as such.

1. The attacking organization enters a market or segment where the defender operates 2. The market or segment is of value to the defender.

Both factors are met since all four defenders operate in the entire Danish real estate agent market, and because it is their only market, maintaining a large market share if of the utmost importance.

This type of attack further increases the difficulty of the entrance. The Re/max frontal attack therefore needs to be extremely precise and target the consumer in the correct situation. The consumers therefore are the most important element in the success of the entrance.

The entrance of Re/max will have an impact on the industry in a negative direction for already established organizations; it is therefore in their main interest to defend their positions, which can be conducted in several different ways. Even before the entrance occurs competitors have begun signaling a strong position and a superior situation²⁴. Not only the competitors have signaled a strong position, the CEO of the industry association has expressed his skepticism towards the Re/max entry, and keeps referring to the failure of the earlier attempt. This type of signaling has a double effect, both on the consumer and on agents within the industry. The reference to the failed entrance may keep consumers from choosing Re/max since it creates mistrust towards the company.

The signaling of a strong industry with tough competition will keep agents from applying since the guarantee of a successful entrance is limited. This limitation to attract agents can be further

increased by market barriers as a defense strategy.

24 http://epn.dk/brancher/liberale/maegler/article2195699.ece

Andreas Ærtebjerg Malle Date 07.10.2011 Mail: malle.andreas@gmail.com

Cand.Merc IMM Copenhagen Business School Master Thesis

48 There is one specific entry barrier which can provide incumbents on the Danish market with a clear advantage opposite the entrance of Re/max. The clear advantage that increases the entry barrier is competition clauses²⁵. Even though regulation has been eased it still influences the possibility of attracting agents, especially within Denmark’s major cities.

The entrance of Re/max will however not be stopped by verbal signaling and entry barriers. The attack is imminent and incumbents therefore need to focus on a defense strategy for the future attack. Pre-emptive strike, counter-attack and withdrawal are not possibilities for the established organizations. These are not possibilities since market leaders do not possess the knowledge and capabilities to confront Re/max on an international level, and since Denmark is their only market there are no other markets to withdraw to.

There are only two possible defense strategies available for the organizations within the industry, these are blocking and holding the ground. These two strategies are very similar and both focus the warfare on marketing, loyalty and price. Warfare within these parameters, however, enables the defender to establish a competitive advantage over the attacking organization. This is due to the experience in the market. The experience could have established customer loyalty, which reduces the ability for Re/max to establish a strong customer base. Another parameter is warfare within marketing. The established companies already posses a strong marketing channel and are

nationwide present a commensurate media presence would require a major financial investment on the part of Re/max. However, the business structure would allow Re/max to exploit marketing experience and financial capabilities from the global organization. The warfare would therefore be approximately equal due to established experience and Re/max’s international experience and financial capabilities.

Another more general rule to why the defender has an advantage is that the attacker needs to change the market whereas the defender needs to maintain the current situation. This provides a defensive advantage since it is much harder to change e.g. customer choice and attract new employees. The entrance company needs to provide additional value towards both consumers and employees to gain a sustainable business model within the new market. It can therefore also be stated that if

established companies within the given market are able to supply the same level of value and service to customers they will be able to defend the current situation.

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49 In general it can be argued that Re/max needs to anticipate a long and intense warfare with the four market leaders. Such a major event such as Remax’s entry will influence the entire industry and direct competition is therefore unavoidable. Competitors will utilize every possibility they have to either block or defend their own market share in order to remain one of the market leaders. This situation influences the Re/max’s market entry since it shows how accurate Re/max needs to position the organization in order to gain entrance and experience the growth anticipated.

Andreas Ærtebjerg Malle Cand.Merc IMM