The dominant strategy is to concentrate and open chain stores in a specific area. It is widely used as a marketing method.
Dominant strategies can be expected to bring significant benefits by monopolizing the market. On the other hand, it is essential to carefully consider the selection of the need to enter and the balance with other chain stores.
Therefore, in this article, I will explain the outline of the dominant strategy and its advantages.
What Is Dominant Strategy
The dominant strategy is a management technique to monopolize a specific market and improve market share. Dominant is an English word that means superiority or dominance.
A dominant strategy is for a chain company or a company with many group companies to intentionally open multiple stores in a certain area.
Advantages Of Dominant Strategy
The dominant strategy of concentrating on a certain area and opening multiple stores of the same chain store or group company is a method that can expect great benefits if successful.
What are the specific benefits? I will also explain what you should pay attention to.
- Raise awareness
- Customer retention effect
- Optimal marketing activities by area are possible
- Deterring the entry of other companies in the same industry
- Increase delivery efficiency of products and materials
- Optimization of personnel and inventory
Having multiple stores with the same brand and store name in a neighboring area increases the chances of being seen by people who come and go from that area.
It is a great advantage of the dominant strategy that it leads to an increase in awareness and naturally increases the advertising effect.
For people in the area, having a brand or store name that is “familiar” or “frequently seen” will create a sense of trust and security. In addition to expecting an increase in utilization rate and an improvement in profit margin, it is possible to have the advantage of “a new store of that store that you already know” when opening new stores.
Customer Retention Effect
The dominant strategy can be expected to retain customers within the company’s chain rather than letting customers flow out to other stores.
For example, in a cafe, if you are developing stores with a dominant strategy. Store A was full. However, if a store B or C of the same chain is nearby, the customer is more likely to think, “There is the same (chain) store nearby, so let’s go there.”
Also, if the availability of seats at stores B and C are known, store A will announce to the customer, “If you are at store B or C near here, we can guide you immediately.” It is also possible to prevent the
If we can guide customers to the same chain stores instead of letting them go to stores operated by other companies, we can expect an increase in profits for the group companies as a whole.
Optimal Marketing Activities By Area Are Possible
The dominant strategy of developing stores by concentrating on a specific area has the advantage of making it easier to collect the data necessary for area marketing.
The more stores you have, the more information you can collect about the area. It also increases the accuracy of information.
A dominant strategy is useful for building a sales strategy that targets a specific geographic customer base.
Deterring The Entry Of Other Companies In The Same Industry
If you can quickly monopolize the market through a dominant strategy, it is possible to block the entry of other companies in the same industry. You can eliminate competition and maintain your advantage by securing a good location ahead of other companies.
If we can prevent the entry of other companies, we can focus on meeting customer needs without getting involved in price competition.
It is possible to bring to the state of “winning without fighting” while building a relationship of trust with customers.
Increase Delivery Efficiency Of Products And Materials
If you concentrate on opening stores in neighboring areas, you can expect the effect of lowering the delivery costs of ingredients and products.
It takes time and money to deliver ingredients and products every day. It is especially noticeable in restaurants and retailers that handle food, especially if the distance between stores is long.
If we can deliver efficiently through a dominant strategy, we will be able to increase the delivery frequency and always provide fresh products (ingredients). In addition, it is possible to avoid opportunity loss due to shortages and increase profit margins by reducing delivery costs.
Optimization Of Personnel And Inventory
If there is a chain store nearby, you can share store staff and inventory.
One of the problems that plague restaurants are the lack of staff. For example, if a delivery specialty store is short of the workforce, they can request help from other stores to avoid opportunity loss due to a shortage of delivery workers.
In addition, even if ingredients are out of stock, it is possible to avoid opportunity loss by borrowing from nearby stores to make it through until the next delivery.
Having stores of the same chain nearby functions as a defensive measure against risks due to various situations that may arise during business.
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