Industry Leaders

By: EconomyWatch   Date: 29 June 2010

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Industry leaders are those brands, products or companies that have high dominance in the industry. Industry leaders have the largest percentage of market share with respect to overall sales revenues.

Characteristics of Industry Leaders

An industry leader has the following major characteristics:

Brand Awareness: This implies the degree to which a particular brand is recognized by customers. The brands of industry leaders are requested by customers most often when a specific product is to be purchased due to the brand’s ready acceptance and popularity.

Regulatory Advantages: Industry leaders push for various market-access regulations, which give them competitive regulatory advantages in the market. These regulations come in the form of patents and trademarks. The regulations are granted by the government or other regulatory agencies to prevent other firms from developing similar products or using similar processes in the business for a stipulated time frame. Industry leaders also combine their patents to create entry barriers and discourage entry of new firms in their target market.

First Mover Advantage: This implies the benefit of being the first firm to enter a market with a unique product or service. The first mover advantage of industry leaders enables them to create a brand name and acquire copyright protection. It also helps the industry leaders to maintain a loyal customer base due to the absence of proper substitutes.

Dominance: Industry leaders have high dominance in the market. This dominance can be of the following types:

 

  • Monopoly: This is a market structure that has a large number of buyers but only one seller (industry leader). The monopolistic firm controls the demand and supply conditions in the market. In this market, there is an absence of perfect substitutes.

 

  • Duopoly: This implies a market structure that has two industry leaders. These firms generally compete against each other to acquire higher market share. However, they might work in concert with each other to prevent entry of newer firms in the market.

 

  • Oligopoly and Cartels: In an oligopolistic market, a small number of firms influence the behavior of the market in general and the industry in particular. This type of market has the features of both a monopoly and perfect competition. However, the industry leaders form cartels to fix prices or to limit individual productions to have monopoly in the market. Cartels are considered illegal in most nations.

Industry leaders are able to sustain their market dominance due to their image, distribution coverage, promotional expenditure and perceived value in the market.

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