What is a market leader?
En market leader is a dominant undertaking which has the largest turnover, highest profit or most customers within a defined market. LEGO A/S, for example, is the market leader in the toy industry, not only in Denmark but also in many other countries.
As a market leader, you often have great power and the ability to influence the market. For example, you can regulate pricing in the market: you can raise the price if you have a large customer base that is loyal regardless of price, or you can lower the price to outcompete competitors if you have a solid profit on products or high equity.
One advantage of being the market leader is that it is easier to introduce new products that can be sold at a higher price than those of competitors, as customers have more confidence in the market leader. A disadvantage of being the market leader is that it can be difficult to adapt and change the company and its products to new needs, because large companies are often not very adaptable.
Market leader strategy
How to become a market leader? One strategy to become or remain the market leader is to acquire or out-compete a major competitor in the market. In an acquisition, the companies merge and the merged company is left with a very strong position in the market.
However, this is a risky strategy, as the competitor may come up with a counter-attack that could negatively affect your business. Therefore, you need to think carefully about which strategy to use.
Examples of market leaders
A few examples of Danish market leaders in terms of turnover:
- Salling Group A/S (groceries)
- Arla Foods International A/S (dairy products)
- Maersk A/S (shipping)
- Louis Nielsen A/S (glasses and contact lenses)
- Vestas Manufacturing A/S (wind turbines)