Example of Successful Competitive Strategies

Cannon Creates a New Market Niche

When Canon entered the copier business, it changed the logic of how to run a copier business. The company successfully expanded its photocopier business in the USA by using competitive innovation.

The dominant player, with a 93% market share, was Xerox, which offered a very broad range of copiers, with frequent introductions of new models.

Xerox' machines were costly, so the traditional revenue model didn't work. Xerox began leasing machines, which included service agreements and paper supplies. Sales were conducted through an extensive direct-sales organization which typically targeted central staff functions, because the Xerox concept was based upon centralizing copying with its big machines.

Canon entered the market with smaller, cheaper machines for decentralized copy locations.

These products were distributed through office-product dealers, who were also made responsible for service. Canon thus avoided the cost of establishing a large sales and service network.

Copy machines were simply sold, not leased, so Canon also avoided the cost of leasing.

5Ss at Canon

Canon's Suggestion System

Market Dominance Strategies

Canon created its own market niche and later became the leader of the small offices market that has been ignored by Xerox, by aggressive sales to this segment with a new line of products called personal copiers.

Xerox had difficulties in responding because its business set-up (cost structure) was designed for a specific type of business and could not easily be changed.