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Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Lanchester Strategy

What it is:

The Lanchester strategy is a marketing strategy named after Frederick W. Lanchester, who wrote about World War II war strategies.

How it works (Example):

Originally a way to calculate losses during World War II, many companies and academics began seeing ways the strategy applies to the analysis of competition and market share. The Lanchester strategy relies on the following laws:

  1. If there are two competitors and the larger one has more resources and market effectiveness than the other, the larger competitor will defeat the smaller competitor easily and thus should conduct a conservative campaign in a market against the smaller competitor.
  2. If there are two competitors and the larger one has fewer resources and less market effectiveness, the larger one will lose to the smaller one. It should compete elsewhere (i.e., in markets in which the more formidable competitor does not do business).
  3. If you are the weaker force, compete on a narrow front, fight local battles, and increase your combat effectiveness.
  4. If you are the stronger force, copy your competitor's tactics to reduce their advantage, and compete in markets in which your superior resources will stretch the opponent to the breaking point.
  5. If you and your competitor are of equal strength, outnumber your opponent at a critical time, at a time and place of your choosing.

Why it Matters:

The Lanchester strategy is a way to determine which markets are easiest to get into. This is especially valuable to start-ups. At least one author on the subject argues that when applied to marketing, the Lanchester strategy is a philosophy.