In general terms, preemptive defense is attacking an enemy before the enemy could attack you. Within the marketing realm, it’s a defensive strategy wherein companies target the competition before they could become the target. Engulfing the market and creating a presence that’s hard to overcome is a form of preemptive defense. A company can target a particular company or multiple companies simultaneously, or could target one company at a time. The preemptive defense strategy may entail new product launches, spending more money on advertising, or any other business move that helps achieve the purpose.
For instance, many successful private banks in India are yet to surpass State Bank of India’s huge market share. SBI has commanded market leadership for several decades, and it keeps thumping its footprint time and again with new products or services, or by increasing its branches and ATMs – wherever and whenever possible.
Preemptive Defense Against Takeovers/Acquisitions
Preemptive defense strategies can be taken up by the management of a firm if it has been identified as a likely acquisition candidate. Different preemptive defense strategies could be incorporated to steer clear of potential takeover or acquisition. For example, the company (if a public company) may alter its stock securities arrangement so that shareholders have limited voice or rights in important corporate matters, such as an acquisition.
Another method is an employee stock ownership plan (ESOP), which is a type of retirement plan that gives ownership rights/privileges to employees. This means a major portion of the firm would be owned by employees who are unlikely to defy the management’s stance during an acquisition scenario.