Market Challenger Strategies

Market Challenger StrategiesMarket challengers are the firms trying to catch the leader’s position and fighting hard to increase their market shares. They are called challengers because they throw direct challenges to the leader by penetrating his market domain. The challenging firms that fail to penetrate the leader’s areas become market followers. Therefore, it is evident that some firms fail to assume the challenger’s position though they attempt to attack the leader.

On the other hand, there are instances of successes, i.e., some successfully overthrew the leader. Challengers are found mostly in industries experiencing high fixed costs, high inventory costs, and stagnant primary demand. The market challengers may launch quite a number of strategies to attack the market leader as well as other competing firms. In the following section, we shall concentrate on the strategies that market challengers may pursue in this regard.

Deciding on the Attack Strategies to be Pursued by the Market Challenger

Before deciding on the attack strategies to be pursued, a challenger firm must define his strategic objective(s) and select the opponent(s) to be attacked.

Increasing market share in most of the instances is found to be the strategic objective of the challengers. In the case of the opponent(s) to attack, the firm may decide to attack the market leader or firms of its own size, or small local and regional firms.

Attacking the Market Leader

A market challenger may decide to attack the market leader. Such a decision should be a well-thought one in order to be successful.

If a thoughtful decision is taken, it could be a highly profitable one, particularly if the leader is a false leader. On the other hand, an un-thoughtful decision to attack the leader could be a highly risky one because the leader with muscle could destroy all the challenger’s efforts using its enormous strengths.

In order to attack, the firm should identify the segments that are either poorly served or un-served by the leader. This will give the firm the opportunity to exploit the unmet or improperly met needs of the consumers and thus cash the gap.

Attacking Firms of Its Own Size

The challenger may find firms of its own size that are performing poorly in terms of customers’ needs satisfaction and are suffering from cash problems.

Some may serve the market with old and outdated products among the firms of its own sizes, some may sell their products at unreasonably high prices, and others may fail to meet customers’ needs in other aspects. These firms could easily be targeted and attacked by challenger firms. Such an attack, if successful, could yield considerable fruit to the firm.

Attacking Small Local and Regional Firms

Many small local and regional firms also fail meeting customers’ needs properly with respect to quality, service, price, fashion, and others. If identified, a firm can successfully attack such firms, provided measures could be taken to minimize customers’ expectation gap.

The objectives of the market challenger vary as its opponent to attack vary. If the firm decides to attack the market leader, its objective should be to capture a leader’s portion.

If, on the other hand, it decides to attack others, its objective should be to wipe them out of the market. In the following sections, we shall discuss the general and specific attack strategies that the market challenger may launch.

The Attack Strategies

Once the opponents are identified, and objectives are determined, the firm is in a position to launch the attack strategy against the opponent(s). There are quite a number of options available to the market challenges that may be applied to attack the opponent(s).

Which of the available alternatives should the firm choose?

The answer lies in the territory occupied by the opponent.

general attack strategies

The five alternative attack strategies are;

  1. Frontal Attack Strategy.
  2. Flank Attack Strategy.
  3. Encirclement Attack Strategy.
  4. Bypass Attack Strategy.
  5. Guerrilla Attack Strategy.

Frontal Attack Strategy

A frontal attack is a strategy where the firm launches a direct attack against the opponent. This is aggressive and risky since the attacker here overlooks the weaknesses of the defending firm rather than directly attacking his strengths.

If the challenger’s strengths are more than the defender, and if he can sustain the attack, he will likely win the war. The frontal attack may be launched by offering similar products (in terms of features or performance), matching the price with the defender, or following the same promotion and distribution policies as followed by the defender.

An aggressive frontal attack to be successful must be backed up by stronger muscle than the defender has or may use. Experience suggests that the attacker should deploy three times forces than the defender in order to be successful in the battle. Failure to do so and the inability to sustain the attack will be a ruinous one on the part of the attacker.

Then, an aggressive frontal attack puts the firm in serious trouble if not backed by the required strengths. If the firm finds it difficult to launch an aggressive or pure defense, it is wise to launch a modified frontal attack, “the most common of which involves cutting its price vis-a-vis the opponent’s.” A firm can apply the modified attack in two ways.

First, it can offer products similar to the leader in all respect except the price. Price could be charged less to induce people to buy his product.

It could be a successful attack if, in response, the defending firm does not cut its price or if the firm is successful in convincing people of the superiority of its product in terms of price and equal to competitors’ products in other terms.

Second, the attacker can do everything possible to cut down its production costs. This may require investment in new production technology. If the attacker is successful in this, he can then launch an attack in terms of the product’s price.

Flank Attack Strategy

The other name of the flank attack is peripheral attack. Flank basically means sides in this respect. The challenger should know that firms protect their fronts usually keep their sides or flanks as well as rears unprotected because of their concentration on fronts. This is the gap the challenger should exploit.

Under this strategy, the challenger launches an attack on, first of all, the stronger sides of the opponents. In this situation, the opponents are likely to concentrate heavily on their fronts, leaving flanks and rears unguarded. A vacuum is thus created where the challenger can easily enter.

There are two strategic dimensions along which the flank attack can be directed. They are the geographic dimension and the segmental dimension. To launch a geographic flank attack, the challenger should, first of all, identify the geographic areas where his opponents are performing poorly. He should then launch his product aggressively in those under-served areas and overthrow the opponents.

On the other hand, in the segmental flanking attack, the firm should find out the needs of the market either not served by the market leader or are not reasonably satisfied by the available products.

He should then modify his product or develop a new product aimed at meeting those needs. It could be a very effective strategy if the firm can really come up with something that is able to meet the unmet or partially met the needs of the consumers.

A flanking strategy can thus give a firm a real opportunity to prosper by identifying gaps and filling those by his offer. Customers equally appreciate it since pursuing such a strategy by various firms will lead to the fuller coverage of the market’s varied needs.

Encirclement Attack Strategy

In the encirclement attack, a firm decides to attack his opponents suddenly. The attack is launched simultaneously on all fronts. The fronts, rears, and sides are attacked at a time, and all of a sudden. In such a situation, the opponents become puzzled and start protecting all fronts.

Such mobilization of resources by the opponents cannot ensure the protection of any front fully since resources are distributed among different fronts. This is another opportunity for the attacker. In this attack, the attacker offers everything his opponents offer to the market.

He sometimes offers the market more than his opponents do. This tempts the customers, and they are unable to refuse his offers. This strategy can be successfully launched only when the attacker is in a better position compared to his opponents in terms of resources and strengths.

Bypass Attack Strategy

The bypass attack is an indirect attack that may be launched by the market challenger.

In this strategy, the attacker avoids his opponents on direct fronts. Here he decides to identify the easier markets and launches attacks there. The bypass attack may be launched in three ways.

First, the attacker may develop unrelated products and launch them into the market.

Second, he may concentrate on new geographical areas not reached by his opponents.

Third, he may decide to jump over others’ backs – the leapfrogging – capitalizing the new technology. This will help him to capture the market with an improved product that will replace the old one.

The firms in the high-technology business may successfully pursue this strategy. Here the challenger engages himself heavily in Research and Development activities to come up with an improved product. This helps him to avoid direct/frontal attacks, which are often very costly.

Guerrilla Attack Strategy

In the guerrilla attack, the firm decides to attack his opponents on a small scale quite frequently, suddenly, and on different fronts. Such attacks demoralize his opponents since they are likely to lose in the battle. Frequent defeats harass the opponents, and ultimately their motivations fall. It will help the attacker to make a more or less permanent position on the opponents’ territories.

Firms decide to go for the guerrilla attack may use both conventional and unconventional competitive weapons in their attacks. They may either go for price cuts, a promotion offering special inducements, coupons, or premiums, product improvements or modification, wider distribution, legal attacks, and so on.

The smaller firms are neither in a position to go for frontal attacks nor launch the flank attacks. It is, therefore, advisable for the smaller firms to launch guerrilla attacks against their giant competitors.

Smaller firms may decide to launch a series of prices as well as promotional attacks in different territories of their large opponents. The attacks could be a few heavy ones or frequent minor ones.

This will no doubt weaken the morale of the opponents, and he can easily penetrate the market of them taking this advantage. For the guerilla attack to be successful, it must be a well-thought and backed by stronger attacks if opponents react instantly and aggressively.

The Specific Attack Strategies

You know, by this time, the general strategies available to a firm. These are too broad in terms of their resource involvement and coverage. The market challenger should, therefore, select the specific attack strategies that he may launch.

First of all, he should identify and choose a number of specific attack strategies to be pursued and then combine those into an integrated one. Such a move will definitely bring considerable fruit to him in terms of long-run success.

There are quite a few specific attack strategies from which the market challenger may choose ones that best suit his need and ability. The alternative specific attack strategies are discussed below.

Price-Discount Strategy

The very name suggests that the challenger here offers his product at a lower price than his competitors’ prices. In order to be successful, four conditions must be met.

First, the firm must offer a comparable product.

Second, the market must be convinced of the comparability of the offer.

Third, the offer should be made to a price-sensitive market.

Fourth, the market leader does not react to such an offer by the challenger.

A price-discount strategy will only be a successful one if the above four conditions prevail.

Cheaper-Goods Strategy

If a firm decides to pursue this strategy, it may offer an average or low-quality product at a lower price. If the majority of the buyers look at price only, not the quality or features of the product, this strategy will succeed. This is again could be a risky strategy to be pursued.

There are firms in the particular business who will be willing to offer much cheaper products. To get rid of this problem, the challenger pursuing this strategy should try to improve its product quality but charge the previous price.

Prestige-Goods Strategy

This is quite a different strategy than the previous ones. Here the attacker launches a superior quality product compared to the market leader. The price that he charges is also higher than the leader. The challenger continues charging the higher price for quite some time and gradually reduces the price as he captures a sizeable portion of the market.

Product-Proliferation Strategy

Under this strategy, the challenger develops a larger variety of the existing product. The availability of a larger variety gives buyers a range of options from which they can select desired ones. Attacking the leader in this way is termed as a product-proliferation attack.

Product-Innovation Strategy

Here the challenger adds a new innovative feature/s to the existing product or develops a new innovative product and offers that to the market with the aim of attacking the market leader.

Improved-Services Strategy

Marketers of tangible products offer services as well with their products. A market challenger can bring changes in the services offered by him to make his product more competitive.

Free delivery, return, replacement, free installation, free accessory, etc., are some of the usual services offered by marketers. The market leader can be attacked in this line by offering more lucrative services.

Distribution-Innovation Strategy

Bringing innovation in the product’s distribution can also give the challenger a competitive advantage. There has been a lot of developments in the field of distribution.

By bringing further innovation in the product’s distribution, the challenger can attack the leader very successfully. Providing teleshopping or electronic shopping facilities to customers could be an example of a distribution-innovation strategy.

Manufacturing-Cost-Reduction Strategy

Manufacturing costs can be reduced by taking several measures. If manufacturing costs can be kept at a minimum level, the product can be offered to the market at a very competitive price.

This will obviously help the firm to cover a greater portion of the total market. The production costs can be minimized by efficient purchases, keeping wages and salaries at an optimum level, owning efficient production equipment, and so on.

Intensive Advertising Promotion Strategy

There is no substitute for aggressive advertising and promotion in this age of extreme competition. The challenger may decide to attack the leader by spending heavily on advertising and promotion.

In order to be successful in such an attack, the advertisement should be outstanding to get rid of the commercial clutter problem, and the product should be of superior quality.

As we have mentioned earlier, the market challenger should first identify the alternative specific attack strategies and then combine those that will yield the most return.

Mere reliance on one specific attack strategy will not bring the desired level of return for the firm. In selecting which strategies to be combined, the firm must consider its objectives, resources, and strengths.

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