Market Challenger

From CEOpedia | Management online

Market Challenger is a company which has a limited market share in a special market contrary to the market leader. It is in a stand, but to be a real danger to the leader. The market challenger might want to expand its policies founded on willingness to resolve into the market leader. So as to do this a challenger will have to present an important ambitious convenience to confront influence of the market leader. In another case, it might settle, there is too high endanger in that plan and could pursue to achieve better returns from its being market standing, possibly by decreasing its cost basis. The challenger might catch position on the leader by affecting comparable sized or more limited opponents. The essence of competing fight inside business will support create policy. That means, where there is little prosperity total a particular company will just be able to increase through capturing market share from its opponents. Pepsi Cola may be probably the best case of market challenger because it continuously straggles to gain market share from the market leader, it means Coca-Cola. It acts this applying high-profile people in its promotioal operations or going to the streets and encouriging customers to try out the "Pepsi Challange" taste (P. Kitchen, T. Proctor, 2001, p. 150).

Market Challenger's competitors

Market Challenger mainly competes with market leader, however it exists among other opponents, which are decsribed as:

  1. Market leader is enterprise having the biggest market share in the business and is usually the boss in key operations, it means launching recent products, price making and fierce promotion. Market leader is Caterpillar in structure amenities or IBM in computer industry (D. W. Cravens, 2011, p.137).
  2. Market follower is company which wants to pursue leaders' movements, including recent products, price making, delivering and more marketing operations. Companies with special performing in this part of business usually have one and more convenience like geographical concern or reduced wage rates which allow them to struggle with the market leaders (D. W. Cravens, 2011, p.137).
  3. Market nicher focuses on one either more sectors of the market. It is mainly a useful plan for modest companies. Marketing benefit might be accessible over special work, product details, individual facility and diiferent powers. Market nichers may be Estee Launder from cosmetics industry, Nucor from steel, or Tootsie Roll from candy business (D. W. Cravens, 2011, p.137).

Market Challenger's strategies

A market challenger needs to firstly decide which rivals to challenge and its planning goal. The challenger may hit the market leader, a high-danger but possibly high-gain plan. Its aim could be to capture market direction. Either the challenger's purpose might just be extract more market share (P. Kotler, G. Armstrong, 2010, p. 566).

Though it may seem that the market leader is the strongest player, challengers usually have one plan called a "second-mover advantage". The challenger detects what has made the leader effectively and makes its work better on it (P. Kotler, G. Armstrong, 2010, p. 566).

In a different way, the challenger may keep off the leader and rather challenge companies its own size, either more limited local, regional companies. These narrower companies might lack finances and not offering their clients everything. A few of the main beer enterprises grew to their current form not by challenging bigger contestants, but by beating narrow local and regional opponents. If the firm wants to beat a smaller enterprise, its aim might be to push that enterprise out of industry. The significant issue is: The challenger need to pick its competitors accurately and have neatly made and viable purpose (P. Kotler, G. Armstrong, 2010, p. 566).

Having particular competitors and set purposes, the market challenger may start using one of five attack strategies; frontal, flank, encirclement, bypass and guerrilla attacks (P. Kotler, K. L. Keller, M. Brady, M. Goodman, T. Hansen 2009, p.322).

Frontal attack In this attack, the attacker combines its contestant's product, promoting, price and delivery. It is said that the side having better stocks will be a champion. An improved frontal attack like decreasing prices, may work if the market leader doesn't repay, and if the contestant persuades the market that its offering is the same like the leader's. Max Factor (P&G) is the best at persuading the market that its things like Masterpiece Mascara or Lipfinity lipstick are the same qualitatively but a higher value than more costly brands (P. Kotler, K. L. Keller, M. Brady, M. Goodman, T. Hansen 2009, p.322).

Flank attack This strategy may be called as recognising changes in market segments which are bringing lacks to expand, next racing to complete the lacks and expand them into better segments. Flanking is the most efficient way of the newest marketing, which means that the aim of marketing is to recognise needs and fulfil them. It is especially beneficial to a challenger with fewer stocks than its competitor and much more probably to be effective than frontal attacks (P. Kotler, K. L. Keller, M. Brady, M. Goodman, T. Hansen 2009, p.322).

Encirclement attack Here a challenger encircles a brand either enterprise and hits it at some points, gained big parts of the market. At the same time, the challenger can block the leader from boosting its position, so escaping the chance of counterthurst act. It is evaluative that the challenger is able to use stocks accurately and productively to beat the market leader. If the challenger does not have component of kicker and prominent stocks to strengthen its place through the market, the market leader will retaliate usually using stronger powers.That means, the challenger might be beat farther away or quite outside the market (J. Groucutt, P. Leadly, P. Forsyth, 2004, p.245).

Bypass attack It is called 'indirect' attack, because the challenger searches fresh markets instead of hitting straight to the market leader. A tack in a bypass strategy is double marketing, where the firm launchs its product to industry and user markets. Example of it may be Redcare hair care goods, which were initially accessible despite select salons. Nevertheless, the vendors noticed a market possibility to trade straight to users by shops (J. Groucutt, P. Leadly, P. Forsyth, 2004, p.245).

Guerilla attack This way of attack combines short pending acts that are created to annoy market defenders. The purpose is to capture a constant part of the market, however not defender to start an extensive retaliation. These ways are usually used by small and SME enterprises but not only. Firms use tacts which contain merchandising to boost attractiveness of the brand, particular price slashes, event marketing, matters promoting and fierce personal trading (J. Groucutt, P. Leadly, P. Forsyth, 2004, p. 246).

The challenger need to expand its strategies beyond these five described. Every kind of the marketing policy may be used as the ground of attack, it means cut-priced either discounted goods, modern or better products or services, different offers and the newest expansion ways. A challenger will succeed when it connects a few of strategies to make better its position in the future (P. Kotler, K. L. Keller, M. Brady, M. Goodman, T. Hansen, 2009, p.324).

Examples of Market Challenger

  • Apple: Apple is a classic example of a market challenger. In the past, Apple was a small player in the computer market, but over the years it has steadily gained market share. Apple has achieved this by offering innovative products that have revolutionized the computer industry, such as the iPod, iPhone, and iPad. Apple has also been able to capture the loyalty of its customers with its easy-to-use operating system and world-class customer service.
  • Amazon: Amazon is another example of a market challenger. Amazon started out as an online bookstore and has steadily expanded its offerings, becoming a major player in the retail industry. Amazon has achieved this by offering a wide selection of products, competitive pricing, and excellent customer service. Amazon has also leveraged its vast customer base to become a major player in the cloud computing market.
  • Netflix: Netflix is another example of a market challenger. Netflix started out as a DVD rental service and has since become a major player in the streaming media market. Netflix has achieved this by offering a wide selection of content and competitive pricing. Netflix has also leveraged its large customer base to become a major player in the streaming television market.

Advantages of Market Challenger

  • A market challenger has the advantage of being able to come up with new ideas and strategies to compete with the leader in the market. They can create innovative ways of competing with the leader, such as offering lower prices, better quality products, or more innovative services. This can give them an edge over the leader.
  • Market challengers can also benefit from their smaller size and less complex operations. This can give them the freedom to take risks and move quickly to capitalize on opportunities. This can help them gain market share as they are more agile than the market leader.
  • Market challengers can also leverage their smaller size to be more agile and creative in their marketing efforts. They can target niche markets, experiment with different marketing techniques, and build relationships with local customers more easily. This can help them gain more market share and build a loyal customer base.
  • Market challengers can also benefit from their lack of reputation and size. They can be more aggressive in their approach to competing with the leader, taking risks and trying out new ideas that may be too risky for the leader. This can give them an advantage in the market and help them gain more market share.

Limitations of Market Challenger

  • One limitation of the market challenger strategy is the high cost of entry and associated risks. Market challengers may not have the necessary resources to enter the market and compete with the market leader. This means that the challenger must either acquire resources through a merger or acquisition or partner with another company to gain the resources needed to challenge the leader.
  • A second limitation is the market leader's competitive advantage. The leader has an existing customer base, brand recognition and market share that the challenger may not be able to overcome. This means that the challenger must find a way to differentiate itself from the leader to attract customers and gain market share.
  • A third limitation is the lack of available resources. Market challengers may not have the resources to effectively compete with the leader. This includes financial resources, personnel, and technology. The challenger may need to invest in these resources in order to be competitive.
  • Finally, the market leader may be able to outmaneuver the challenger. The leader can use its resources and influence to protect its market share and prevent the challenger from gaining ground. This could include increasing prices, investing in new technology or launching new products.

Other approaches related to Market Challenger

  • A market challenger might also try to gain a competitive advantage by using pricing tactics to undercut the market leader. For example, if a challenger has lower production costs, it can set lower prices for its products, attracting more customers.
  • A market challenger might also try to differentiate its products from the leader's by offering unique features or benefits that the market leader does not provide. For example, Pepsi Cola's products are usually sweeter than Coca-Cola's, which has been used by Pepsi to attract customers.
  • A market challenger might also employ creative marketing strategies to compete with the market leader. This could involve using celebrity endorsements, developing innovative campaigns, or using new and emerging technologies to target potential customers.
  • A market challenger can also use promotional and advertising tactics to create a positive image for its products. This could involve sponsoring events, creating viral campaigns, or partnering with influencers to increase brand awareness.

In summary, a market challenger has a number of strategies available to it in order to compete with the market leader. These can range from pricing tactics, product differentiation, creative marketing, and promotional and advertising. By leveraging all of these strategies, a market challenger can gain a competitive advantage and increase its market share.


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References

Author: Aleksandra Otczyk

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