Tactics and Outcomes: Evaluating the Success and Failure of Competitors
In the competitive world of business, market leaders, those companies with the largest market share in an industry, strive to maintain and strengthen their dominance. However, there are firms that aim to increase their market share and replace these market leaders. These firms are known as market challengers.
One of the disadvantages of being a market challenger is that customers may perceive their products as inferior to those of market leaders, and may be reluctant to switch to their products. To overcome this, market challengers must have a sustainable advantage, such as a low-cost structure or product differentiation.
Pepsi, for example, is an example of a market challenger trying to steal Coca-Cola's market share in the soft drink business. However, the path to success is not easy. By carrying out an attack, the potential challenger is very likely to face a counterattack, which can hurt more because the market leader has better resources to attack.
Market challengers can adopt several offensive techniques, such as a frontal attack, flank attack, encirclement attack, by-pass attack, and guerrilla attack. In a frontal attack, market challengers attack the main force of the leader by offering lower prices, higher quality products, aggressive advertising, or better quality service to customers.
A flank attack involves attacking the weak points of the market leader, which is a reasonable alternative if the market leader has several target market segments. In an encirclement attack, market challengers combine frontal and flank attacks, initially dominating segments where market leaders are weak, then targeting other segments to spread attacks across the market.
By-pass attacks are indirect, with market challengers building resources and capacity first, avoiding direct competition with market leaders, and then launching head-on attacks with new products or new markets. Guerrilla attacks aim to destabilize and demoralize the market leader, using discounted prices, intensive short-term advertising, and public relations to undermine market leaders, taking small, random attacks to confuse the market leader's focus.
In addition to these direct attacks, market challengers can also leverage digital marketing and guerrilla tactics, using nimble digital marketing, content marketing, social media, and viral or guerrilla marketing campaigns to rapidly raise brand awareness and steal market share from larger, less nimble competitors.
Moreover, market challengers can build trust and credibility through consistent superior value, delivering better quality, addressing consumer pain points effectively, and building strong relationships with consumers. They can also engage influential but less obvious decision-makers (“hidden buyers”) through quality thought leadership content, turning detractors into advocates within the customer organization.
Finally, market challengers can try to outsmart competitors by getting leaders to make strategic mistakes or miss opportunities through deceptive or unexpected moves. However, it's important to note that if they fail to replace the market leader, market challengers must be willing to be replaced by market followers.
Meanwhile, market followers prefer an accommodative strategy over an offensive strategy, seeking to imitate market leaders while finding profitable opportunities. They are less likely to directly challenge market leaders but may benefit indirectly from the strategies employed by market challengers.
In conclusion, market challengers play a crucial role in keeping market leaders on their toes, driving innovation, and pushing the boundaries of what is possible in various industries. By adopting strategic and innovative approaches, they can potentially displace established market leaders and reshape the market landscape.
Market challengers, like Pepsi in the soft drink business, aim to increase their market share by adopting various offensive strategies, such as a frontal attack, flank attack, encirclement attack, by-pass attack, and guerrilla attack, to challenge market leaders. To overcome the perception of inferiority, market challengers must have a sustainable advantage, like low-cost structure or product differentiation.
In addition, market challengers can also leverage digital marketing and guerrilla tactics to rapidly raise brand awareness, steal market share from larger competitors, and build trust with consumers through consistent superior value, addressing consumer pain points effectively, and building strong relationships with consumers.
