What are market challenger strategies and how to use them?

Any market you go in will always have market challengers. You have to challenge these competitors instead of presenting a meek response to them. Only by challenging them head on, you create a fear for future market entrants. At the same time, this challenge also ensures that you move up the competitive ladder.

The mistake which most companies do is that they look at the top player of the industry whenever they enter the market. They try to beat the top player only. But when entering a market, your main competitor is the one around you and who is eating away even a small pie of your market share. It is unlikely, that when you are the 5^th or 6^th brand in the market, then the 1^st brand will be your competitor. The 4^th and 3^rd brand are the more likely market challengers in your case.

So how do you respond to your market challengers? And how do you move up the competitive ladder using market challenger strategies? Here is a 5 step process to accomplish the same.

1) Use a frontal attack

Observed most prominently in the smartphone market today, or more commonly in the Pepsi vs Coca cola war since ages, a frontal attack is seen when a competitor attacks another based on the strengths of the competitor.

Example – Pepsi introduces Diet Pepsi when Coke introduces Diet coke. Both have strength of product expansion and a diverse product portfolio. So in a direct frontal attack, Pepsi also launches a product in response to its market challenger.

2) Flank attack

The above example of Pepsi and coke contains 2 brands which are very strong in the FMCG market and have no other competitor. Thus, they use frontal attacks. But what if a small player has to take on a mammoth. Then the player uses a flank attack and attacks the competition based on its weaknesses.

Example – Many technology firms like AMD vs Intel, Apple vs Microsoft, and others operate on the basis of Flank attack.

3) Encirclement attack

This form of market challenger strategy is used when the competitor attacks another on the basis of strengths as well as weaknesses and does not leave any stone unturned to overthrow the competition.

The current E-commerce scenario is the best example of the encirclement attack where the E-commerce companies are ready to go negative in their margins to beat a competitor on turnover basis. They want to come on top and gain maximum customers by hook or crook.

4) Bypass attack

What did Ipod do to the Sony walkman? It simply by passed it. There can be no simpler example of the Bypass attack form of market challenger strategy. This type of strategy is found in a firm which has the brains to innovate. And when it innovates, it bypasses the complete competition and creates a segment of its own. Off course, other competitors soon follow. But the attack is very useful in the long term to create brand reputation and gain customers.

5) Guerrilla marketing

Making small but useful changes, which repeatedly puts your brand in the forefront, and slowly but surely makes it a huge name in the market, is the crux of Guerrilla marketing. A small brand, which wants to take on huge competitors, which first become famous in a local market, then will introduce price discounts and trade discounts.

Slowly but surely, the name of the small player will spread and it will then use branding activities and ATL and BTL marketing activities. Over a period of time, the small player has become a successful large player and is a thorn in the side for all major players in the market. Isn’t this the success of any small brand which became big?

Take the AJE group for example. They launched their flagship product “Big cola” several years back in the market. It was slowly so successful, that the brand is now present in multiple countries.

Video on Market Challenger Strategies

Thus, overall, there are the above 5 market challenger strategies which are used by any company to defend their market and to challenge competitors. The advantage of these strategies is that it allows you to climb up the competitive ladder and the strategies can change depending on the competitor whom you are targeting.