Market challenger

strategies
 Boeing and Airbus.
 Year 2003, Airbus surpassed Boeing in
terms of sales.
 Airbus created innovative new product
line equipped with modern features.
 The massive A380 designed to carry
555 passengers at only 2.5 cents per
seat mile.
 Boeing fell behind in both technology
and manufacturing efficiency during
1990.
Defining the strategic
objective and opponents.
First define its strategic objective.
Most aim to increase market share
The challenger must decide whom to
attack.
It can attack the market
leader
 This is a high –risk but potentially
high-pay off strategy and make
good sense if the leader is not
serving the market well.
 The alternative strategy is to out-
innovate the leader across the
whole segment.
 Ex.Xerox from 3M, Cannon from
Xerox.
 It can attack firms of its own
size that are not doing job
and are underfinanced.

 These firms have aging products,

are charging excessive prices, or
are not satisfying the customers in
other way.
It can attack small local and
regional firms.
 Several major banks grew to their
present size by gobbling up
smaller regional banks.
Choosing a general attack
strategy
 Given clear opponents and
objectives, we can have five attack
strategies :frontal,
flank,encriclement,bypass and
guerilla attacks.
Frontal attack
 In this strategy the attacker
matches opponent product mix.
 The principle of force says that the
side with the greater manpower
(resources ) will win.
 Price-cut.
Flank attack.
 Its about identifying the weak areas of
the opponents and attacking on those
fronts.
 Its can be directed towards
geographical and segmental.
 In a geographical attack , the challenger
spots areas where the opponent is
underperforming .
 Ex.Honeywell (Mainframe ) to IBM
Encirclement attack.
 It is an attempt to capture a wide
slice of the enemy’s territory
through various marketing actions.
 It involve launching a grand
offensive on several fronts.
 Ex. Sun microsystem ,Microsoft.
Bypass attack
 It means bypassing the enemy and
attacking easier markets to broaden
one’s resources base.
 It include diversifying into unrelated
products,
 Diversifying into new geographic
markets,
 Using new technology to develop
existing products.
 Ex.Pepsi used a bypass strategy
against coca-cola by purchasing
orange juice giant Tropicana for $
3.3 billion in 1998 which owned
almost twice market share of
coca-cola Minute maid.
Guerilla warfare
 It consists of waging
small,intemittent attacks to harass
and demoralize the opponent and
eventually secure permanent
footholds.
 These include selective price cuts,
intense promotional activities and
occasional legal actions.
Market-follower strategies
 Some companies prefer to follow
rather than challenge the market
leader
Counterfeiter
 The counterfeiter duplicates the
leader’s product and package and
sells it on the black market.
 Ex. Music record firms, Apple
computer, are facing this
problems.
Cloner
 The cloner emulates the leader’s
products, name, and packaging,
with slight variations.
 Ex.Buiscuits ,fmcg products.
Imitator
 The imitator copies some things
from the leader but maintains
differentiation in terms of
packaging, advertising, pricing or
location.
 The leader does not mind the
imitator as long as the imitator
does not attack the leader
aggressively.
 Ex. Home delivery concept.
Adapter
 The adapter takes the leader’s
products and adapts or improves
them.
 The adapter may choose to sell to
different markets, but often the
adapter grows into the future
challengers.
 Japanese firms.
Nicher strategy
 Three tasks of Nicher
 Creating Niches.
 Expanding Niches
 Protecting Niches.