Market Challenger Strategies involve the Runner-up or trailing firms that maintain second, third, and lower ranks in the industry.
- Burger King
- Under Armour
Defining Strategic Objective And Opponents
Defining a strategic objective and choosing whom to attack is a must for a market challenger
1. Attack market leader
If the leader is not serving the market well, this approach can be successful as it has high risk but possibly high pay off.
2. Attack firms of their own size
Firms of the same size that are unsuccessful and underfinanced can be attacked by using this approach.
These firms may have outdated products and high prices and maybe other reasons by which the customers may not be satisfied.
3. Attack small and regional firms
The small local companies can be targeted using this approach, eventually forcing them to shut down their business.
4. Attack the status quo
A challenger can attack an entire industry as a whole and not just an individual firm, as the industry’s approach and way of thinking don’t satisfy the customer’s needs anymore.
For Example – Netflix and Airbnb
Market Challenger Strategies
There are 5 main Market Challenger strategies that can be used by challengers to take over market leaders.
1. Frontal attack
In a frontal attack, the opponent’s strengths can be focused on and attacked, instead of their weaknesses. The competitive forces of the challenge are well-focused in this approach.
The frontal attack consists of a straight forward attack, where the competitor’s product, price, advertising and promotion activities can be matched by the market challenger.
Example – Burger King
By revealing a Big Mac behind every Whopper in its ads Burger king calls out McDonald’s. This ultimate prank on McDonald’s was pulled off by Burger King for an entire year without anyone noticing it. In its 2019 ads, the Big Mac was shown hiding behind every Whopper photographed, as disclosed today by the sneaky fast-food chain.
Burger King playfully stated the following in a video: “We have a confession to make.
“You see, throughout 2019 we were keeping a bit of a secret. Actually, a Whopper of a secret.
- “Everybody knows our burger is more generous than that other burger.
- “So we thought we’d prove it by hiding a “Big” Mac behind every Whopper we photographed.”
Attacking the competitor on its weak points is known as a flank attack. Here, the weak areas of the competitors are analyzed by the market challenger in terms of two strategic dimensions, i.e. Geographic and segmental.
The competitor’s areas, in which they are underperforming are identified by the challenger and then their marketing strategies are pushed in that area. Segments that are left untapped by the competitor are identified by the challenger. This segment can then be covered with its own products and services.
Example – Under Armour
Guys who play football, all experienced that their sweat-soaked T-shirts got wet, heavy and uncomfortable. It got in their way when they were trying to play. Thus, as a solution Under Armour was born. Kevin Plank, being a football player, designed a T-shirt that stayed perpetually dry and fresh.
This was inspired from the wicking in women’s lingerie fabric. A whole new sub-sector in athletic wear was created after Kevin solved this frequent problem.
3. Encirclement attack
To satisfy every market segment many products are created simultaneously. This forces the opponent to fight on all planks at the same time.
Several offensive campaigns are launched by the market challenger which surrounds the competitor with a varied brand leaving the company no option but to defend himself from all sides. A market dominance can be enjoyed by utilizing this strategy.
Maruti Suzuki (the market leader) was forced to launch vehicles in every segment in India because of automobile manufacturers such as Hyundai, Honda and Renault launching vehicles in different price segments.
4. Bypass attack
Sometimes the market challenger does not attack the leader head-on but broadens its market share by attacking the easier markets. This indirect attack is known as the Bypass attack.
Following any of these strategies, the leader can be bypassed by the challengers. Diversifying into unrelated products, expanding into the untapped market, the invention of technology for modernizing the existing product.
Amazon released Amazon Go cashiers fewer stores and Amazon Web Services to take on Walmart the Brick Mortar leader.
5. Guerrilla attack
By adopting both the conventional and unconventional means of attack, the challenger can demoralize the competitor. Such an unusual attack is known as the Guerilla attack. McDonald being mocked by the campaigning of Burger King.
Burger King in Germany pounced at the opportunity to target its clown-fronted competitor, McDonald’s, as the scary clown movie ‘It Number Two’ released. Burger King offered up its own restaurant as a refuge, for their customers, to save themselves from McDonald’s.The purpose of the #EscapeTheClown campaign was to get the fast-foodies out of the golden arches and into the nearest Burger King.
This was solely done to target the customers in McDonald’s. McDonald’s customer’s Facebook or the Twitter page will receive a message using geo-targeting, inviting them to read the review of the rival’s cinema magazine and read the review of “It”.
Using the Burger King app, the page can be scanned by the readers once they find the article. When a red balloon floats up after clicking the ‘Escape The Clown’ button, a coupon featuring a Whopper burger for only one cent will be received. As the countdown begins a ‘flee and run’ route will be calculated by the customer’s app, thus heightening the customer’s ‘scary’ experience. This a sure and a genius way to get customer’s running out your rival’s door.