Challenger

Market challenger strategies  

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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 

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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 outinnovate 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 

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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. 

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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. 

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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 

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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.

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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 

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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 

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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 

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The cloner emulates the leader’s products, name, and packaging, with slight variations. Ex.Buiscuits ,fmcg products.

Imitator 

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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 

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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.