Market Challenger Strategies
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Transcript of Market Challenger Strategies
Keys Variables in Analyzing Competitors
Share of Market
Share of Mind
Share of Heart
The competitor’s share of the target market
The percentage of customers who nam ed the
competitor in responding to the statement“ Name the first company that comes t
o mind in this industry”
The percentage of customers who name d the
competitor in responding to the statement“ Name the company from whom you would prefer to buy the product”
Market Challenger Strategies – Choosing Attack Strategy:
Attacker Defender1. Frontal Attack
4. Bypass Attack
2. Flank Attack
3. Encirclement Attack
5. Guerrilla Attack
Examples of Market Challenger Strategies
Frontal: Reduction in prices by Hyundai santroFlank: Hero Honda’s launch of “ CD 1000” in late
1980s was a frontal attack on then exiting leaders in the motorcycle segment.
Bypass: Pepsi’ s bypass strategy against coke by acquiring Quaker Oats Company which produced “Gatorade” brand of sports drink.
Encirclement : Reliance Retail purchased its raw material at a higher price from the farmers and sold it to customers at a lower price vis-à-vis unorganized retailers.
Guerilla: Go Air’s short term ad-campaign against Kingfisher and Jet Airways.
Strategies for Market FollowersFollow the market leaderMany advantages:
Learn from the market leader’s experienceCopy or improve on the leader’s offeringsStrong profitability
Objective is to increase the profitability rather than gaining market share.Specific strategies include price discounts, improved services, innovation etc. May resort to counterfeiting, cloning, Imitating and Adapting (especially in rural areas).
Strategies for Market Nicher
Smaller firms can avoid larger firms by targeting smaller markets or niches that are of little or no interest to the larger firms
Good strategy for small firms with limited resources
Offers high margins Specialization is key Should focus on multiple niches.e.g. Logitech—mice achieved remarkable success by
making different variation of computer mouse. For example separate mice for left and right handers, 3-D mouse etc.
Reaction PatternsThe Laid Back Competitor - no quick or strong
reaction, because: It feels customers are loyal, milking the business,
slow to notice or lacks funds to reactThe Selective Competitor - Reacts only to
certain types of attack, eg price cuts. Reacts swiftly to demonstrate that this particular strategy is futile, and will not be tolerated.
The Tiger /Tough Competitor: Reacts swiftly and strongly to any encroachment on its territory.
The Stochastic/Unpredictable Competitor - No predictable reaction pattern
Competitive Intelligence SystemA systematic and ethical program for gathering
information about competitors and general business trends to further your own company’s goals
Value analysis helps firms to select competitors to attack and to avoidCustomers identify and rate attributes important in
the purchase decision for the company and competition
Four Main StepsSetting Up the SystemCollecting the DataEvaluating and Analyzing the DataDisseminating Information and Responding
Designing The Competitive Intelligence SystemFocus on Customer Value Analysis:
1. Identify the major attributes customers value.
2. Assess the quantitative importance of the different attributes.
3. Assess the companies’ and competitors’ performances on the different customer values against their rated importance.
4. Examine how customers in a specific segment rate the company’s performance against a specific major competitor on an attribute-by-attribute basis.
5. Monitor customer values over time.
Balancing Customer and Competitor Orientations
-Competitor centered -Customer centered
• It develops a fighter orientation: being on constant alert, watching for weakness
es in its competitors’ and its own position• It determines its move s based on
its competitors’ moves; does not
move towards its own goal
• It is in a better positi on to
identify new opportunities and set a strategy course - that makes long run sense• It can decide which customer groups and emergingneeds are the most importa
nt to serve, given its resou
rces and objectives
Hero Honda’s Frontal Attack on Market Leaders in motorcycle segments in late 1980s
Pepsi’s by pass strategy
L.G’s Flank Attack on market leader
Reliance Retail’s encirclement attack
Logitec – Market Nicher