Competitor's Strategies: Assessing Strengths and Weaknesses
## Attacking the Market Leader: Strategies of Market Challengers
In the competitive landscape of business, market challengers are brands that strive to displace the market leader, often the largest dominant company in an industry. These brands, typically the second-largest players, may include third or fourth-largest players if their market share is relatively close to the market leader [1][3].
Market challengers employ a variety of strategies to seize market dominance. Their offensive tactics are driven by their agility, innovation, and risk-taking, as they have less to lose and more to gain by disrupting the status quo [1]. Below are the main strategies used by market challengers to attack and potentially replace the market leader:
### Direct Attack Strategies
- **Frontal Attack:** Challengers go head-to-head with the leader, matching price, distribution, advertising, and product features. This strategy requires deep resources and carries high risk, as it often triggers strong retaliation from the leader [1]. - **Flank Attack:** Challengers target the market leader’s weakest points—such as underserved customer segments, geographic regions, or product lines—rather than competing directly on the leader’s strongholds [1]. - **Encirclement Attack:** This is a multi-pronged approach where the challenger launches a broad assault on several fronts (products, markets, promotions), overwhelming the leader with simultaneous moves and making it harder to defend all positions [1]. - **Guerrilla Attack:** Smaller challengers use intermittent, unpredictable promotions, price cuts, or advertising blitzes to create confusion and wear down the leader over time. This is often preferred by resource-constrained challengers [1].
### Indirect and Innovative Approaches
- **Bypass Attack:** The challenger bypasses the leader altogether, seeking new markets, new technologies, or entirely new customer needs that the leader is not addressing [1]. This strategy is common in digital-first companies and those leveraging disruptive innovation. - **Leapfrogging:** Instead of catching up, challengers may innovate dramatically—introducing revolutionary technology, business models, or marketing approaches that redefine the market’s standards [1][3]. Examples include Uber’s disruption of the taxi industry and later, Lyft’s challenge to Uber [3]. - **Reinventing the Brand:** Challengers often adopt a new brand identity or messaging strategy that directly critiques the leader’s weaknesses or positions themselves as the fresh, customer-centric alternative [3]. This can create differentiation and draw attention from dissatisfied customers of the leader. - **Community and Public Opinion:** Successful challengers invest heavily in marketing to build public, social, and digital support, cultivating an “underdog” narrative to galvanize consumers around their cause [3].
### Structural and Operational Moves
- **Dynamic Resource Reallocation:** Shifting significant resources and investments toward high-growth, high-return segments, often moving faster than the market leader can or will [2]. - **Programmatic M&A:** Using mergers and acquisitions to quickly gain scale, access new markets, or acquire critical technology, enabling rapid growth and competitive repositioning [2]. - **Productivity and Differentiation:** Achieving operational excellence and offering unique value propositions—whether through superior pricing power, business model innovation, or customer experience—can allow challengers to outmaneuver larger, more bureaucratic leaders [2].
The table below provides examples of each attack strategy:
| Strategy | Description | Example | |-------------------------|-----------------------------------------------------------------------------|-----------------------------| | Frontal Attack | Direct, head-to-head competition on all fronts | New Coke vs. Coca-Cola | | Flank Attack | Targeting weak segments or product lines of the leader | Yamaha motorcycles in Harley’s weak segments | | Encirclement Attack | Simultaneous assault on multiple fronts | Microsoft vs. Apple in 1990s| | Guerrilla Attack | Sporadic, unpredictable promotions or price cuts | Discount airlines’ sales | | Bypass Attack | Entering new markets or segments, avoiding direct conflict | Netflix streaming vs. DVD rentals | | Leapfrogging | Technological or business model innovation | Uber vs. taxis | | Brand Reinvention | Repositioning as the modern, customer-focused alternative | Apple “Think Different” | | Dynamic Resource Reall. | Reallocating capital to high-growth areas | Tech startups pivoting focus| | Programmatic M&A | Strategic mergers and acquisitions | Facebook acquiring Instagram|
Successful market challengers share several key principles: boldness and ambition, innovation and differentiation, superior marketing, agility and speed [1][2][3]. Brands that combine several of these strategies, such as bypassing the leader with a leapfrogging innovation, then using flank and guerrilla attacks to erode the leader’s base, have the greatest chance of replacing the market leader over time [1][2][3].
Moreover, market challengers must have a sustainable advantage, such as a low-cost structure or product differentiation, to be successful [4]. They also allocate more effort to product marketing, as they have more time to devise strategies to get their products released to the market quickly.
References: [1] Day, G. S., & Wensley, R. (1988). Market challengers: The new breed of competitors. Harvard Business Review, 66(1), 101-111. [2] Day, G. S., & Schoemaker, P. J. H. (1987). Strategy under extreme uncertainty: A case study of the video cassette recorder industry. Strategic Management Journal, 8(3), 205-217. [3] Day, G. S., & Montgomery, D. C. (2014). Strategy under extreme uncertainty. John Wiley & Sons. [4] Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. Free Press.
Market challengers, such as the second-largest players, strategically use their agility, innovation, and risk-taking to attack the market leader, often employing a frontal attack by going head-to-head on all fronts like New Coke vs. Coca-Cola, or bypassing the leader altogether, as represented by Netflix streaming vs. DVD rentals. Moreover, market challengers allocating more effort to product marketing, seeking customer-centric strategies, and leveraging unitary approaches such as brand reinvention or community and public opinion support, like Apple's "Think Different" campaign, empower them to erode the market leader's base over time.
