Companies that are in the second, third, or even a lower position in the industry is often called companies on the rise, and companies that walk pave the way. Some companies, such as Colgate, Ford, Montgomery Ward, Avis, and Pepsi-Cola, have been great in their own areas. These companies on the rise can operate in two modes. Can attack the leader and other competitors in an aggressive battle for the expansion of its market share (market challengers), or they can cooperate and work without risk (market followers).
Market Challenger Strategy
There are many cases of market challengers who won positions as the market leader or even abandoned certain leaders of the market. Canon, which was only one-tenth the size of Xerox’s mid-70s, today produces more than copiers Xerox. Toyota now produces more cars than General Motors, and British Airways carried more international passengers than the former leader, Pan Am. These challenges set high aspirations and coordinate their scarce resources as the market leader conducts its business as usual.
The competitive rivalry and price reductions occur in industries with high fixed costs, high inventory costs, and stagnant primary demand, such as the steel industry, automotive, paper, and chemical industries. Now let’s examine the strategy of competitive attacks that are available to market challengers.
Defining Strategic Objectives and Opponents
The market challenger must first define its strategic objectives. Most of the strategic goals of market challengers to increase their market share. These decisions relating to the attacks are linked to deciding whom to attack:
- It can attack the market leader. This is a high-risk but also potentially very cost-effective strategy and has a lot of sense if the leader is actually a “false leader” that does not serve the market properly.
- can attack firms of the same size which is not going to work or lack the financial resources, to attack the company which produces obsolete, which charges excessive prices, and failing consumers in other ways.
- can attack small local and regional firms that do not go deal or they lack financial resources. Several major firms for the production of beer have grown to its current size, no looting consumers from other companies, but “devouring” of smaller firms, or “small fish”.
If the attacking company goes to market leader, her goal would be to be gaining a certain market share. So “Bic” no illusion that it could bring down the Gillette razor in the market, rather than simply seeking greater market share. If the attacking company goes to a small local company, its objective could lead to a company under bankruptcy.
Choosing General Attack Strategies
Having clearly identified opponents and objectives, which are options available to attacking enemies? We thrive imagining how it occupies the territory of the market. Five different attack strategies:
1. Frontal Attack
A frontal attack launches when concentrating their forces directly opposite his opponent. Here attack enemy forces, not its weakness. The outcome depends on who is stronger and more durable. The clean frontal attack attacker attacks the opponent’s product, advertising, price and so on. The principle strength of the opinion that the party has more manpower (resources) to win the conflict. This rule is modified if the defender has greater efficiency in the artillery field strengths (say top holding at the top of the mountain). Military dogma lies in the fact that the successful frontal attack against well-established opponent or opponents who controlled the strategic “high ground”, the attacking force must develop an advantage in the ratio of at least 3:1 in fighting the fire. If the attacker has less human power or inferior firepower than the opposition, frontal attack is nothing more than a suicide mission, and it makes no sense. One such company on the rise, a manufacturer of razor blades from Brazil was attacked by Gillette, the market leader. Attackers asked whether the consumer provides a better razor for shaving. “No,” was the reply. “The lower price?” “No.” “You better pack?” “No.” “Wise advertising campaign?” “No.” “Better benefits at the store?” “No.” “Then how do you expect to take over the market from Gillette? ‘” pure determination. “Was the answer. It is not necessary to say, the offensive failed competitor.
As an alternative to a pure frontal attack, the attacker can launch a modified frontal attack, of which the most common means lowering its prices according to the price of it. Such attacks can have two forms. Something more common procedure is to equalize the offer leaders in other areas and beat it at price. This can act: (1) if the market leader did not respond by lowering its price, and (2) if the competitor convinces the market that their product is equal to that of the competition, but better because it is sold at a lower price. Another form of aggressive price strategy entails substantial investment header to achieve low production costs and only then attacked by competitors on the basis of price.
2. Side attack
The enemy is the strongest army in the area were expected to be attacked. It is, therefore, less assured in its side and rear positions. Its weak points (blindside), therefore, are natural targets for attack. The main principle of modern warfare concentration of power against weakness. An attacker can attack the strong side of the opponent in order to pull its forces from positions in which they will actually make a real attack on the side or the back. This maneuver will find the opponent’s side of the guard. A flank attack has excellent marketing sense and is particularly interesting that the attacker has fewer resources than your opponent. If an attacker cannot overcome Veterans brute force, can outsmart him.
Sidebar is traditionally the best strategy to discover their needs and satisfaction. Side attacks are more successful than frontal assaults.
3. Pincer Attack
The maneuver is to surround an attempt to acquire a substantial part of the enemy’s territory through a comprehensive “blitz” attack. Coverage includes launching a major offensive on several fronts so that the enemy is forced to defend his front, side, and background simultaneously. An attacker can market to offer everything at the same time provides an opponent, and more than that, in this way offer hard to dismiss. Coverage makes sense where the attacker has superior resources and believes that rapid coverage break forces opposing side
4. Bypass Attack
A bypass attack is mostly a less directive attack strategy. It means bypassing the enemy and attack easier targets to extend the resources of the company. This strategy offers three approaches: diversification among unrelated products, diversification into new geographic markets, and reorientation to new technologies in order to squeeze out existing products.
Technological advancement is a strategy to circumvent what is widely used in industries with high technologies. Instead of imitating a competitor’s product and taking costly frontal attacks, the challenger patiently examining and developing technology and launches an attack, shifting the battlefield on his territory, where it has an advantage.
5. Guerrilla Attack
Guerrilla warfare consists of taking small occasional attacks in different areas of an opponent. The aim is to harass and demoralize opponents and eventually secure permanent footholds. Liddell-Hart delivered the military principles as follows: The most common reason for using the strategy of limited objective consists in anticipation of changes in the balance of power changes, which is often, achieved through the depletion of enemy forces, weakening it harassment rather risky attacks. The main condition for such a strategy to drain the enemy should be disproportionately greater than their own. Opponents can inflict damage on the influence of its resources, local attacks that cause destruction or causing substantial losses in parts of their power, causing him to unprofitable attacks, causing the considerable spread of his forces, and, not least, exhausting his moral and physical energy.
The guerrilla attacker uses both conventional and unconventional resources when attacking opponents. These funds include selective price reductions, intensive advertising “blitz” and occasional legal activities.
Selecting Specific Attack Strategy
Strategy five attacks which we have just discussed are very broad. The challenger must unite together an overall strategy that will consist of several specific strategies. Market challengers can choose between several specific attack strategies:
- Strategy at discount prices
- Strategy cheaper products
- Strategy prestige products
- Strategy proliferation of products
- Strategy of product innovation
- Strategy enhanced services
- Strategy innovation in distribution
- Strategy to reduce production costs
- Intensive advertising promotion
Market Follower Strategy
A few years ago, Theodore Levitt wrote an article entitled “Innovative imitation” in which he argued that the strategy of imitation products can be just as profitable as well as product innovation. Inventor, such as Sony, carries a substantial burden of developing new products, offering them the distribution, and informing and educating the market. The prize for this great work, and take the risk of the market leader. However, other companies can copy or improve new products. For example, Panasonic rarely innovates new products. Instead, rather copied Sony’s new products, and then selling them at lower prices. Panasonic earns higher profits than Sony because they did not have to bear the cost of innovation and education. Sony looks at Panasonic as bitter enemies.
Many companies on the rise, that followers prefer to follow rather than challenge the market leader. But leaders never accept dragging their consumers so easily. Although the company offers attractive emerging low cost, improved service, or additional product features, a leader can quickly respond to soften the attack. It is likely that the leader has a stable force for its preservation in the entire fight. Because it would be a tough fight that could either leave the company in a difficult position, firms on the rise must closely consider all the details before they take offense. If the firm cannot start rising earlier coup – in the form of significant product innovation and distribution penetration – then they will often follow rather than attack the leaders.
This does not mean that the market lacks a follower’s strategy. The market follower must know not only how to retain current customers, but also to win the satisfaction of the new consumer. Every follower trying to achieve exceptional benefits to your target market – location, service, financing. Furthermore, because the follower is often subject to attack challengers, he has to keep production costs low, and high-quality products and services. You must enter new markets when it opens.
Being a follower is usually not the same as being passive or copies a leader. A follower must define the path of growth, but not one that will cause revenge competition. Can be distinguished four broad follower strategies:
- Duffer – Duffer duplicates products and packaging leaders and selling them on the black market or through disreputable dealers. Companies such as Apple Computers and Rolex struggling with the problem of counterfeiting, particularly in the Far East, as well as seeking ways to thwart counterfeiters.
- Cloner – Cloner mimics products, distribution, advertising, and other segments of the leader. Product and packaging Cloner similar to those of the leaders, but the name brand products are somewhat different, such as “Choco-Cola” instead of “Coca-Cola”. Cloner actually parasitic lives at the expense of investment market leader. In dealing with computers, Cloner is actual facts to be taken into account. Most of IBM’s competitors in the market of personal computers began cloning the IBM personal computers.
- Imitator – Imitator copies leaders in some elements, but keeps diversity in terms of packaging, advertising, pricing, and so on. A leader does not have anything against imitators until this does not attack aggressively. Impersonator actually helps leaders to avoid a possible lawsuit for a monopoly.
- Adapter – The adapter takes produce leaders and adapts them, or better. The adapter can choose to sell them in different markets in order to avoid direct confrontation with the leader. But often the adapter grows in the future challengers, as was the case with many Japanese companies after they adapt and improve their products that were developed elsewhere.