Best way to Penetrate a Market as a Startup Business

Nyasha Ziwewe / Posted On: 22 March 2020 / Updated On: 29 September 2022 / Business General / 752

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Best way to Penetrate a Market as a Startup Business



The rule of business is that when there is a market leader, there are definitely going to be market followers. Many startup companies come out with a market follower strategy. As a startup, it is wise to get into the market as a market follower. In fact, in today’s world, the competency of all companies are so high that innovation is quickly copied or imitated in different formats. When you grow in the business you become a market challenger, you need different strategies to fight the competition.

Market followers are bound to exist in a mature market. The market followers are wider in case of online marketing because online marketing has lower entry barriers and higher returns. These are the four main market follower strategies existing in the market. In these four categories, it is the adapter and possibly the imitator who has a chance to take over the market leader. However, the cloner and counterfeiter can never overtake the market leader because they are not present in the market with their own manufactured products or with their own brand equity.

However, all market leaders know that they are going to be followed and that market followers will exist forever. What strategy the market follower uses, white or black is completely dependent on the vision of the market follower.

 

Strategies as a Market follower

1) Be an adapter

Adapter is white collared market follower strategy. In this case, you offer similar products and try to adapt from their closest competition. Adapters can soon become leaders as well because they can adapt, learn and make a better product than the higher competition.

2) Imitation

Imitation is the best form of flattery. However, such a flattery can cause a huge dent in your profit margins if you are a product manufacturer. Imitators make use of your hard-earned brand equity and give a product, which has the same characteristics as a competitor’s, even at a lower price.

The difference might be that the new product is made from poor material or that it does not have the service or promise that the leader’s brand can offer. Nonetheless, there is a huge market for imitators where people want to buy products at lower cost as they cannot afford the higher one.

3) Cloner

There is a silver lining between an imitator and a cloner. An imitator might copy some of competitor’s product qualities, but it maintains its own product qualities as well. Cloning means making the same product as competitor’s, but with very subtle difference. Cloning makes, advantage of the top brands and makes same to same products.

4) Counterfeiter

This is not recommended at all, as it has legal issues. The best example of counterfeiting is selling the originals via piracy. Where cloning involves manufacturing of slightly altered products, counterfeiting involves thieving and is a black market follower strategy. The best example is pirated DVDs and CDs of movies and music. If you notice, repeatedly the movie industry wakes up against piracy. This is because, piracy and counterfeiting steals their work.

 

What are market challenger strategies and how to use them?

You have to challenge these competitors instead of presenting a meek response to them. Only by challenging them head on, you create a fear for future market entrants. At the same time, this challenge also ensures that you move up the competitive ladder.

The mistake that most companies do is that they look at the top player of the industry whenever they enter the market. They try to beat the top player only. However, when entering a market, your main competitor is the one around you and who is eating away even a small pie of your market share. It is unlikely, that when you are the fifth or sixth brand in the market, then the first brand will be your competitor. The fourth and third brand are the more likely market challengers in your case.

So how do you respond to your market challengers? In addition, how do you move up the competitive ladder using market challenger strategies? Here is a 5-step process to accomplish the same.       

1) Use a frontal attack

Observed most prominently in the smartphone market today, or more commonly in the Pepsi vs Coca cola war since ages, a frontal attack is seen when a competitor attacks another based on the strengths of the competitor.

Example – Pepsi introduces Diet Pepsi when Coke introduces Diet coke. Both have strength of product expansion and a diverse product portfolio. Therefore, in a direct frontal attack, Pepsi also launches a product in response to its market challenger.

2) Flank attack

The above example of Pepsi and coke contains two brands that are very strong in the FMCG market and have no other competitor. Thus, they use frontal attacks. However, what if a small player has to take on a mammoth. Then the player uses a flank attack and attacks the competition based on its weaknesses.

3) Encirclement attack

This form of market challenger strategy is used when the competitor attacks another based on strengths as well as weaknesses and does not leave any stone unturned to overthrow the competition. The current E-commerce scenario is the best example of the encirclement attack where the E-commerce companies are ready to go negative in their margins to beat a competitor on turnover basis. They want to come on top and gain maximum customers by hook or crook.

4) Bypass attack

There can be no simpler example of the Bypass attack form of market challenger strategy. This type of strategy is found in a firm, which has the brains to innovate. In addition, when it innovates, it bypasses the complete competition and creates a segment of its own. Off course, other competitors soon follow. Nevertheless, the attack is very useful in the long term to create brand reputation and gain customers.

5) Guerrilla marketing

Making small but useful changes, which repeatedly puts your brand in the forefront, and slowly but surely makes it a huge name in the market, is the core of Guerrilla marketing. A small brand, which wants to take on huge competitors, which first become famous in a local market, then will introduce price discounts and trade discounts.

Slowly but surely, the name of the small player will spread and it will then use branding activities. Over a period of time, the small player has become a successful large player and is a thorn in the side for all major players in the market. Isn’t this the success of any small brand that became big?

Thus, overall, there are the above five market challenger strategies, which are used by any company to defend their market and to challenge competitors. The advantage of these strategies is that it allows you to climb up the competitive ladder and the strategies can change depending on the competitor whom you are targeting.

 

Nyasha D Ziwewe is a Business Consultant and Systems developer at Industrial Psychology Consultants. Email: [email protected]. Mobile 0783462251. LinkedIn: Nyasha D Ziwewe.

 



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