7 WAYS TO CHALLENGE THE MARKET LEADER

What do you do as business person to penetrate a market already held hostage by a strong player?

Put differently, how do you challenge an established market leader and rip off part of it’s market share. We have cases in point. Coca-Cola, the world over, has held under a tight grip the soft drinks market. East African Breweries Limited has under it’s wrap the East African beer market and Unilever for a long time controlled the local detergents and cooking fat market. In some of these cases, we have had shrewd new entrants strongly coming in to grab a sizeable share of the market. In some cases, like in the cooking fat market, Unilever was totally outfoxed and surrendered by selling their brands-Kimbo and Cowboy- to their rival, Bidco.

Tusker

Safaricom is a near monopoly in mobile phone communication and money transfer market in Kenya. All other fringe players have desperately tried to overhaul the Safaricom juggernaut to no avail.
As a business person, what are some of the techniques applicable in trying to dislodge a dominant player? African Market Media shares our thoughts:

1. Avoid a frontal attack.
Never play hardball with someone who is carrying a big stick. You will be dismembered. A frontal attack will leave you with a bloodied nose. In the recent past in Kenya, Pepsi tried challenging the market leader Coca-Cola, Castle with EABL and Aspen with BAT all with a predictable negative outcome. Never wake up a sleeping giant. Tiptoe.

2. Forget price wars and challenge with parallel value.
Clients buy solutions to their needs. They do not buy products or prices. As an underdog, challenging the market leader by provoking a price war is disingenuous. Your resources are still very thin. Challenging a heavy weight is like calling for a knockout. Orange, YU and Airtel tried this approach to dislodge market leader Safaricom using the price strategy. They ran themselves to the ground.

cloud-price-wars

You may not have realized this, but Equity Bank charges could be the highest in Kenya! They charge per transaction and their loans are on a flat rate per month. So if they are not cheap, why the popularity? The simple answer is that they offer parallel value. When no bank would touch your cheque, they give you instant cash against it at a discounted shylock rate. You pay more of course, but get what other market leaders cannot give you. Both parties are happy. Most times as a market challenger, a lower price makes you look inferior. Pack in more value where possible and sell at a higher price to appear a credible market challenger.

3. Unless it’s a gift, nobody values free things from a Market Challenger.
Airtel offered free money transfer across its network. Yu promoted free calls for a good part of their existence. They still lost. Miserably. As a client, you would rather pay for what you want than get for free what you do not want. Forget the free offer. When one is in need of anything, they would gladly pay the price.

4. Define your distinctive advantage as the Challenger.
Accept the reality that you cannot match the masters. Just be good at what you are and what you do. To dislodge the market leader, pick out an area ignored by the dominant player and give it your best. Being small and flexible, you can stretch your time and resources to go an extra mile. That’s what Equity did. They hired enough clerks to assist their illiterate clients to fill up the bank forms for opening accounts and applying for loans.

farming

5. Play for the long haul and Reward your partners.
When you want to win a match, avoid at all costs those antics that may earn you a red card. Play to complete the match. Remember your adversary has enough resources to buy the referee, all your players plus your team manager. EABL succeeded in their fight with Castle after negotiating a buyout deal while their foot soldiers were busy shooting each other in the field. To last in this game, camouflage yourself. Bear your teeth at the right time. Also be generous to your channel partners. They are a crucial part of your team. If they are happy, they will be on your side throughout the battle.

6. Wait for that big mistake to pounce.
Every individual has a blind spot. Similarly, every organization has a blind spot. A point of weakness that if identified and challenged vigorously, can easily bring it down. Bid your time. It will eventually appear. It could be in their product, service and staff or just in their attitude. Once you notice it, go for the kill.

7. Start where they have ignored.
Choose the market segment carefully when preparing to challenge the market leader. The best place to start with, is any market the big boys consider less attractive or ignore. That is what Equity Bank did. They went for the unbanked hawkers and the big boys laughed them off.

Curiously, there is a strong feeling in the mobile telephony industry that the big buck is with the masses. Nobody gives a hoot about those privileged few who want their telephone numbers to send a message of class and believe M-PESA is beneath them. They would rather be dead than seen in those unsightly M-PESA kiosks. Can Airtel take care of them?

In all markets the world over, the market leaders have been challenged and overturned. Apple did it to Microsoft and Blackberry when they were the unrivalled market leaders. Samsung proved it in electronics and Toyota nearly ran General Motors out of East Africa.

mac-vs-windows-competition

It can be done.

Article from African Market Media.
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