Market Challenger

DEFINITION of 'Market Challenger'

A firm that has a market share below that of the market leader, but enough of a market presence that it can exert upward pressure in its effort to gain more control. Market challengers are able to jockey for industry leadership several ways: challenging the market leader on price (direct approach), increasing product differentiation or improving customer service (indirect approach), or launching an entirely new product or service in order to change the field (radical approach).

BREAKING DOWN 'Market Challenger'

Companies with low market share are generally not in a position to influence prices, and are often susceptible to the actions of larger firms. Market challengers, being in a position of becoming the dominant player, may face a high degree of risk because they must take potentially radical steps in order to draw away consumers from the market leader. Each of the three primary strategies carries with it a unique risk, with the direct approach and radical approach posing more risk due to the high potential costs.

RELATED TERMS
  1. Price Leadership

    When a firm that is the leader in its sector determines the price ...
  2. Follow-The-Leader Pricing

    A pricing strategy in which a business sets the price of its ...
  3. Price War

    When companies continuously lower prices to undercut the competition. ...
  4. Market Share

    The percentage of an industry or market's total sales that is ...
  5. Gorilla

    A company that dominates an industry without having a complete ...
  6. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
Related Articles
  1. Fundamental Analysis

    Great Expectations: Forecasting Sales Growth

    Predicting sales growth can be something of a black art, unless you ask the right questions.
  2. Active Trading

    Economic Moats: A Successful Company's Best Defense

    Find out why some companies thrive while others flounder.
  3. Economics

    Selecting A Second-Tier Company

    Find out why an industry's "little guys" can be big winners.
  4. Active Trading

    Which Is Better: Dominance Or Innovation?

    Find out how to assess and evaluate both these values in the market and your portfolio.
  5. Investing

    3 Secrets Of Successful Companies

    Make smart investments by spotting up-and-coming success stories early.
  6. Stock Analysis

    7 Trump Businesses You Didn't Know Existed

    Understand what Donald Trump is best known for and the types of income streams he's created. Learn about seven obscure businesses he owns.
  7. Investing

    3 Brands Owned by the S.C. Johnson Family (JOUT)

    An overview of three companies that are owned by Johnson Family Enterprises.
  8. Stock Analysis

    Berkshire Hathaway's 4 Most Profitable Lines of Business (BRK-A, BRK-B)

    Learn about Warren Buffett and his company Berkshire Hathaway. Understand why the four companies listed are his most important and profitable lines of business.
  9. Insurance

    Warren Buffett: The Road To Riches

    Find out how he went from selling soft drinks to buying up companies and making billions of dollars.
  10. Investing Basics

    What's a Holding Company?

    A holding company is a corporation that owns enough voting stock in another company to control its management and policies.
RELATED FAQS
  1. What is Warren Buffett's largest holding?

    The investing strategies of Warren Buffet, the billionaire investor dubbed the Oracle of Omaha, have long been the focus ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center