Market Challenger

AAA

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).

INVESTOPEDIA EXPLAINS '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. Active Trading

    Which Is Better: Dominance Or Innovation?

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

    Selecting A Second-Tier Company

    Find out why an industry's "little guys" can be big winners.
  5. Investing

    3 Secrets Of Successful Companies

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

    Warren Buffett's Best Buys

    The Oracle of Omaha's "Rip van Winkle" approach has served him well. Read on to learn more.
  7. Personal Finance

    Pros And Cons Of Offshore Investing

    Tax loopholes are shrinking, but there are still plenty of viable prospects. Get the big picture.
  8. 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.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center