There are five competitive positions of an offerer related to its competitors: leader, challenger, follower, nicher, and outsider.
The following figure illustrates the market shares – only hypothetical, as they vary greatly depending on the markets and products taken as a reference – of each of those positioning.
The leader is the supplier with the largest market share. For this reason, he is the principal role model, permanently imitated and harassed by his competitors.
The leader must exert a broad and intense marketing effort to maintain his position, leading to constant market changes. This action applies to innovation in the product and service mix and its distribution, sales, pricing, financing, communication, and promotion.
The challenger, in turn, is the competitor who, with a relevant operational base, seeks to snatch significant portions of the market from the leader or even displace it from leadership. To do this, he must also develop competitive advantages that attract and ensure clients’ preference for its offers.
The follower is the competitor who, neither a leader nor a challenger, is content to imitate the most successful players in their market.
His advantage is that he can use its competitors as benchmarks without assuming the burden of investing in pioneering technologies, an unprecedented modus operandi, or the costs of exploring an incipient market.
Instead, the nicher, or occupant of a market niche, is the competitor who specializes in meeting some specific needs that are poorly or not at all met by others. Thus, he does not compete directly with the leader, the challenger, and the followers.
For example, the orchid provider serves a particular group of customers (orchid growers, interior decorators, and landscapers) whose potential demand is limited but compensated by the buyer’s loyalty and the advantageous prices he can charge.
Finally, the outsider is the competitor whose offer may or may not differ from that established by the leader, questioned by the challenger, imitated by followers, or adopted by the niche occupant.
This competitor, lining up alongside, can be a privileged, a corruptor, or just an eccentric. But he can also be an innovator who, instead of imitating and developing improvements that support the established standard, invests in disruptive technologies, original work methods, and latent markets that, when successful, set a new supply pattern and create a new market.
Concerning this last positioning, Clayton Christensen, in The Innovation Dilemma, describes the work of some American outsiders in data storage on hard drives and flash memory, excavators, and mini steel plants.
C. L. Eckhard, author of Pricing in Agribusiness: setting and managing