Every organization comes to a point where they need to figure out what they want to be when they “grow up“. When you begin to expand beyond your core market segments, you look to your competitors, and wonder what is the next beach head to stake a claim to. All too often these junctures lead to indecision, and defocusing of your early intensity.
The organizational temptation to emulate the formula followed by the market leader is strong. They got where they are by adding to their core segments, one by one, establishing a market where one may not have been before. Why can’t we just match them product for product and bring the fight to them?
Why not indeed
Market leaders become leaders over a long period. Perhaps they were first to market (like the leader in my industry), or they were a fast follower, with uncanny instincts as to where to place their bets next. Regardless they leave a trail of breadcrumbs that isn’t difficult to follow, adding products to address markets, or developing new technologies to fill gaps, until they are numero uno.
While you might envy their full product portfolio, and their ability to command the market’s mindset, one thing is certain, you can’t just follow the path that they blazed to the top spot.
Yet, when strategic planning, and future product strategies are laid out, all too often the leaders in your organization will look to the #1 player in your market and try to duplicate their offerings.
The big mistake in this is that it is always a “me too” strategy. You are walking a path that has already been charted, and you can bet your last dollar/yen/euro that the market leader will see you and lay barriers in your path.
What to do then? All the usual marketing tactics:
- Look for underserved markets. The market leader has size and inertia propelling them. Their scale and scope reduces their ability to react nimbly to new segments that appear, or causes them to write off smaller opportunities that aren’t attractive (read: BIG) enough.
- Outflank them. The market leader has a huge portfolio of segments to defend. Their need to offer “standardized” products that aren’t tailored to specific segments (but are good enough) leaves those segments open to someone who can put the extra effort to meet their needs.
- Differentiation. Large companies who lead across multiple markets do so with compromises. Often their products are neither the best, nor the right tool for the job. An astute competitor can make significant headway by developing a differentiated offering, optimized to the specific segment’s needs. Caution though, if you become too painful to the leader, they will react aggressively.
- Orthogonal market expansion. There are likely completely new beach heads to land on that even a market leader will miss. These are outstanding opportunities to grow your reach. (an example: A company that made instruments to measure bearings in automotive manufacturing, with a simple software change was able to penetrate the optics testing market for lenses).
While the temptation to follow the leader is attractive, it is risky. The Leader will see you in their rear view mirror, and react to protect themselves. Avoid the “me too” strategies, and focus on either underserved segments, or on differentiating and beating the bigger player in a market that they are the square peg in the round hole.
Of course, if you are the big cheese, the numero uno, the ichiban, your goal to be on the lookout for the inbound attacks from the pretenders.
About the title: When I was a youth, in my formative years, I listened to Dr. Demento on the local radio station (KOME 98.5), and one of the songs that played almost every week was “Existential Blues” by Tom “T-Bone” Stankus, and to this day, I remember most of the lyrics when it comes up on my playlist.