Winning Brand Strategies for Market Leaders and Challengers
Let's say that your customer has three options when choosing which company to work with and which product to buy:
Option A: A large brand with a proven but aging product
Option B: A startup brand with an innovative, forward-looking product
Option C: A lesser-known copycat brand with a cheaper, good-enough product
If you're a large brand, how can you maintain your dominance over innovative startups or copycat, low-cost replicas?
If you're an innovative startup, how can you continue to disrupt the market and capture market share from the larger brand and the cheaper alternatives?
This was the focus of my recent discussion with Michael Roberts, CMO of Health Connective and host of the Health Connective Show.
If you've ever marketed in the healthcare technology space - and I have - then you know that the scenario I introduced above is not at all uncommon.
I'm a founder turned 18-year B2B marketer. In 2015, I led marketing for SleepCharge - an innovative sleep health technology and services company that offered patients a telemedicine app for access to sleep physicians, care teams, sleep assessments, equipment and monitoring. We first sold to benefits managers at privately insured Fortune 500 companies like Coca-Cola and Delta (B2B). Then, we rolled out our app and services to the employee populations within those companies (B2C) who needed to solve dangerous health problems related to poor sleep that kept them out of work, off the road, and away from the cockpit. SleepCharge was acquired in 2019 by a larger player, Nox Health.
This was one of several experiences in my career that gave me a view from both sides of the fence. Because of this, Micheal Roberts wanted to ask me about the risks and opportunities for both small and large brands trying to get ahead or stay ahead in the health technology space. In fact, the arguments I presented during our interview are true no matter what industry you're competing in.
So, let's discuss each company type and what they can do strategically to win in the marketplace.
Option A: A large brand with a proven but aging product
When it comes to large brands, I don't think people decide to move their business away overnight. What happens more often than not is that big brands get complacent. And when that occurs, the result is that they:
Become out of touch with customer concerns
Are less innovative
Are transactional in their interactions (smiles, SPIFFs, no substance)
Lower their service standards and responsiveness (new account manager every six months)
Watch their price-to-value go way off
In this case, it's only a matter of time before they lose customers and market share. Once the frustration peaks to a certain level, many customers will seek an excuse to move their business away from the large brand.
To avoid losing ground, established brands must resist complacency and keep surprising the customer. They must make themselves indispensable by continually adding to the value proposition. Large brands have the benefits of scale. They can remind customers why so many people trust their brand. They can use Brand to convey a desired status on their customers. It's quite challenging to remain number one in any industry and complacency will get you replaced.
The uneasy disposition of market leaders reminds me of a storied tagline from the 1960s from Avis rental car: "We're number 2. We try harder."
Option B: A startup brand with an innovative, forward-looking product
Innovative, challenger brands forge a path and build new categories with products and services that address customer needs in new and different ways.
As outlined in Sangram Vajre's book 'MOVE,' the growth stages of a startup are as follows:
Stage 1: Problem-Market Fit - The company does one thing well
Stage 2: Product-Market Fit - The company solves a significant problem
Stage 3: Platform Market Fit - The company solves a category of problems
So, the Achilles' heel of startup brands is arrogance. Because of their intellectual property, these companies may present themselves as untouchable and remain too long in the first or second growth stage. The reality is that there is no category of one. Eventually, innovators themselves face pressure from new entrants and copycats.
These are my general recommendations for startups:
Focus on building awareness, affinity and trust
Differentiate in every way possible
Stay small by focusing on relationships
Become a source of insights providing access to experts
Establish your reliability in both, technology and service
Make yourself easy to access including with key partners and affiliates
Become well-regarded so that reputable customers do business with you
Establish your scalability particularly as relates to supply chain and logistics
In the real world, customer needs change at least every 6 months, so the key for smaller, more agile brands is to stay close to the customer, continuing to listen and adapt.
Option C: A lesser-known copycat brand with a cheaper, good-enough product
In 2010, I was the Director of Marketing for an automotive chat company. We entered the space as the challenger with an innovative product and then made smart, strategic moves that got our product placed on the largest automotive sites, including those of major car brands and third-party listing sites like autotrader.com and cars.com. We went from a 12% market share to 46% in four years. It was around year three when a cheaper knock-off popped up and started gaining ground.
For large brands and startups, it may be comforting to believe that a copycat brand with a lower-priced product can never win because the copycat company doesn't have the recognition or longevity of a large brand or the clout and technology of the innovative startup, but this isn't always the case. Price and relative quality, particularly in tight economic conditions, are very attractive to many consumers. And while it's difficult for any company to win a race to the bottom, copycat brands can do well for a time and take significant revenue away from other competitors in the process.
The healthcare market, in particular, is plagued with me-too products featuring insignificant and meaningless brands. So, what then can large brands and startups do when customers seem okay with low-cost, good-enough products?
Competing against good-enough
No matter what customers tell you, people value their time more than their money. Customers want to prevent the loss of their time, resources, and reputations and avoid missing out on revenue opportunities. Oftentimes, a fuller comparison beyond price can reveal the hidden costs of inferior products and services.
Consider how rare it truly is to find a reliable, easy-to-use and well-supported product that's also lower cost - most are aware of this. Instead, there's an opportunity for companies large and small to highlight their value and build a meaningful brand that conveys something about the customer using it.
Check out the full 24-minute interview, including these and more gems, HERE.
