Competitive Marketing Strategy: How to Dethrone a Powerful Incumbent

August 29, 2012 by

In order to take on an established competitor, your company needs to establish a competitive marketing strategy using these five steps.

Image provided by: Campaign Asia

All too often, early stage companies attempting to dethrone a strong incumbent market their product as though it is the only solution available. The challenger believes that publicizing how their product solves the customer’s problem will be enough to win the encumbent’s business.

What these companies mistakenly don’t take into account is that the user of this product no longer has those same problems that made them buy the incumbent’s product in the first place.

Depending on the strength of the incumbent’s product, some or all of these problems have been solved.

When Google released G Drive earlier this year, for instance, I didn’t even bother to check out the demo. Why? Because it was offering to solve a problem that I’d already solved with Dropbox. The one difference that jumped out to me was more disk space, and since that isn’t personally an immediate problem, I didn’t investigate further. Switching products requires time and mental effort, and unless the benefits are crystal clear early on, I’m not even going to waste my time with further research.

The majority of B2C users no doubt share this sentiment, and the resistance to change is further exacerbated by the longer sales cycle in B2B. To effectively market against a strong competitor, you’ll obviously need to be an upgrade in functionality or be cheaper than their current solution. But you’ll also have to:

  1. Do research to anticipate and preempt the specific problems customers have with the incumbent.

  2. Make research into your product as available and easy as possible. Don’t make potential customers have to speak with a salesperson to learn about your product.

  3. Lower the cost and risk of switching over with a freemium model or free trial period.

  4. Differentiate yourself – incremental improvements won’t overcome the monetary and non-monetary costs associated with switching.

  5. Excel at a niche of the larger market. If you can convince customers that your product is better tailored to them than the big guy’s, you stand a chance of stealing their business.

The good news is, startups and expansion-stage companies have, are, and will continue to win this battle every day against house-hold name competitors. But it isn’t easy, and it requires a much different strategy from pursuing those greenfield opportunities where there’s no system already in place.

So you built a better mousetrap. Now comes the hard part.

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Discussion

  • http://www.menco-finco.com/ edward blake mendez

    thank you nick for an insightful piece! how many companies do you see actually juggling solutions 2 through 5 at the same time effectively? it appears relatively clear that employing all five at the same time should create some serious cash flow and future opportunities.

    mastering solution 5 generates explosive financial capital alpha with quality human capital investment. that damn mousetrap…

    blake mendez

    • http://twitter.com/NCPetri Nicholas Petri

      I think it’s rare in B2B to see companies doing all 5 effectively. My general perception is that many B2B companies are overly-reliant on their sales teams and are weak at #2 and #3. Visitors to their websites often have to contact sales to learn any more about the value proposition. If the visitor is already with a competitor and isn’t actively looking to replace their solution, they probably won’t bother.

      • http://www.menco-finco.com/ edward blake mendez

        you raise a good point about the website dance. synchronizing the message between sales speak and website content requires careful calibration. our organization needs to do that better.

        time to deliberate and consult my website designer. controlling the self-service experience would make managing multiple revenue models at the same time more approachable.

        thank you for planting that seed!

        blake mendez

  • http://twitter.com/twmalloy Tom Malloy

    In “Judo Economics” it is also helpful to use size against the established opponent by the newco being more nimble to smaller market changes. (EX: Ryanair vs. The World)