How To Take On (And Beat) Large Competitors

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As a marketing and revenue growth consultant, I often work with companies that are not the industry leader in revenue, market presence or other factors. For many, going up against competitors that have large customer bases and huge marketing and R&D budgets can be daunting. However, there are several upsides to being the challenger to the industry giant:

• When it comes to market share, the big company has more to lose. If they have 70% of the market and you can slice off some of that percentage, it could hurt them and mean rapid growth for your company.

 You do not have an existing perception to untangle. Firms that have spent millions of dollars and years/decades building a certain brand can’t easily claim to be something else. You, on the other hand, can take a fresh approach to the marketplace.

• You haven’t been doing it “this way” for years. While there are exceptions, it seems like the larger the company, the more likely it is to have a mentality like: “We have had tremendous success doing things a certain way, so why should we change?” Think Kodak, Blockbuster, WordPerfect, Siebel Systems and many other giants that thought they were too big to fail and were too stubborn to change.

Here are some proven methods to create your own David-versus-Goliath story:

1. Know the enemy.

Sun Tzu said it best in The Art of War: “Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and yourself, you are certain in every battle to be in peril.”

Google is your best friend when it comes to keeping tabs on your competitors. You should opt in to receive their promotional materials, newsletters, etc. Also, bookmark your competitors’ websites, and check in once a week or so to see what has changed.

2. Don’t be afraid to engage with Goliath.

By following the first strategy, you should know enough about your competitor(s) to find the exploitable gap — the place(s) where you are strong and they are weak. Here are some areas to explore:

 Who are their target customers, and which segments are missing?

 Where are the calm waters? This concept was popularized in the book Blue Ocean Strategy, which shows you how to find what the authors call “untapped new market spaces.”

 What are the weaknesses in their product, pricing or delivery systems?

Once you determine these gaps, pick the most important, and share it with the world. Perhaps the best-known example of this was Apple’s Super Bowl ad in 1984 that pitted the (then) lowly Macintosh computer against mighty IBM’s PC. For a fee of $250,000 (plus $650,000 in production), Apple received tens of millions in publicity. And, as reported by Business Insider, “The ad aired only once, but was replayed on news channels across the world for weeks, and contributed to the sale of about $150 million worth of Macintoshes in barely three months.”

It is also a good idea to do a SWOT (strengths, weaknesses opportunities and threats) analysis on each of your main competitors. Pretend you are the competitor and ask: How would you beat your company? Then, take whatever measures are necessary to cover your own exploitable gaps.

3. Establish the rules of the game.

Just because your competitor is bigger doesn’t mean they get to dictate how you sell, what you sell or how you present yourself. Instead of playing their game, disrupt the industry by creating a modified game that leverages your strengths and exploits their weaknesses.

Dell did this with online PC sales, Uber with transportation services, Netflix with movies and Dollar Razor Club with shaving gear. In each case (PCs, movies, rides, razors), what the company was selling was substantially the same, but the how was very different.

4. Be unique.

By this, I don’t mean that you should give the impression that you do exactly what your competitor does, only a little better or cheaper. As the saying goes, “There are riches in niches.” Your niche could be exclusive features, specialized vertical expertise, favorable pricing/payment options, or anything else.

5. Project a bigger appearance.

Your mission is to obtain parity with bigger competitors, at least from a perception standpoint. Small companies can look bigger by posting a contact address that is in a real business area (not their house or apartment). Another smallness indicator is if only 1-2 people are listed as owners, since bigger companies tend to use titles like CEO, VP, Director, etc. Also, ensure that the materials you produce and your social media presence reflect what prospects would expect of an industry player.

When I ran marketing for Optika, a smaller company in the content management space, I tasked my web development team with creating a website that was on par with the three biggest vendors in the enterprise content management space. We didn’t want to lose deals because prospects who viewed our website perceived us as a small player. Because we presented ourselves as a leader, we were invited to bid on many more opportunities.

Cloud-based/SaaS vendors have done a great job of using these five strategies to beat giant legacy vendors. They knew the enemy and were willing to engage with them because many of the founders had come from legacy companies. They set the rules of the new game by offering a new way to deploy, use and pay for software. Moreover, they were different to the core, and the smart ones found a way to look like they were bigger and stronger than they really were.

Remember that Salesforce was once David to Siebel Systems’ Goliath, as was Netflix to Blockbuster, Apple to IBM and Southwest to the big airlines. By following the above strategies, your company can be the success story everyone is talking about.

Note: this article originally appeared at Forbes.com August 28, 2018.

2 COMMENTS

  1. Hi Chris: thanks for posting this. Many early-stage companies face the challenges of selling new offerings in markets where there are multiple dominant, well-established competitors. When head-to-head competition is the preferred strategic choice, it’s good advice not to be afraid.

    But very often, there are alternative approaches that are more successful and less risky. As a product manager, I have carved beach heads at the edges of markets, where customer needs might not be not well supported – for example, when IBM’s DMAS (Distribution Management Accounting System) was a dominant solution for IBM mid-range computing. At the time, my company’s application addressed needs that DMAS didn’t handle well, notably, strong unit-of-measure conversations, vital for building material distributors and retailers. As a small software developer, taking on DMAS directly was a recipe for failure. Instead, by positioning my company’s product as offering the correct features for a subset of customers where DMAS struggled, IBM’s sales force began to recommend my company’s product. That my ‘n’ of prospects was comparatively tiny to DMAS didn’t bother me – or IBM – in the least.

    For this reason, I recommend to clients entering new markets to re-define ‘competitor’ and consider how they might partner or complement a dominant offering, rather than taking ‘goliath’ head on. Even when a sliver of market share gets shaven from a dominant vendor, rapid growth – or any growth – is far from certain.

  2. Andy, as always, your comments are very perceptive. Your example of how you attacked IBM’s DMAS flank is a perfect example of how to be a niche marketer without engaging the ire or turning on the competitive juggernaut of the large competitor. I’ve had occasion to do this against the likes of Microsoft, Oracle and a few other giants and it is almost always the best approach.

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