Wednesday, December 14, 2011

Are there advantages in being #2 rather than being an industry leader?


Many corporate leaders aspire for their companies to become industry leaders. But there can only be one leader for each industry – or in marketing terms, there can only be one product, brand, or business that controls a category. Sure, there are exceptions, but more often than not, there is a big company setting the standard – and others follow.

There are countless reasons why companies would want to be known as industry leaders. Reasons range from setting industry prices to determining product specifications to clarifying standards for customer service. But in many industries, a large and powerful force has emerged as the #2 player who often keeps the industry leader on its toes in terms of new product development, pricing, and customer service – all in an attempt to chip away at the industry leader’s percentage of market share.

Here are some famous industry leaders followed by the #2 players in their industries:

  • Coca-Cola vs. Pepsi (soft drinks)
  • Hertz vs. Avis (rental car agencies)
  • iOS vs. Android (operating systems)
  • Google vs. Bing (search engines)
  • Ford vs. Chevy (trucks)
  • McDonald’s vs. Burger King (fast food hamburgers)
  • Duracell vs. Energizer (batteries)
  • Home Depot vs. Lowe’s (home improvement warehouses)
  • Ritz-Carlton vs. Fairmont (five-star hotels)
  • Mozilla Firefox vs. Microsoft Internet Explorer (web browsers)

However, something interesting has happened with many #2 companies. Many #2 companies have used their #2 status as a selling point and competitive advantage. The fact that they are #2 or the little guy (think, David vs. Goliath) resonates with consumers, customers, and prospective customers. Consider Avis and its tagline: “We're #2 – We Try Harder.” Avis may not be the biggest car rental agency, but its ads and theme stick out. Consider the Energizer Bunny – who doesn’t think of the pink bunny when a wireless mouse or keyboard needs new batteries? And while the golden arches of McDonald’s appear on almost every corner around the world, Burger King’s constant advertising and emphasis on bigger and cheaper hamburgers have developed a large following.

So the next time your leadership team asks, “Why can’t we be number one?” Explain that there are advantages to being #2. One advantage to being #2 is the ability to create unique product specifications and/or packaging since no one expects you to be different. Consider the recent uproar when Coke launched its main product in white cans versus classic red cans – there was such an outrage that the white cans were removed from store shelves within a month of their launch. Other advantages include the ability to tweak pricing, the ability to align or partner with totally unconventional companies or brands, and the ability to change packaging or advertising just to see how consumers react.

Without the responsibility of being the industry leader, you have more leeway to appeal to new customers. Depending on how creative your marketing initiatives are and how well they are implemented, you may develop a more brand loyal following than the leader in your industry.

Check out these great quotes about COMPETITION:

In the words of Sir Richard Branson, “We know that people in Australia love the idea of both Impulse and Virgin Blue getting up and adding a bit of competition, and it’s fun to be able to deliver it.”

In the words of Linus Torvalds, “I don’t try to be a threat to Microsoft, mainly because I don’t really see MS as competition. Especially not Windows – the goals of Linux and Windows are simply so different.”

In the words of Henry Ford, “Competition, whose motive is merely to compete, to drive some other fellow out, never carries very far...But when a business ceases to be creative, when it believes it has reached perfection and needs to do nothing but produce – no improvement, no development – it is done.”

In the words of Jacob Kindleberger, “Don't knock your competitors. By boosting others, you will boost yourself.”

In the words of H. Gordon Selfridge, “Get the confidence of the public and you will have no difficulty in getting their patronage. Treat them as guests when they come and when they go, whether or not they buy.”

1 comment:

  1. Interesting perspective Debbie. This is something that I think most us connect to at a core level, but it's the first time I've seen anyone write about it from this perspective. :)

    I would tend to agree with you. Being #2 doesn't mean you're second best, it means you're positioned different.

    Great post!


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