Every startup can relate to facing a brand leader -- a competitor who may seemingly be out of their league. Some startups choose to enter the market with guns blazing, determined to go head-to-head with the industry “Goliath.” And while this kind of attitude will generally help you get ahead, entrepreneurs sometimes need to slow down and take a breath -- and smartly employ tactics that initially allow you to work around competition, instead of directly against it, all while priming you to be a worthy player.
Before you dive in, determine your intentions for your brand: are you a challenger or follower? Most fall in the follower category and develop a successful “me too” brand, but those who choose to be challengers have the most long-term ability to grow.
For SMS Audio, when we entered the market two years ago, our Goliath was Beats -- and we developed a very clear strategy that would sidestep our biggest competitor, but also allow us to begin to challenge the space. How do you position yourself to be a challenger?
Competitive research. It might sound like a no brainer, but spend time and energy researching how your competition got to where they are -- and learn to interpret it to your advantage. Everything takes place at retail, so look there first. Develop an understanding of their distribution and display strategies, pricing in the market and how they’re promoting the brand to consumers. Once you have a good handle on their overall marketing strategy, start to think about ways your brand can fit within the gaps.
When we created SMS Audio, Beats already had a substantial hold on U.S. market share and most other "celebrity headphones" paled in comparison -- launching multi-million dollar ad campaigns, only to die a quick death. Knowing that retailers would initially be reluctant to take on another celeb headphone brand during our ‘upstart’ growth period, we charted a different course.
Speak to consumers differently, in new places. If your competitor dominates your core audience, look for the outliers. Look for creative ways to promotionally bring about brand awareness among a more niche audience. When companies are not effectively filling the competitive gaps, they face a common ‘follower’ pitfall: spending too much time fighting on retail price, falling down a rabbit hole that’s hard to escape.
As an example, SMS Audio took up an unlikely, yet symbiotic, partnership with Swan Racing and NASCAR to expand beyond its core demographic of hip-hop fans -- and likewise with NASCAR’s racing demographic. Finding partnerships that seem unconventional but still have universal recognition will allow you to speak directly to a new and interested fan base.
Circumvent big-box retail -- at first. The cost of entry into a big-box retailer is extremely high, and most startups end up spending limited resources in trade allowances and slotting fees, finding themselves at a loss for cash when it comes time to talk to their consumers. To be an aggressive challenger, you need mixture of both. Circumvent the big-box retailers initially, and find ways to look at markets in the same way as major customers. Connect with individual global markets and view them as if they were retailers unto themselves.
Following the path similar to adidas, who has much larger brand recognition and sales worldwide vs. in the U.S., SMS Audio focused the first few years on growing our international sales. After achieving strong retail presence in more than 60 countries around the world, we’re now better positioned to focus more heavily on the U.S. market.
Bottom line. It’s not about the pace -- it’s about the race. You don’t always have to be fast, but you have to be intelligent enough to know your position in the category and how to work intelligently within the marketplace.