Mindshare Marketing

Sometimes there just isn’t anyone you can acquire to extend your coverage of the market.  Either your competition is entirely incompatible with your organization or it would just be cheaper to start from scratch than incorporate another entity.  In this case, it is easiest to establish an entirely new brand for the new segment of the market or category of product.

Many companies make the mistake of extending their own brand to cover new products.  This can be dangerous because it can lead to consumer confusion, decreased brand equity, and a lower level of customer loyalty in the market.  Take the example of Wilson Sporting Goods.  Wilson is active in almost every sport, but remains most well known for its tennis products.  By entering other sports like baseball and basketball, Wilson runs the risk of confusing its customers.  Its strength lies in tennis, why would anyone want to buy an expensive baseball bat or basketball equipment from a tennis company?

The other end of the spectrum is Toyota.  Already successful with economical family cars, Toyota wanted to target a younger, edgier segment of the market.  Rather than creating a new line of Toyotas and forcing a change to their existing brand image, Toyota created the Scion brand.  Still made with the same technology and designed by the same engineers, Scion is marketed towards an entirely different segment of the market.  One juxtaposition of a Toyota and Scion advertisement, or just a side-by-side comparison of their cars, shows the difference.

Extending your brand over new products or a new market might look easier, but it can be dangerous for your company.  You already know how to build a strong brand, else you would not be in the position of expanding at all.  Take the time to practice your marketing skills and build a second (or third?) brand under your corporate umbrella.  It will be well-worth the investment!

Corporate acquisitions, a phenomenon that is increasingly prevelent in today’s news media.  Companies will buy up smaller competitors.  Others will buy related businesses to leverage the competitive advantages of each.  In a heavily saturated market, acquisitions are one way to get ahead, but only if pursued correctly.

Buying a competitor just to reduce competition is a poor investment.  You buy a competitor when the purchase would enhance both brands’ performance.  Do you produce similar goods in two different facilities?  After the purchase, use just one facility and thus improve your bottom line, freeing capital for other marketing investments.  Does the competitor have a better understanding of a market while you have a greater capacity to do business there?  Combine their market savvy and your operational prowess to fully capture the market for both brands.

There are several other reasons an acquisition could be a good idea, but they are specific to industry, market, and business size.  Managers must survey their market for themselves and make an appropriate decision - to buy, or not to buy.  There is one key point every manager must keep in mind, though.

You are buying a brand, not an operations method, market research, or management team.  A business and brand is a whole package - you can leverage its strengths to improve your business, but you can’t strip it for spare parts and hope performance will still improve.

Think of your overarching corporation as a stage coach, always moving on to the next town or market opportunity.  Your brand is the horse pulling the stage.  You notice the competition has a horse with a certain characteristic that will improve your travel time - longer legs, greater stamina, lower need for grain, or something along those lines.  You buy the horse so you can leverage its strengths and those of your existing horse together. 

In this example, you will always put the horses side by side.  Would it make any sense to chop off the new horse’s legs and lash them to your own?  You horse will not run any faster and you have just destroyed the reason for buying the competitor in the first place!

Business is the same way.  You buy the brand to strengthen your corporation and, eventually, strengthen an existing brand.  This is the only way an acquisition will benefit both companies and build on the already captured market share of each.

If a move into a new blue ocean is impossible, consider setting yourself up as an island in your red ocean.  There are techniques you can use to establish yourself as the market leader and provide a level of insolation from attack.

1. Never be satisfied with your current products - Always fight for new product innovations and be willing to incorporate your competitions’ successful ideas.  This establishes you as a thought leader in the industry and new entrants will look to your company for inspiration.
2. Set standards - Offer your way of doing things as an industry standard.  VHS was the standard for video, MP3 for music, USB for computer peripherals.  Here are two examples: Sony never allowed other companies to use the technology for Beta tapes.  VHS quickly became the standard and noone uses Beta anymore, even though it has higher quality.  Hewlitt-Packard has the best technology for making inkjet printer heads, and it created the standard for ALL inkjet printers.  Now, HP sells its printer heads to other companies; even Canon, Epson, and Brother ink cartridges have HP-manufactured printer heads!

These are just two techniques your company can use.  While they might sound simple enough, any undertaking can be difficult.  Make a wise evaluation of the competitive landscape before declaring it a red ocean, and look to your competition first to see if they have already begun taking these positions.