Being a market leader is not ENOUGH!

To be a market leader is the second-best thing in business, but what is better is to stay a leader in what you do. We’ve seen many companies become leaders, only to become arrogant, lazy, or careless and lose their position in the market.

Examples of such fallen leaders are Nokia and Blackberry in the mobile market. Yahoo!, too, was a market leader in search engines, and Hotmail in emails, but both lost to Google. Cadillac lost the high-end car position to Mercedes, BMW, and even Lexus. You might not be as big as those examples, but there is always a market leader in niche markets such as a local burger joint, a bakery, or a tailor. And if you are fortunate enough to be at the top of your category, defend it!

Defensive Strategy:

Rule #1: Define your position.

Any entrepreneur or business owner should know his/her strategy options. There are four strategies: defensive, offensive, flanking, and guerrilla (I have explained guerrilla marketing strategy in a previous article). Defensive marketing strategy is only good if you are currently a market leader. What determine your position are the customers of the market (not just your customers – all customers who use what you offer).

Take, for example, cafés. We all know our options when it comes to cafés: Starbucks, Caribou, Costa, Cinnabon, etc. But if we randomly ask people which café is their favorite, I personally believe Starbucks will be mentioned more than the rest.

So, you’re a market leader; now what?

Rule #2: Attack Yourself!

It might be true that you have the best product, the best service, or the best business model. But if you think that no one will ever make a better product than yours, then you’re insane. There is always room for improvement, a new technology, or a better way to do things. In other words, there is always room for a new competitor.

This strategy says, “Don’t give new competitors the chance to attack you-you attack yourself!” Be like Gillette. Have you noticed how many new razors they produce each year? And every time they claim it’s a better technology than the previous one. They are masters of defensive strategy. While a competitor is trying to come up with a better technology than theirs, they launch two, even three new technologies. In Procter & Gamble, they say, “It’s better to have the guy in the next office steal our market share than an outside competitor.”

Rule #3: Block Competitive Moves…

Starbucks coffee might be a market leader in coffee shops, but what would happen if people started moving to a different kind of drink? Say, teas? This is actually what’s happening, and Starbucks sensed it. Not long ago Starbucks acquired Teavana, a tea brand that sells loose tea. A few days ago, Starbucks announced the introduction of a “Tea Bar.” Before a serious competitor was even established in the tea market, Starbucks blocked it.

Apple did not care enough to block competition in the smartphones market and was attacked badly by Samsung. Because the iPhone is high in price (and always should be) there was room for other smartphones with lower prices. Although I’m an Android user, I always hoped Apple would buy out Nokia to produce a new line of phones to block competition.

The simplest way to block new competitors is to constantly remind people of who is the leader, by spending heavily on advertisements that focus on the brand. Another way is to drop prices for a period, just long enough to kill the new competitor. As market leaders have higher sales margins, the new competitor can barely break even at the starting point.

P.S. It’s a war.

If you’re one of those who believes that starting a business is the solution to all your problems and the way to your dreams coming true, you’re wrong. Many people succeeded, even became billionaires by starting a business, but you have to know it’s a war (marketing strategies are actually inspired by warfare strategies). You have to be realistic, patient and endure a lot of pressure to fight this war. You’ll face a lot of obstacles, bureaucracy, and many people will doubt you. I say most people don’t have the skills, but if you do have them, and can handle the pressure, go for it.

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