Vantive Media
contact
Brands Brands

 Brand Management

Brand Strategies

Brand strategies are most broadly implemented consistent with relative market position. The most misunderstood or missed all together brand strategy is the pre-market strategy.

Pre-Market Strategy

Pioneers face the challenge of introducing new technology solutions to a conservative IT buying community. For game changing technologies which render existing business models inferior or redefine new value propositions, the challenge is significant and messaging must be reinforced with strong combinations of education and media. Pre-market brand strategies begin the race for mind share in advance of the race for market share.

Experienced brand managers employ a pre-market strategy which begins well before the new product or technology solution is available. By crafting the brand message prior to product release, brand managers are not just illuminating their visionary solution, but actually defining the market in a way that links their product with the market or positions the market in a way that only their solution can succeed. Pre-market strategies leverage pre-launch events well in advance of product availability in order to experiment their brand messaging, establish the company’s standards as the industry’s accepted standards, position the company as a thought leader, place the company’s executives as the go to media resources and prime the IT buying community for initial market share acquisition.

The target audience for pre-market launches is much broader than with subsequent brand strategies. Instead of focusing the brand message directly on the customer, pre-market events address a much wider ecosystem which includes media, analysts, developers who may create complimentary products or product extensions, third party ISVs (independent software vendors) who may integrate their solutions, business partners who may bundle the new solution with other solutions, distributors who may increase the company’s delivery channels or complimentary vertical market companies who may be willing to OEM the technology.

Pre-market brand executions are difficult even for experienced brand managers. Prior to Apple’s impressive success with the iPod, the company failed miserably when CEO John Sculley pre-marketed the Newton PDA as the digital device of the future. Similarly, while Sun CEO Scott McNealy pre-marketed ‘network centric computing’ well before the company ever had a web server and then became a market leader for a category which it heavily influenced, CEO Larry Ellison’s similar vision for the ‘network computer’ was unsupported, discredited and failed.

Pre-market brand strategies are separate from pre-release product announcements. The later are generally used as sales strategies intended to slow the market’s current purchase cycles, stop competitor sale opportunities from closing and increase sales cycle durations to a length where vendors currently without products may later have products ready for sale.

First To Market Advantage

First to market pioneers enjoy product and market positioning which is very difficult to attack. Because these pioneers literally define the market their solutions inherit the de facto market fit.

Pioneers are closely connected with the category or technology sector they originally evangelized. They benefit from high brand awareness, influencer recognition, media attention and mature distribution channels. Most importantly, they possess strong influence with prospects in the formation of brand preferences and are viewed as the low risk choice.

Pioneers will first be challenged by me-too competitors; however, as long as the pioneer is prepared the challenges will be weak. Me-too competitors attempt to pick away at the industry leaders market share with solutions that are marginally superior (normally in select areas) and less costly. However, me-too entrants fail to realize that their references and comparison points to the pioneer actually provide the leader with increased prominence and competitive positioning. This occurs as the me-too alternatives derive their identities from the leader while their distinctiveness becomes marginalized and offset with their perceived increased risk.

Any perceived buyer risk when making a brand choice will uphold the leader’s position absent any considerable incremental value. Buyers recognize and have more information about the market leader. They perceive that the market leader is the leader because their solutions work. Me-too or follow-on competitors are unknown and their solutions untested. Buyer caution imposes measurable risk with the untried competitors and to reduce risk the buyer will pay a premium for the de facto standard.

In the end, the me-too brands differ from the leader simply because they are not the leader and therefore are by definition inferior. The dominant first to market preemptive position thwarts the ability of later entrants to attack it based on negligible differences or price.

Late Entry Strategies

There are several late entry strategies, sometimes referred to as first to market displacement strategies, that have proven successful for many hardware and software technology companies. Netscape brought the browser to the Internet with extremely strong first to market advantage, however, was succumbed to Microsoft’s Internet Explorer. Supercalc was the pioneer of the spreadsheet, however, was displaced by Lotus 123 who was then displaced by Microsoft Excel. Palm achieved a resounding pioneer advantage with the PDA, however, was later displaced by multiple competitors including Apple. In the business applications market, McCormick and Dodge (M&D), Management Sciences of America (MSA) and Dun & Bradstreet Software all lost pioneering advantages and were later displaced by SAP. The technology industry is infamous not just for the frequency of displaced first to market leaders, but also for the pace and swiftness in which technology leaders become displaced.

The most utilized late entry strategies within the technology industry include the following.

  1. A fast follower strategy. This approach is one of the most frequently implemented late entry strategies and normally fails. Fast followers choose to engage the first to market pioneer without changing the rules of the game. They attempt to surpass the pioneer’s innovation by being better or applying more resources in select areas. However, fast followers are normally me-too competitors and by adopting this position the follower implicitly signals to the market that the pioneer is indeed the de facto standard, the most favored and the lowest risk solution. Fast followers are normally resigned to a defensive posture. They are forced to play by the rules established by the pioneer. They have access to only a portion of the target market, need to spend more to have the same marketing impact and their customers are more fickle.

  2. A differentiation strategy. This approach is the second most utilized late entry strategy and fairs better than the fast follower strategy. A late entrant uses the differentiation strategy to define its solution more fundamentally different than the first to market pioneer. However, a key point with this strategy is that the late entry competitor is using the value proposition and business model created by the pioneer to the competitor’s advantage. There is a key distinction between brand differentiation and brand superiority which is important when planning brand strategy. While differentiation seeks to produce value in a way that is distinct or unique, superiority attempts to position the late market brand as better than the incumbent using the existing market evaluation criteria. Experienced brand managers sometimes craft particularly potent brand strategies which combine the differentiation and superiority variables for a synergistic value proposition.

    The most successful differentiation strategies are frequently based on the market leader’s weaknesses, however, the degree of differentiation necessary depends in large part on both the strengths and weaknesses of the pioneer. If the leader is strongly associated with the market it created, the challenger will need to veer further away from the leaders’ core value proposition and convincingly demonstrate greater differentiation. However, if the pioneering leader exposes material weaknesses it is much more susceptible to direct attack. In this case, challengers may be well advised to assail the leader’s weaknesses head on with concrete demonstrations of superiority (more so than differentiation). A key success factor with this later strategy is to support an increased value proposition with increased pricing (as opposed to discounting which implies a me-too strategy to buyers) and strong marketing and advertising support.

  3. A bundling strategy. When brand differentiation or superiority becomes impractical, brand bundling may be a viable option. Bundling is the clever grouping of products or solutions which collectively achieve a more synergistic value. This strategy works particularly well for solutions which are often manually assembled by the buyer and for more mature technology solutions which individually are perceived as commodities, however, as a group may be perceived as unique. The risk with a brand bundling strategy is that it offers few barriers to entry and can often be copied by competitors in short order. However, the upside is that for an interim period, the brand bundler can change the comparison evaluation between itself and competitors. When products are rightly or wrongly perceived to be commodities, the only material decision making differences for buyers are brand and price. By bundling the perceived commodities, the seller creates differences where none previously existed, can shift buyer evaluation from price and exerts to brand influence.

  4. An innovation strategy. This brand strategy seeks to redefine or make obsolete what consumers believe or perceive about the market and the established leader. Within the technology industry, innovation is normally born from technology or process originality (or a combination of both) and delivered in the form of new products.

    The strength an ultimate success of an innovation strategy is directly commensurate with the degree or magnitude of innovation. Buyers are less responsive and less loyal to only marginally innovative product releases. Therefore, the late entry’s brand message will be more muffled and their marketing spend and sales effectiveness will be less effective as compared to the pioneers. Marginal innovation coupled with late entry enables the pioneer’s brand to impose great costs and a daunting task on its rivals.

    However, if the market perceives the innovation to be truly ground-breaking, the late entry’s product introductions will be freed from playing by the pioneer’s rules and in position to change the rules of the game. This will actually result in putting the pioneer in a defensive and reactive position. While new product innovation is a challenging undertaking, technology is a fast changing competition, no pioneering technology is without its weaknesses and innovative late movers trump their pioneering competitors every day of the year within the industry. Late market innovators actually then capitalize on the investments made by the pioneers and succeed in growing faster and growing the market beyond what the pioneer attained. In many regards the pioneer actually provides the initial customer base which converts to the innovator and thereby accelerate the competitive positioning between the two.

Innovation Strategy Case In Point

Innovation strategies are not always based upon technology or intellectual property (IP) break through and in some cases may be carried by a combination of marketing resources and pure velocity. Microsoft is prime example of the pure marketing strategy.

Microsoft is surprisingly nimble despite the company’s large size. Nonetheless, with the introduction of more technologies than any single company can manage, Microsoft has initially missed several game changing technology events such as the Internet browser and online search. To counter first to market misses, the Redmond-based company routinely employs a progressive marketing strategy against the first to market pioneer as follows:

  • First Microsoft either dismisses or chastises the market leader and/or the industry in general, often lobbing broad (and unsupportable) claims of FUD (fear, uncertainty and doubt);
  • If unable to turn the tide of market progression, Microsoft then humors or belittles the new technology, often remotely acknowledging the pioneering value but suggesting limitations and maximum scale for the market;
  • Once Microsoft recognizes the new technology and market are bigger than itself, it embraces the technology.
  • Finally, Microsoft adopts an innovation strategy whereby it introduces a competing product with what it positions as the “next industry standard version” of the technology’s evolution.

This Microsoft theme has been most recently played out within the software as a service (SaaS) movement. Microsoft originally snubbed SaaS CRM and other business software systems while simultaneously injecting FUD with allegations of information security vulnerabilities or system uptime concerns. After the market enthusiastically endorsed SaaS CRM software companies such as Salesforce.com, Microsoft suggested SaaS was limited to the smallest of SME (small and midsize enterprises) and would not threaten its Dynamics line of CRM and ERP software products. Once Salesforce.com had acquired over 1 million users and other SaaS CRM companies such as RightNow, NetSuite and Aplicor had acquired tens of thousands of middle market and enterprise SaaS customers, Microsoft embraced the technology as though it had always been a supporter. Then in predictable fashion, Microsoft promoted a concept titled “Software + Services” as the next evolution in SaaS. In reality Software + Services was not SaaS at all, it was simply Microsoft repositioning its same old (on premise) Dynamics lines in an attempt to reduce its customer erosion while also tapping into the unstoppable SaaS movement. While Microsoft’s often repeated innovation strategy frequently works, at the time of this writing its Software + Services strategy has been a losing proposition for the software giant.

Technorati: Technology Media, Brands, Media  Technorati Add to Technorati Favorites
Del.icio.us: Technology Media, Brands, Media  Del.icio.us Save this page to del.icio.us
Posted In:   Brands  PermalinkPermalink  CommentsComments (2) TrackbackTrackback (1)


TRACKBACK

Trackback URL for this blog post: http://www.Vantivemedia.com/brandstrategies.asp.


READER COMMENTS

By Jillian Campbell
Your comments about Microsoft were a Eureka moment for me. I've been a Microsoft Dynamics GP (formerly Great Plains) and CRM software value added reseller (VAR) for over a dozen years and I've watched Microsoft leverage this strategy multiple times over. I recall vividly that as soon as the Dynamics channel began loosing CRM and accounting software deals to Salesforce.com, NetSuite and others, Microsoft responded with pure FUD. When the market didn't buy the FUD, and continued to buy SaaS solutions, Microsoft responded with multiple disjointed strategies, finally attempting to redefine SaaS as the currently failing Software + Services. It's near embarrassing when trying to pitch S&S as an alternative to a customer looking for subscription pricing, hosted delivery and a multi-tenant architecture. For Microsoft, Software + Services has the two fold goal of lessening the Microsoft install base attrition to SaaS solutions and simultaneously prolonging the life of desktop software and on-premise applications. Neither goal appears to be succeeding.

comments

By Sabrina Sherman
I don't disagree with the prior reader comment, however, there will always be a place for locally installed accounting software and CRM applications. I personally think Microsoft is a great software company, however, needs to recognize when it is not bigger than a market movement. If you can't beat them, then its time to join them.

Send comments to blog[at]Vantivemedia.com.

Home Blog Home

 

 

 

 

 

 

 

GLOBAL TECHNOLOGY MEDIA BLOG

 

Services | Methods | Markets | Brands | Company | Media | Blog

Home | Search | Sitemap | Directory | Resources | Links | Terms | Contact | Privacy | 508