Author: Jan Kubik
The processing digitalisation enables disruptive innovations. At the same time customers require cutting-edge solutions fulfilling their needs in terms of being seamless, sustainable, or smart (just to mention a few). Therefore, entrepreneurs and visionary companies work on new business models to bring out innovative products and services. However, they face the question whether it really pays off to be the first mover or if they are better off when using possible advantages coming with a follower strategy.
My post answers this question by providing ‘Three brand rules to rule new markets’. The brand rules are deducted especially through an expert survey carried out in the Indian Automobile Industry, which is nowadays obviously dominated by established providers. However, the survey takes on a retro perspective to reveal the success factors of first mover brands as a blueprint for other industries and emerging markets.
Brand Rule ONE: The earlier the better.
How does the timing of making important strategic decisions affect the ability of a company to create competitive advantages? Strategic decisions taken early in the development of an industry or market can enable the company to gain competitive advantages. This can also be seen in the Indian Automobile Industry where first movers have reached superior market shares and profits compared to their followers.
Take the chance, be fast and grab market shares at an early stage of the lifecycle. But to really gain competitive advantages you have either to differentiate with greater customer value, generate comparable value more cost-effectively, or do both. How this has been worked out in the Indian Automobile Industry is explained in Brand Rule TWO.
Brand Rule TWO: Differentiation instead of cost leadership.
In the Indian Automobile Industry there was a fundamental requirement to market success. Namely, to quickly anchor a vivid and differentiating brand perception in the target group to reach a price premium. Successful pioneers have fulfilled this precondition in order to reach competitive advantages. In comparison the cost leadership strategy was less promising as shown in the correlation analysis on the left. Use your brand as a valuable differentiator that has to be clearly profiled to keep an edge over followers. Therefore, you have to examine the decisive brand differentiators in terms of customer benefits and competences. Brand Rule THREE summarizes the learnings we can draw from the Indian Automobile Industry.
Brand Rule THREE: Pioneers have to understand their customers quickly and deeply.
When it comes to a vivid and differentiating brand perception the pathway for pioneers in the Indian Automobile Industry was a high level of ‘customer centricity’. Considering the lower buying power in India first movers scaled down their offerings following a ‘good enough strategy’. This means that they tailored their products and services to the specific needs of the Indian automobile drivers. Therefore, providers needed various brand competences and capabilities like a high ‘proximity to the customers’ that enabled a strong ‘responsiveness for market trends’. In combination with highly ‘motivated employees’ pioneers have built up a superior ‘reputation transporting quality’ to gain confidence in the target group. Therefore, ‘marketing abilities’ and profound ‘managerial skills’ were necessary.
Focus on relevant and differentiating brand competences that really add value to your customers. Hard facts like high tech plants, up to date machinery, broad distribution networks, etc. are hygiene factors you will not draw your customers from the woodwork. Successful pioneers possess especially intangible brand assets like committed people, a culture of customer centricity, or skills to market products and services in an exciting way. These build the cornerstone to deliver brand benefits already in an early stage of the lifecycle that empower and fascinate the customers.b
