If you’re a small business competing in a market with a dominant leader, you can find plenty of David vs Goliath advice out there discussing how you’re supposed to stand your ground.
Generally, the advice boils down to:
Be quick and agile
Play up your small business strengths (local, personality, family-owned, high-touch service)
Compete against the giant’s weaknesses (slow, disconnected, poor customer service)
This playbook might seem easy enough to follow, but in a time of intense competition where big businesses have gotten better at playing on the local business level, half measures aren’t enough.
Your “unparalleled customer service”? That’s not a differentiator; it’s the baseline expectation. And don’t lean on the fact that you’ve been a family-owned business for over 50 years, either. You can be proud of these things, but don’t expect your audience to care about them enough to give you their business (or attention).
In other words, you need to be savvy with your positioning.
Your Positioning Options
There are a few paths you can choose from when deciding how to position your business in relation to the product or service category in which you currently belong:
1. Dominate Your Existing Category
This is what the market leader is already doing successfully. They are using messaging that reinforces the way the category is defined now and emphasizing the criteria that prospects already consider when making buying decisions.
Picking this approach means you believe you can beat the leader at their own game.
Example: You have a laundry detergent that you’re marketing as “Basically just like Tide, but better!”
While we may like to think that if more people just knew how great we are and if we just had more web traffic we’d be number one in the market, this is an extremely difficult thing for smaller companies and startups to pull off.
Remember that your market leader almost definitely has a larger sales team and bigger marketing budget than you. On top of that, if there’s economy of scale, they’re probably undercutting you on price. Even if they’re not, trying to persuade their customers to leave them for your similar but lesser-known offering is not putting you in a position to win.
Unless your market leader has obvious weaknesses that you can easily exploit, this is a high-risk path that should be avoided.
2. Dominate a Segment of Your Category
In this style of positioning, you can use an existing category and then make the case for why you’re the best choice in a sub-market of the broader category.
Example: You have a toothpaste that you’re marketing as “The BEST toothpaste for people with sensitive teeth.”
The advantage of this approach is that you can talk about your service or product in terms that your prospects already understand, but you’re not attempting to take your category leader head-on. This approach also helps you make more targeted decisions about channels and messaging to speak directly to the defined needs and challenges of your niche audience.
The downside of this approach is that your target market is smaller than the entire category, though this is only a problem if your niche market is too small to support your business goals. (Note: be sure you’ve done the market research to answer this question before committing to this positioning approach.
3. Reframe the Category
In this approach, you work within the existing category, but your goal is to alter the way your market evaluates your type of offering within that category.
Example: You make electric cars, but instead of marketing environmental bona fides, you reframe the category by emphasizing the importance of luxury, style and performance.
The benefit of this approach is that you can still work with your audience’s understanding of the category, but you have an opportunity to shift their thinking in a way that highlights your strengths and downgrades the current leader.
The challenge with this approach is that you have to be able to change the way the market thinks about your category – and you can be sure that your market leader will fight to maintain the status quo.
4. Create an Entirely New Category
Creating a new category means you are either merging existing categories (or parts of them) or staking a claim to something completely different and unique to your market.
Example: You created an app that connects riders with drivers, disrupting the taxi industry.
This is the most difficult position to pursue.
Typically there’s some type of innovation in technology, delivery or business model that makes this possible to begin with. Assuming this innovation has taken place, you’ll then need to:
Educate your market on what the new category is and demonstrate that you’re not just slapping a new label on an old category
Convince them that there’s a good reason why they should care
Prove to them that there’s a future for this category
Make them confident that you’re the company that will make this future a reality
Given how hard it is to compete for more than a few seconds of your audience’s attention, this is no small feat. That said, if you succeed at creating a new category, the potential for rewards is high. In an article in Harvard Business Review, Eddie Yoon and Linda Deeken of The Cambridge Group spoke to the benefits of being first:
“To find out just how lucrative category creation can be, our company examined Fortune’s lists of the 100 fastest-growing U.S. companies from 2009 to 2011. We found that the 13 companies that were instrumental in creating their categories accounted for 53% of incremental revenue growth and 74% of incremental market capitalization growth over those three years. The message is clear: Category creators experience much faster growth and receive much higher valuations from investors than companies bringing only incremental innovations to market.”
By creating the category, you’re the first market leader – and as discussed, leaders are hard to topple once they’re entrenched. You can shape the category’s definitions and dictate how prospects evaluate their options.
Choosing the Right Position for Your Business
Landing on the best position for your business isn’t easy; it takes careful consideration and a deep understanding of what your customers care about and what sets you apart.
By understanding the importance of this context and putting in the work to figure out the best possible position for your offering, your market leader won’t prevent your business from succeeding.
Charlie is the Chief Strategy Officer at Simple Machines Marketing. When he's not doing the marketing, he likes playing guitar, hanging with his family in Chicago and lots of other stuff too but this seems like a good amount for a blog bio.