Nothing is permanent-in life, relationships and business! This eternal truth is brilliantly demonstrated by the rise, fall and rise of brands in the marketplace. Leaders of yesterday have become laggards today; and might become leaders again tomorrow or even disappear altogether. Students of economics and management are taught that every market has ‘entry barriers’ that make it very difficult, if not impossible for new players and brands to compete with and outperform older and well established rivals. But, what fascinates more than the so called entry barriers is the frequency and intensity with which new brands conquer more established rivals across the world. There are literally hundreds of such examples across sectors, geographies and segments. What makes the new entrants overcome formidable entry barriers and beat market leaders at their own game?
In contemporary times, technology and innovation play a key role in transforming late entrants into global power houses. Back in the early 1990s, when I was a management student, Microsoft was the unchallenged global leader. The advent of the Internet saw Yahoo first challenge the supremacy of Microsoft. Back then, nobody had heard about a word called Google. And yet, it is Google that is the undisputed and virtually unchallenged global brand in the business today. Bill Gates and his team at Microsoft have poured billions of dollars to create a search engine that can beat Google. No luck so far. And of course, it does appear as if the once powerhouse Yahoo is gently fading into history. And who knows, the rate at which new technology is evolving, the next generation might see a brand bigger than even Google!
Technology has played a key role in one of the biggest brand wars of the last decade or so. Going back to my days as a student, Motorola used to be familiar and awe inspiring brand name. Telecom was then – it still is – the market with the biggest promise and potential. But, we had only vaguely heard of mobile phones and Nokia was of course a name that probably only a few hardy souls in Finland were familiar with. The company was originally involved in manufacturing paper, pulp and rubber! But now, Nokia is the undisputed mobile phone and telecom global brand leader while Motorola is struggling of stave off bankruptcy. Quite clearly, brand Nokia has been more successful in harnessing mobile handset technology than Motorola, despite the huge head start
Technology and successful marketing of the consumer benefits delivered by the new technology can also explain why a relative newcomer dislodged an iconic brand in India as the unquestioned market leader. Back in the 1980s, Bajaj Auto ruled the Indian two-wheeler market. The Indian market was then overwhelmingly dominated by scooters with motorcycles coming a distant second. But that was the time Japanese two-wheeler brands like Suzuki, Yamaha and Honda made an entry in India. The Hero group tied up with Honda and launched the Hero Honda motorcycle. It was arguably the first ‘fourstroke’ bike in India and delivered superb fuel efficiency. The early Hero Honda ads brilliantly sold this value proposition to Indian consumers with the now legendary tagline – ‘Fill it, Shut it, Forget it’. Last year, Hero Honda sold more motorcycles than Bajaj and TVS together and is perhaps the largest motorcycle company in the world now. Sometimes, established brand leaders are demolished in the marketplace by new rivals because of sheer complacency and inability to move with the times. I will give one global and one Indian example to show how pervasive this tilt towards complacency is. Once upon a time, General Motors (GM) – along with Ford – virtually ruled the world of automobiles. Brands like Chevrolet and Pontiac had become gold standards when it came to customer loyalty and brand equity. By the time Toyota started selling its cars in the United States, the giant GM did not even deign to acknowledge the potential new rival. After the oil shock of the seventies, Toyota focused increasingly on fuel efficiency and smaller sizes while GM continued with gas guzzlers. The result: GM had to eventually fi le for bankruptcy in 2009 while Toyota is the gold standard today when it comes to quality and customer satisfaction in the automobile industry. Read More....
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