Of all the ways to differentiate a brand, none is better than leadership. Leadership is its own credential. People naturally believe if you hold the market leader position, your product or service is better. The benefit of becoming a category leader goes well beyond bragging rights.
Powerful market leaders can take ownership of the word that stands for the category. IBM owns computers. Heinz owns ketchup. Red Bull owns energy drink. Rarely is the category leader over-turned. Marketing history shows it is typically easier to hold the market leader position than achieve it. In marketing, as in war, the odds favor the leader. The principle of force gives the leader advantage.
However, while it doesn't happen as often as you might suspect, leaders can and do get toppled.
A new research study by Peter Golder, associate professor of marketing at New York University's Stern School of Business, challenges the old orthodoxy that brands holding the market leader position are near invincible. Mr. Golder's re-evaluation of the 1923 NYU benchmark study of which has oft been used to justify the near impermeability of those in market leader positions, has revealed that staying on top is more difficult than reported. Golder was referred to in an Advertising Age article:
Previously, he [Golder] said, studies concluded that 19 of 25 leading brands from 1923 maintained their leadership position for at least six decades. But the original 1923 study, he said, was actually done on 100 categories. The sample of 25 categories was selectively chosen to demonstrate longterm leadership, resulting in an overstatement of the ability of leading brands to maintain their leadership.
In other words, selected categories in the original study biased the result. The implication (indeed warning) is that owning the market leader position is not stable, it is dynamic. Treat it as a fixed entitlement, and you stand to lose what you have gained.
The Leader's Self-Inflicted Wound: Complacency
The biggest enemy of a market leader is complacency. Webster's defines complacent as: marked by self-satisfaction especially when accompanied by unawareness of actual dangers or deficiencies. Time and again, we have seen products and brands that have attained the market leader position treat it as a privilege, a fixed state of being, rather than as a responsibility to continually lead forward.
"Maintaining brand leadership over time is a game of evolution," says Jack Trout, president of Trout & Partners and founder of positioning strategy. "You don't just sit on past glory. There's no guarantee that once you get to the top of the heap that you're there forever ... Companies get into trouble when they've disconnected from their brands, and it's often difficult to help them understand that to maintain leadership, they just can't sit there. They've got to change."
The point is pointed. Regardless of how strong a brand's market leader position is, unless it remains strong to each customer and is reinforced by user experience, equity is going to be eroded over time.
The Antidote for Complacency: Relevance in Action
Positioning lives at the crosshairs of differentiation and relevance. Relevance is about maximizing the perceived fit between your brand and your customers' needs. Differentiation is about maximizing the perceived difference between your brand and competitive brands.
While both differentiation and relevance are essential, the quest for relevance must come first! You can't differentiate your brand until you first maximize its relevance to your customers. Said another way, within the context of leadership, your position (difference) doesn't matter unless you continually evolve to maintain ultimate relevance. Note: relevance is about action, not words. A company in the market leader position can't boast. A leader must "DO." It is about walking the walk. It is about evolving and adapting to change while staying connected to your basic leadership position and promise.
McDonald's and Ben & Jerry's are two brands that are actively stoking the fire of their market leader position with relevant re-invention. They are showing who they are, not just repeating tired tirades.
Message for Leaders: Do Not Quench the Fire, Stoke it with Relevancy!
Leaders that rest, dampen the fire. Leaders that reinvent, that innovate and evolve, keep the brand fire burning.
It is easier to stay on top, but only if you work at it. Holding the market leader position swings on the hinge of "if." If you are a leader, avoid complacency like the plague. Put your market leader position into play. Fix what needs fixing. Improve what needs improving. Invent what needs inventing. Put relevance in action. You've got everything to keep and nothing to lose.
Lorraine Kessler is Innis Maggiore's Principal Client Services & Positioning Strategist.