When it comes to establishing a company in a new market, some marketers believe it is often better being the first company in rather than a follower. The argument for this includes the potential advantages of establishing relationships with buyers, suppliers, the news media and others before competitors enter. Yet being first to market does not guarantee these advantages will happen, thus opening the door for others. For instance, some of the things that can open up the market for competitors include early entrants launching poorly performing products or early entrants who cannot get their message out due to ineffective promotion.
The advantage of being an early entrant especially does not exist when it comes to technology products. The reason is technology can change so rapidly that a similar, though more innovative product can be introduced and quickly steal away customer interest. A good example is the evolving market for television connected devices. These devices range from set top boxes offered by major cable providers, such as Comcast and Verizon, to much smaller devices, such as Apple TV and Google Chromecast. With these major players, one might think this market is too crowded for any new entrant. Internet giant Amazon does not think so. As discussed in this story, the world's premier online retailer has entered the market with its own Internet connected device that will stream movies and even some TV programming, such as ESPN.
Amazon has a track record for entering tech markets late and then succeeding. The most notable is the eBook reader market, which Amazon entered in 2007 with the launch of its Kindle book reader. By the time Amazon entered several devices were already on the market, including a highly promoted reader offered by Sony. Amazon was also a late market entrant in the online streaming music business, following Apple's iTunes by almost four years. In both cases, Amazon quickly became a market leader.
As mentioned, the streaming video market is quite crowded, so things may not go as smoothly as they did with eBooks readers and online music. But given Amazon's marketing power, including a staggeringly large customer database and its strategy of initially pricing products at highly competitive levels, one expects they will become a key player in relatively short period.
Comparative advertising, where one company takes dead aim at another company, can be a remarkably effective way to capture the attention of a target market. For instance, let's assume Product A is the market leader for potato chips to the point where a large percentage of the target market thinks of this brand first when they want to purchase chips. Product B, on the other hand, may be an upstart brand looking to capture some of Product A's market share. Using a strong comparative advertising message, that has Brand B discussing the limitations of Brand A, the upstart brand may eventually get some customers to think of their brand when the need arises for potato chips. This outcome has a higher probability of occurring if the comparison advertisement runs for an extended period and is presented across different media (e.g. TV, Internet, print).
However, comparative advertising is also inherently dangerous, especially when an upstart uses this strategy against a leading brand. Invariably, the market leader will fight back with their own ads that often contain the message "we are the leader and you can trust us, but you cannot trust them." Additionally, if this fight goes on for an exceedingly long time it can lead to serious financial strains on the upstart brand if they want to continue to duke it out.
In order to avoid a protracted battle, an upstart brand may forego direct comparative advertising and instead employ a more subtle, indirect approach. The key to this method is not to directly mention the competitor by name but to allude to them so that most people experiencing the ad can easily recognize the competitor being targeted.
This is the approach being used by Taco Bell as they take on McDonald's. As discussed in this USA Today story, Taco Bell has launched ads that are unmistakably directed to McDonald's, but are doing so without directly mentioning the fast food leader by name. Well, sort of not mentioning them. The ad presents 25 men named Ronald McDonald, who sing the praises of Taco Bell's new breakfast menu.
At this point, it is not clear how McDonald's will respond. A search of the U.S. trademark database shows that McDonald's has trademarked various terms using the Ronald McDonald name, including one from 1967. But whether they will attempt obtain a cease-and-desist order claiming trademark infringement is unlikely as this seems to be more along the lines of being a parody than an intentional infringement.
For the second time in the last week, we see what may be a new approach to promotion within television shows. Last week it was a special test of placement-and-purchase promotion, where viewers could buy items they saw while watching a television program.
Today we see promotion that is even more direct as it uses a television show's cast members to deliver the message. While advertising featuring cast members is something we discussed last year, as explained in this New York Times story, what makes this a new approach to promotion is that cast members are pitching products in-person during the live telecast of two TV Land sitcoms.
Now we say this is something new, but new in marketing is often a relative term. In fact, while this may be new to a large majority of viewers of these shows, it is certainly not the first time live cast member advertising has been presented. This method of advertising was actually the common form of television advertising back in the 1950s, when television was in its infancy. For example, check out the accompanying YouTube video of a 1950s children's show at about the 2:30 minute mark.
While these live commercials are catching attention, it is somewhat unclear if this will be a trend given that so few shows are presented live. But also discussed in this story is another evolving promotional method in which sponsors pay to be included in the plot line of a show. Compared to the live ads, the relatively simple execution needed to present sponsored plot line ads almost certainly means these will be a common occurrence over the next few years.
Throughout our Principles of Marketing tutorials, we note that the most challenging part of marketing is creating products customers will actually want. To achieve this goal, most marketers engage in research to help identify benefits customers seek. There are many research methods marketers use to uncover customer needs ranging from simply survey research, such as those delivered by phone or on the Internet, to more advanced techniques, such as focus groups and observational research.
Within observational research, there is an evolving method called ethnographic research, where marketers watch customers in their natural environment as they manage their everyday activities. By entering customers' homes, marketers may come across unmet needs the customer may not recognize and would not be able to convey if asked directly.
For instance, in this Advertising Age story, we see how a research firm hired by Playtex (same name as the lingerie firm but offering different products) benefited from in-the-home research. The research was aimed at identifying shortcomings in children's drinking cups that led Playtex to introduce several new cup designs.