Military Strategy Applied to Product Marketing
Product marketing is an area that many company’s struggle with. That is because organizations often don’t take a strategic approach to the way they organize and design campaigns. In fact, product marketers stand to benefit significantly by taking a page from the military playbook.
When evaluating your approach to the market with a new product it helps to fully understand the strength of your adversary (at the company and product level). The following rules were developed by the military and I was first exposed to these principles by author Steven Blank.
- If a single company has 74% of the market, the market has become an effective monopoly. For a new product, that’s an unassailable position for a head-on assault
- If the combined market share for the market leader and second-ranking company is greater than 74% and the first company is within 1.7 times the share of the second, it means the market is held by a duopoly. This is also an unassailable position for a new product to attack.
- If a company has 41% market share and at least 1.7 times the market share of the next largest company, it’s considered the market leader. For a new product, this too is a very difficult market to enter. Markets with a clear market leader are, for a new product, an opportunity for identifying new segmentation opportunities that play to your product’s strengths.
- If the biggest player in a market has at least a 26% market share, the market is unstable, with a strong possibility of abrupt shifts in the company rankings. There may be opportunities for new products from existing players.
- If the biggest player has less than 26% market share, it has no real impact in influencing the market. New products can easily enter an existing market and increase penetration rates.
Steven Blank adds one more rule to this set of strategic calculations that is particularly relevant for product marketers. If you decide to attack a market that has just one dominant player, you need to be prepared to spend three times the combined sales and marketing budget of the dominant player. In a market that has multiple participants, the cost of entry is lower, but you still need to spend 1.7 times the combined sales and marketing budget of the company you plan to attack.
So if you are planning a disruptive assault on your market’s competitors make sure that you have enough resources at your disposal to be successful. If not, you risk wasting resources with little likelihood of success.