Over the past few weeks it has struck me how many small firms are trying to market new innovative products. These can range from smart phone apps to; in the rather ridiculous words of Andrea Leadsom; innovative jams. Many of today’s leading firms began life as innovative small firms. Apple began life as a small manufacturer of home computers based in a suburban garage. Virgin began life as a small independent record store. Today, that journey, from small newco. to worldwide brand is difficult because we live in a world of copying.
For many years, management academics talked of the advantage of being the first into a new market or segment. They even coined a term for it. ‘first-mover advantage’. The problem is that there is little evidence that being first into a sector ensures a leadership advantage or even survival. The first personal computer on the market was the MITS Altair not the Apple Macintosh and it is Apple who are now the most prominent brand. Powells.com was the first online bookstore not Amazon but who recognises the Powells brand today?
Often the winner is not the first brand to enter a market but the first brand to achieve dominance of recognition in the minds of consumers.
It is increasingly difficult for a small company to achieve such dominance because copying, whether legal or illegal is endemic. During my career in consumer protection, the incidence of major brands complaining about the products being copied rose year on year. For example, Proctor and Gamble complained that Lidl were copying the design of their bottles and Lurpak complained about the similarity of the packaging of their spreads with those sold in Aldi. There was also an increase in trademark applications on the shapes of bottles and other packaging in an attempt to ensure distinct product identities.
In 2012 research showed that 50% of products sold in European supermarkets were own brand replicas of major brands. Supermarkets were keen to drive the sale of own label versions of famous brands as they could achieve a higher margin on such products than selling major brands.
Even famous brands copy. The unofficial biography of Steve Jobs alleges that many of the innovations Apple brought to the PC market resulted from a visit to Xerox’s ultra-secret development laboratory.
Of course, a firm can protect its innovations through the use of intellectual property rights. You can use copyright, trademarks or patents. However the cost of such protections may be prohibitive. It isn’t just the cost of registration; it is the cost of protecting that registration through the courts or by other means.
Arsenal spent almost a decade fighting a stallholder located outside their ground over the use of the canon logo. Manchester United and the estate of Elvis Pressley lost high profile cases on the basis that they would not have authorised the products sold by traders (the Elvis case related to branded toilet seats). Apple and Samsung have been involved in a long running patents case over the technology in their phones. Each firm has counter claimed that the other is in breach of their patent.
These cases can cost millions of pounds. Well beyond the pocket of a small business.
Then there are countries where intellectual property rights either don’t exist or are improperly enforced. Mercedes had a trademark case thrown out of court in China despite the fact that the Chinese domestic manufacturer had copied virtually every feature of the Mercedes model’s design.
Yes, intellectual property registration can help to protect your innovations but you have to allocate significant resources to that protection; funds which may not be available to a small firm. You may win the right’s battle but lose the war.
So how do you protect your brand in an environment where innovations will likely be copied. Well there are three parts to the use of marketing to protect your product or brand:
- Capture the minds of consumers through the application of a strong marketing mix. Make sure your brand is the first in their mind when they look to buy a product in your market sector. People don’t buy a vacuum cleaner, they buy a Hoover (or increasingly a Dyson)
- Constantly innovate your offer. Those that copy will have to play a constant game of catch up and the cost of doing so may be prohibitive.
- Use an appropriate launch strategy for your sector.
In relation to that last point, here are a few examples.
- Apple use a fast skimming approach to launch products. Prices are high but so is their promotional effort. They also sign distributors up to exclusivity contracts e.g. launching the iPhone only through Carphone Warehouse in the UK.
- Rolls Royce use a slow skimming strategy where the price is high and promotion is low key. High levels of promotion would likely hurt the brand image of Rolls Royce and they may see word of mouth amongst their select customer segment as a more appropriate route.
- EasyJet use a rapid penetration strategy to combat brands such as British Airways. Here the levels of promotion are high but the price of the product is low.
- Most supermarket own brand products use a slow penetration strategy where prices are low and so is the level of promotion.
So if you want to compete in today’s copying market you need to be fleet of foot and have a marketing strategy which is able to rapidly adjust to changes. Strategy needs to be altered in weeks, not months.