A good idea will always be imitated.
How do you guard yours and stay innovative?
Entrepreneurs or inventors recognize that “light bulb moment”: when they discover a product or service idea that meets the demand of a previously untapped market.
The potential to launch a new product or service with the potential of a tremendous share of the market can be quite encouraging. But…, as soon as the large competitors discover this new market they come in with big budgets, greater resources and…well, you know the rest.
So, what to do when you find yourself in this dilemma? A successful business, particularly the leader/innovator of a new category (and that’s what these innovators may instantly become) must be prepared to defend its piece of the pie whether the firm is large or small.
We counseled an entrepreneur who started a line of personal care products targeting pre-teens. The market was free, clear, and pretty much un-touched – for a while. Large personal care companies got wind of the idea and moved in . Paying slotting allowances to distributors for favorable shelf placement and deploying larger, well organized sales forces, these behemoth companies achieved greater market penetration. And, as larger companies, they also had resources to hire advertising agencies that fielded hard-hitting sales campaigns to build awareness for their new products which offered tie-ins with their other brands as incentives to retailers.
The client didn’t go away quietly, though. He was able to convince a diverse array of investors to believe in his product. He was able to negotiate with distributors and spread his product over 13 percent of the country – without a dedicated sales force. This included gaining distribution in CVS, Kroger, and other larger retail chains. However, despite his creativity, perseverance, and hard work, he was simply out done by competition with greater resources.
Our advice at the time was two-fold: 1) take the alternative (private label) brand option, AND 2) consider forming a joint venture with a major firm.
Private label, the idea of a ”store brand” is not an unlikely direction for a new company in the health and beauty category. Many firms in this sector have more than one brand of the same product; they have products that extend the brand name AND manufacture store brands for the likes of Walgreens, etc. In this case, the major retailer would become a financial partner, gain a store brand of the new category (positioning them as more innovative), and free up resources for client’s brand of the new product.
Unfortunately, the client (not unlike many entrepreneurs) held an emotional investment in the company, which he named after beloved family members. He was uncomfortable with the idea of a joint venture.
While not uncaring about the client’s affinity and personal feelings about his idea, the fact is a joint venture could have resulted in a much greater profit on the original investment and the proceeds could be invested into the “family brand.”
The adage about necessity being the mother of invention can serve as inspiration for inventors and entrepreneurs who have succeeded at avoiding direct head-to-head competition to bring many ground-breaking firsts to market.
Unfortunately, another adage comes to mind: “Amateurs invent – professionals steal.” In other words, a good idea is going to be imitated. Innovation, even technological innovation, is no shelter from competition.
Getting and keeping market share can be challenging, whether you are a large or small enterprise. Even the best idea needs a good strategy that fits the company’s needs.
Remember – innovation does not stop with a new product. In fact, the finished new product is often just the beginning.
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Founded in 1987, Dorsey & Company Strategic Consultants to Management is a carefully assembled group of more than 50 associates who offer a wide range of marketing expertise to thoughtfully approach every engagement according to its unique competitive and marketing challenges and requirements. The Dorsey & Company approach has consistently yielded favorable results for leading clients in automotive, energy, utility, branded and consumer goods, retail, higher education, telecommunication, government and nonprofit, financial and professional services, health and pharmaceutical, and other industries. Visit here to learn more about Dorsey & Company.
