How small brands can take down a Goliath
Thursday, June 13, 2019/
In the biblical story of David versus Goliath, David the shepherd takes down the mighty giant warrior Goliath with a single sling of a stone, hitting him between the eyes and knocking him to the ground.
In his book David and Goliath, Malcolm Gladwell explains Goliath’s size was also the source of his greatest weakness. The slow giant had a genetic condition that drove his extreme growth also rendered him partially blind. Goliath falsely assumed that any battle would be won through hand-to-hand combat. Goliath appeared to be undefeatable, but closer examination revealed David had the advantage.
Historically, a brand’s size was a great defence against smaller brands. With size came great strengths: purchasing power, resources and the ability to invest in capability. In today’s business world, defined by speed and disruption, these strengths are often weaknesses. Big business is caught in a state of inertia. Greater resources need more coordination, through meetings and committees, resulting in slower decision-making. Large factories, for example, are efficient but inflexible.
The key to taking down Goliath is exploiting vulnerabilities. Big brands are often built to solve old, outdated consumer needs, motivations and pain points. Technological advancements create product evolution opportunities. Big brands have greater sales channel conflicts to manage. Media disruption, for example, is creating new ways to spread brand messages.
Your brand can attack Goliath in four critical ways.
- Identify relevant customer needs.
- Sell contemporary features with better benefits.
- Exploit channel opportunities.
- Amplify your message.
Changing customer needs
High-growth brands are built on the foundations of motivating customer insight. What are customers trying to achieve, and more importantly, what will they pay you to solve? Often incumbents were designed to address an old, outdated consumer insight.
We all have a universal need to drink water for our health and survival, yet most people don’t carry water around all day. The broad distribution of Mt Franklin and Cool Ridge satisfied our need for conveniently packaged water. However, the guilt associated with buying single-use plastic is now a pain point. This prompted us to launch Calm & Stormy, solving this tension by selling mineral water in sustainable, recycled aluminium cans.
New features, better benefits
Brands sell features, while consumers buy benefits. Advancements in science and technology are creating new features. However, large brands protect profits by maintaining the status quo and selling old features, either assuming new opportunities are fads, or because they’re hamstrung by manufacturing capability.
Blockbuster, the once-dominant movie rental business successfully transitioned from VHS to DVDs, but it failed to adapt to the movie streaming revolution. Ironically, Netflix offered to collaborate with Blockbuster in the early days but was knocked back. Netflix successfully took down Blockbuster and is forcing Disney to reassess its core business.
Sales channel conflict
Big brands achieve scale by selling across a variety of channels. Some retailers offer highly curated experiences, while others are more transactional, selling at the lowest prices. With opposing objectives, it is hard to satisfy all. Invariably, big brands neglect experiential retailers in favour of high-volume, cost-driven retailers.
For more than 200 years, the Schweppes brand has been producing quality drinks and is famous for its tonic water. But the formerly premium brand is now traded by the grocery chains at half price, creating tension with the best bars and restaurants. Fever Tree identified this opportunity and filled the gap with a premium offer.
Spreading new messages
Brand success is driven by creating awareness and positioning. Big brands have capitalised on safe, mass media campaigns to achieve this. However, the digital revolution has created new communication platforms, opening the doors to a new approach. Leveraging the 24/7 media cycle relies on creative and regular stories, a new skillset that every company is learning in parallel.
For 30 years, the Gillette brand consistently advertised with the message ‘the best a man can get’. They relied on mainstream media expertise, which is becoming less effective. In contrast, the startup razor brand, Dollar Shave Club, built its brand using an irreverent short-film featuring its chief executive officer talking about how fucking great its blades are. Its latest campaign was on Pornhub, a leading pornography site. Far from safe, but no doubt effective at targeting their audience.
Goliath may seem like a formidable competitor, but by deeply studying and identifying its weaknesses, it is possible for new brands to take them down.
Change is constant, and it creates opportunities. Because customers need change, technology evolves, sales channels emerge, and media channels disrupt, the little guy has a chance.
It has never been a better time to be a startup brand. However, you won’t be alone in trying to steal business from the big brands. Goliath may not be your only obstacle.
From the frontlines
Five critical questions: Are you listing your startup too soon? Lisa Schutz Verifier founder
Ignoring your ‘obnoxious roommate’: What this founder learnt when she met Arianna Huffington Michelle Gallaher ShareRoot CEO
Sex appeal, runways and mature markets: Everything Guy Pearson learnt during his $26 million Series B raise Guy Pearson Practice Ignition CEO
Barriers from the outset: Why the government’s Boosting Female Founders Initiative is unlikely to succeed Laura Keily Immediation founder