Posted: August 30, 2011

David vs. Goliath, business-style: Part 1

Strategies to help small companies compete with industry giants

By Christopher J. Ryan

The first step to marketing success is a matter of not screwing up the big things. Presuming that you're going to avoid the major non-starters, the question becomes: "OK then, what should I do?"

How to pick the right mix of strategies is a critical question that has a textbook's breadth of possible responses. It begs further questions such as budget size, target audience, selling models and objectives. There can be as many answers as there are scenarios.

I want to consider this tactical puzzle from the perspective of a small- or medium-sized business that has to do battle with a much larger competitor. Your budget is small. Your competitor is well-entrenched, and has decades of brand equity, as well as money to burn on everything from ad buys to fancy displays at the biggest trade shows. How do you compete?

Out-niche the big guys

In my career, I've had to take on the likes of Oracle, IBM, Microsoft and EMC from a few rungs down the ladder. Some of our clients have also faced the challenge of being the David to the Goliath in their field. Perhaps you're in the same situation, staring up at Goliath and wondering, "Where is a rock big enough to take this guy down?" Except sometimes the trick isn't picking a better rock. It's picking a better battleground.

Let's assume that you're an SMB with a small budget and limited brand awareness, and even less to brag about in terms of customer base, reference accounts and chances for recurring business. Your gambit is to create a niche where your differentiators are without compare; something that addresses a particular market pain point that you do better than anybody else. Anybody.

Two examples come to mind from my days in the content management industry. A (then) small company called Documentum out of Pleasanton, California, developed a solid document management product in the early 1990s. Facing industry giants, the company decided to focus almost all of its resources on serving a niche market: pharmaceutical companies that needed to manage millions of documents while bringing new drugs to market. Because Documentum found a niche where the pain was great and then created a specific application for a specific industry, the company grew quickly and was acquired by EMC for $1.7 Billion in 2003. By challenging the industry giants, the small company became giants in their own right.

In similar fashion, when I was VP of Marketing at a small document management company called Optika (now part of Oracle), our major competitor was FileNet (now part of IBM). FileNet was 20 times our size, but we were able to compete against them quite well in a specific niche known as accounts payable automation. Instead of playing on a wider field, we won deals because we aimed our limited resources at a niche where we had a competitive advantage.

This is the essence of beating larger competitors. Always bring the fight to your backyard. Once on secure footing in your niche, don't hesitate to throw a few rocks at your Goliath. The market incumbent generally does not want to create parity by responding to attacks. In the worst case, you'll hijack their brand a little bit and gain some awareness in the giant's slipstream. At best, they might just get annoyed enough to buy you.

In Part 2: low-cost, high impact tactics for the underdog.
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