What does it take for a No. 2 company to establish itself as a viable rival for the long-term—or even as a future No. 1? Corporate history offers some clues .
19 Jul, 2017FORTUNE.COM
Any industry can have only one top dog at a time, of course. But what does it take for a No. 2 company to establish itself as a viable rival for the long-term—or even as a future No. 1? Corporate history offers some clues . (For a present-day story of a second-place company gaining ground on the front-runner, read the new Fortune feature "How Lyft Could Defeat Uber," by my colleague Michal Lev-Ram.)
Marketing yourself as a harder-working alternative to the top dog is a classic move. The most famous example is rental-car giant Avis, which made big gains in market share at the expense of rival Hertz in the 1960s with the help of ad campaigns that said it was No. 2, but trying harder. Apple’s famous “1984” ad, which showed a colorful revolutionary rebelling against the gray dominance of IBM PCs, played an analogous role.
Do something the leader isn’t doing, or isn’t doing much, and do it well. When Burger King decided in the 1950s that it couldn’t compete with McDonald’s ultracheap hamburgers, it rolled out the Whopper—a much bigger burger than anything sold at the Golden Arches at the time—and started catching up. More recently: Adidas captured the title of top-selling active shoe in the U.S. in 2016 with the Superstar, a model fashioned in a retro-casual style that Nike, the dominant player in the market, didn’t offer.
Once an industry leader has pioneered something, a secondary player can emulate what works, with improvements and variations of its own. Think Samsung rolling out high-end smartphones to catch up with Apple’s iPhone, or Dunkin Donuts offering frappuccino-like drinks after Starbucks proved there was a market for them.
Despite more than a century of trying, Pepsi has never unseated Coca-Cola as the top soft-drink seller worldwide. But with soda consumption in decline, Pepsi has been quicker to pivot to other categories. (Coke is also diversifying, but analysts say it has been spending more effort than Pepsi on defending its legacy soda brands.)