The number 2 brand in a market

How to succeed as the number 2 brand

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Everyone strives to win, but what happens when you compete in a market where you are, and can never be more than, number two? If you’re Pepsi, for example, or Bing, how do you find the energy to continue to build out a business that will stay where it is, behind a massive incumbent? How do you do that without becoming uninspired, distracted or stuck?

The temptation that so many succumb to is simply to pursue the brand they see as the market leader, and their greatest rival, at all costs. To go all in. The burger wars, the cola wars, the airline wars, the smartphone wars … many a campaign has been generated through the wish of one brand to dominate and overpower another. For the most part, such struggles, whilst all consuming for those involved, do little or nothing to sway the sentiment of consumers. And while market positions may shuffle, once the dust settles, things are usually not that different (at least as far as buyers are concerned).

Many a campaign has been generated through the wish of one brand to dominate and overpower another

So what should you do? The best strategy if you’re the number 2 brand, I believe, is a combination of inclusion and distinction. That’s because being one of the top three ranked brands in a sector places your brand amongst the ‘establishment’. You are one of the brands that defines the sector and therefore you need to use enough of the predominant industry structures and technologies to leverage that mass whilst at the same time finding ways to separate what you believe in, offer and mean from the offering and ethos of the market dominator.

4 opportunities of influence

This great quote from James Henderson points to the four key places to consider how you do this: “To exert influence, a brand needs to impact or change the way people shop, think, act and behave.” Number 2 brands have the power and the means to be hugely influential. Their critical decisions rest on how and where they choose to strengthen that influence.

If I was going to split Henderson’s four-pack into inclusion and distinction, I would suggest that number 2 brands need to be inclusive in how they want people to shop and act (because those are functional drivers) and to be distinctly influential in how they invite people to think and behave (because those are of course the emotive drivers).

Whilst it is tempting to introduce stand-alone channels and ways of buying in a bid to entice consumers to decide, this is a difficult strategy to pull off when you’re a major player because it requires buyers to make choices and commitments in where and how they buy that they may not be willing to make. If they choose not to, or they fail to do so in the numbers required, the proposed operating system fails. By sticking with what people know and do, you cut the number of alternative decisions that buyers must make, and you add the vital dynamic of competition into existing channels. Pepsi may not be able to oust Coke from the dominant position in supermarkets but equally they cannot abandon the channel either. Competitors must be where consumers hope to see competition.

Where number 2 brands can stand apart is in what they are seen to stand for. This is their opportunity to articulate a credible alternative targeted specifically at those consumers who, for any number of reasons, would rather not go with number 1. Number 2 brands should build a market platform on ideas that are popular enough to attract critical mass and, at the same time, make their presence valuable and important because they are more than ‘more of the same’. That doesn’t happen enough in my view.

Being, not feeling like number 2

There’s also a significant difference in mind-set and ultimately approach between ‘being’ number 2 and ‘feeling like’ number 2. A brand that is number 2 understands the position it has and seeks to capitalise on it. A brand that feels like number 2 spends much of its existence lamenting that it is not number 1. Too many number 2’s seek to copy what their nemesis is doing in a bid to out-do them at their game, hoping somehow to take over the leading role. Except of course this is not a leadership strategy. It’s a following strategy and it’s a bad one because it means the brand is not only trying to play by someone else’s rules, it’s also reinforcing that the market leader’s philosophy and way of doing business is correct.

By espousing different thought patterns, championing different behaviours and building offers and products that enable that to happen, the number 2 brand can make its presence felt in ways that keep the market leader in check and prevent the number 3 brand (which, under rule of three dynamics, is often the most innovative) from usurping its position.

If you’re number 2, this simple reminder question will serve you well: “Why are we proud to be here, and what does being number 2 make it possible for us to strive for that the market leader wouldn’t dare to pursue?” Chase that.

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