Continuous Innovation and bringing new products is the recommended competition strategy for Leader companies. Reference Book: Marketing Warfare by Al Ries & Jack Trout
When Salesforce launched CRM on-demand product in 1999, it was ignored by Siebel, the market leader. Siebel was offering CRM on-premise to Large enterprises only and due to high cost, small and medium-sized businesses could not afford CRM.
Salesforce targeted small and medium-sized businesses and its product was very well accepted by them.
The market gradually shifted to on-demand space.
Siebel was watching this market shift to CRM on demand. Siebel decided to enter this space by using the Principle of Force. Siebel acquired Upshot corporation and white-labelled it as Siebel CRM and new players like Zoho also copied Salesforce.
How did Salesforce maintain its leadership position?
Salesforce was able to maintain its leadership position by constant Innovation. In 2006, Salesforce launched the Application development platform, force.com and App exchange to promote customizations and application development. It took hours and not days or months to develop a new app and integrate it with Salesforce CRM.
The speed of app development was 4X faster than the on-premise model. Salesforce shifted the battleground from CRM on-demand to building customizations. When you are constantly innovating, competition struggles to catch up. On the other side, Siebel was not able to allow customizations in its product and this challenge was their weakness. Siebel was lagging and could not catch up.
In 2011, Salesforce also innovated by building the Salesforce Chatter product. This was a very creative and innovative way of bringing more collaboration and concept of social networking in the corporate world. Salesforce brought fun elements to the workplace and transformed the B2B world into a colourful and vibrant world. This product was perfectly aligned with customer behaviour as the virality of using Facebook was at its growth stage.
In 2005, Siebel was acquired by Oracle. Salesforce is World’s No.1 CRM.
PM Lessons: When you adopt this strategy of constant innovation and bring in new products and services constantly, competition struggles to catch up.
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The competition Strategy is based on your company’s market share and Position in the Market.
Al Ries recommends the following four ways of competition based on the Position in the Market:
