“When you are fast-following and budget constrained, how do you find ways to leapfrog in certain segments of your market or product areas?”
Before we get to the meat of this question, let’s make sure that we’re using the term “fast-follower” in the right context.
I often see product managers mixing the concept of being a “fast follower” with the concept of providing a “me too” product. A fast follower quickly follows an innovator to market; usually with the strategy of improving on whatever it is that the innovator missed. The benefit of being a fast follower is that you let someone else invest all of the upfront development dollars while gaining the benefit of gauging customer reaction and making improvements for relatively low investment dollars. The downside, of course, is that you will never carry the true innovator title, and, as such, you might have to find clever ways around patents or other protective intellectual property.
A “me too” strategy, on the other hand, involves providing a copycat product, usually at a lower price point than the market leader. In this case, the “me too” provider does not necessarily seek to improve upon the competitor’s product but, rather, seeks to provide an equivalent alternative to an otherwise dominant market player. This type of situation usually applies to more mature products that have already lost, or perhaps never had, patent protection.
The reason this is important is that fast following does not usually go hand-in-hand with being budget constrained as there is still an innovative component at play. So, my assumption is that the true context of the question is that this company is actually in a more mature, “me too” type of market environment.
With this being the case, how do you leapfrog in certain market segments? Well, the answer is actually partially embedded in the question.
In short, you have to find new ways to differentiate. And one of the ways to do this is by looking at new market segments. This could take the form of new geographic markets, new vertical markets, or even new demographic, psychographic, or behavioral markets. The caution, of course is that you can’t assume that just because you want to enter a market that’s new for you, that this market will automatically welcome you with open arms. So, as I’ve mentioned many times before in this blog, you need to listen to your markets, understand their needs, and see if there’s a match before just barreling on in. But, assuming that you can find a market with needs that are aligned to your capabilities, this is certainly a good place to start.
All of this is not to say that you can enter these new markets without investment. But you may find that investing in market expansion is a less risky venture than investing in trying to differentiate the product itself, particularly for products that are on the other side of maturity. So, for “me too” products, assuming that’s what we’re talking about here, new markets are certainly good places to explore.
Listen to the podcast episode
Dear Strategy: Episode 022