Salty Strategy: How to Break into Crowded Markets

Saltwater Collective

Marketing strategy should always come back to one question: does this idea forge a connection with our audience? This question is so important because, each and every time, it’s difficult to achieve that connection. Plenty of clever tactics and flashy content mask the fact that, when pushed, the brand doesn’t have a good answer to this all important question.

Connecting with an audience can be hard enough on a good day, but it’s even more difficult when you’re breaking into a new market: trying to get the consumer’s attention for the first time, competing with an established industry leader, or looking to change preconceived notions. Below, we examine 3 winning strategies (and some failed tactics) that companies used to market their way into the hearts and minds of new audiences.

Indirect assault on the competition

Going after a major competitor? No matter how many resources you can leverage, you’d be wise not to go after them head on. Instead, identify a niche audience that presents an opportunity for your product or service and build up strong brand affinity with them before expanding into a broader demographic.

In the late 1990’s, two different soft drink companies tried to move into the market, which was (and still is) dominated by Coca Cola and Pepsi. One was Virgin Drinks, a subsidiary of Richard Branson’s conglomerate Virgin Group. With a billion dollar holding company and an internationally renowned CEO behind it, Virgin Drinks went ahead and tried to steal market share, and shelf space, from Coke and Pepsi. PR stunts included Branson driving a tank through a wall of soda cans in Times Square, a “top heavy” soda bottle design named the “Pammy” (after model Pamela Anderson), and product placement on era’s most popular TV show, Friends. And the result? Some sales, sure, but Virgin Drinks was defunct by 2007.

Around the same time, another European soft drink company was also working its way into the market. It saw the choke hold that Coke and Pepsi had on shelf space in supermarkets and decided to chart its own path into people’s preferences. It found a niche audience in bars, where it was used as a mixer, and then in nightclubs where it was a caffeinated solution for after-hours fatigue. Any guesses what this soda might be? If you said, Mr. Pibb… you’d be wrong. This is the origin story of Red Bull in the United States. After cultivating a fan base amongst nightlife enthusiasts, it worked its way to corner stores and gas stations (where its small cans didn’t take up as much shelf space as other sodas) and finally into the hearts, minds, and grocery stores of the caffeine-loving, sugar-addicted population of the United States at large.

Walk the walk, don’t talk the talk

Sometimes your biggest challenge isn’t the competition, but preconceived ideas that a consumer may have about your brand after observing it from afar. Huawei, the Chinese technology company, had just this problem in 2000 when it expanded into India. While the Indian telecommunications market was crowded, Huawei’s biggest hurdles were brand-related: it was a B2B supplier trying to connect directly with consumers, Indians often perceive Chinese companies as being closed off and impersonal and thus hard to develop brand affinity for, and in general the sour relations between the two countries (including disputed borders, unsavory diplomatic relations, and armed conflict as recently as the 1970’s) stoked the Indian opinion that Chinese goods in general, and Huawei products in particular, were low-quality.

Huawei did have a card it could play, however: its $3 billion annual research and development budget. The company’s commitment and investment in making great products was not widely known in India, but Huawei had the bonafides to push back on the perception that it made cheap products. How they did it is the interesting part.

A typical approach would have been to advertise the fact that Huawei spent heavily in R&D, showcase some of their innovations, and flood the market with this messaging. Instead, the company made its R&D operations, and by extension its people more visible in India and let the company’s actions speak for themselves. Huawei established R&D facilities in Chennai and hired local Indians to fill 90% of the positions and worked with local companies to source materials. It took the same approach with the service centers it established in India. Overtime, instead of being converted via advertising, more and more Indians knew someone working at Huawei and had personal experience hearing about the company’s innovative operations and commitment to making good products.

Do your research

There are 4,300 Starbucks locations in China, and they’ve all opened in the last 20 years since Starbucks entered China in 1999. In case you hadn’t heard, the Chinese prefer tea. In fact, even up until 2006, it was hard to find a cup of coffee in China outside of a Western hotel chain. So, how did Starbucks see so much success? And how did they sustain it to the point of, by the summer of 2018, opening a new location every 15 hours?

Research told Starbucks that an advertising blitz could be seen as culturally insensitive, a Western affront to China’s traditional tea culture. Stores were opened in high traffic, high visibility areas and, most crucially, tea-based products were added to the menu. Additionally, there was concern that the Chinese market would not respond well to a brand like Starbucks, a high profile capitalist institution. More research showed that by the late 1990’s, a significant portion of China’s population was open to “Western style” as an indicator of modernity and status, and saw consuming Western products as a way to communicate a higher quality of life. In the years since, the success Starbucks has seen since has proven the credibility of these insights.

It’s easy to get distracted by Starbucks’ rapid expansion in China, but how did the brand initially convert tea drinkers into cosmopolitan Starbucks fans? It wasn’t the coffee. The brand’s success in other parts of the world had been based on providing a “third place” between home and work for people to meet and spend time together. In America, that meant replicating (and adapting) a café culture prevalent in Italy. As it turns out, China was also looking for a way to revitalize its own third place: the tea house. Starbucks understood what it was providing its customers, beyond coffee, and then did the research necessary to see how to apply that to a new market.

Few brands have a CEO like Richard Branson, or a $3 billion research and development budget, or the capacity to take advantage of growing demand like Starbucks has in China. However, every brand looking to break into a market and connect with a new audience can learn from these examples. Whether that means cultivating brand affinity with a niche audience before looking to expand (like Red Bull), showing your differentiator through your actions rather than telling about it in your advertising (like Huawei), or doing the necessary research to understand how to approach a new audience (like Starbucks), these strategies can be leveraged by any organization.


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