Electronic Retailer - March 2012 - 46

RICK PETRY

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46

Following the Leader
its own foothold, or it adopts a different tact to penetrate the market. An example of the latter is the contrast between the Apple iPhone and Google’s Android in the worldwide battle for smartphone domination. While the iPhone was hardly the first so-called smartphone, it was the one that ignited the marketplace. In December 2011, it was reported that Apple’s market share had dropped from 17 percent to 15 percent, while Android had climbed to 25 percent. The iPhone uses a proprietary operating system, iOS, which can only be used on, well, an iPhone; whereas Android’s operating system is a part of phones manufactured by a wide array of manufacturers. Think of it as akin to Macs versus PCs where a Mac can only be purchased from Apple or an affiliate distributor of their products. In contrast, Android’s Linux-based operating system is open source and can be purchased on a variety of different brands of devices, which explains in part how it has been able to aggregate more market share and double that share (25 percent) in Q4 2011 versus the year prior. However, Apple should not be counted out. The iPod’s market share in MP3 players is nearly three-quarters, and its iPad tablet is forecasted to control 90 percent of the global marketplace. Nonetheless, by taking a kind of component approach (think of “Intel Inside” or Gortex), Android is outflanking the competition for the time being. The lesson here is that product innovation, as well as an innovative approach to the marketplace are each capable of winning the day. The key is in developing goods or business practices that create true differentiation from the competition. With rare exception, it isn’t enough to simply copy or imitate. While the age old marketing adage “first in wins” is wisdom that prevails more often than not, an original idea can also come in the form of a go-to-market strategy or heretofore-untapped approach. That’s the sort of challenge that keeps marketers up at night as they hug their pillow and dream of pet projects come to life, fueled by ideas capable of banishing failure, where the only cow anybody has is a cash cow. Rick Petry is a freelance writer who specializes in direct marketing and is a past chairman of ERA. He can be reached at (503) 740-9065, online at rickpetry. com or on Twitter at http://twitter.com/thepetrydish.

It seems simple enough. An innovator establishes a marketplace and captures a vast beachhead. Other follower products compete, attempting to grab or preserve market share. It’s a scenario as old as advertising itself that has played out in many direct response-driven categories from oxygenated laundry detergent, acne cures, fitness equipment and most recently, children’s plush pillows. But marketers who believe they can succeed simply by virtue of having a “me too” product should proceed with caution, for follower products face unique hurdles that are not as easy to overcome as they may seem at the beginning of a new product launch. Let’s examine the aforementioned pillow category. As profiled in a December 2011 Electronic Retailer cover story, Pillow Pets is a seemingly “overnight” success story that took some eight years to fully blossom, growing from $7 million in sales during its first year on television in 2009, $30 million in 2010 and an estimated $45 million in 2011, along with a forecasted 15 million units sold via a royalty agreement with marketer Ontel. How could other marketers not take notice? As a result, Happy Nappers – a pillow that unzips and transforms from, say, an igloo into a penguin, and many other follower products have emerged. It isn’t that there isn’t room for more than one kiddie pillow line, it’s that by the time these other products emerged, children everywhere were already hugging their Pillow Pets and had memorized its catchy jingle, “It’s a pillow, it’s a pet.” Further, now that the original iterations of Pillow Pets have reached late majority status in terms of their product adoption life cycle, its marketer, CJ Products, has leveraged the product’s favorable reputation for quality and satisfaction to secure licensing agreements with the likes of Disney’s Winnie the Pooh, Pixar’s Cars franchise and Nickelodeon’s Dora the Explorer. In addition, with the introduction of the smaller Pillow Pets Pee-Wees, an entire cadre of new SKUs is extending the brand. Competitive products do not possess these formidable marketplace advantages, nor have they established their sell-through capability at retail where the real battle for consumer share of mind and pocketbook is joined. Hence the likelihood of any follower product securing the kind of broad retail distribution that Pillow Pets has established is unlikely, unless their product innovation is so distinctive it can carve out

electronicRETAILER | March 2012

Electronic Retailer - March 2012

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