One main difficulty of entering the consumer electronics sector, especially the computer and mobile devices sub-sectors, is the presence of well-established and entrenched global brands; Apple, Samsung and Motorola quickly come into mind. With the fact that these brands are already entrenched in their positions in the global market, the fact that they have established excellent reputations (or at least established a reputation of some sort that attracts exceptional attention from consumers), and the stereotyping of Chinese import goods (which will be your goods) as sub-standard, one might think that it will be impossible to enter this segment of the industry.
Sun Tzu said in The Art of War (a vital reading for business), “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” That is, you must be aware of your weaknesses and strengths, and that of your competitors as well. Here are a few generalizations with regards to global electronics brands.
- Established reputations – global electronics brands often have good reputations behind them. For example, Apple is known for having (generally) reliable products; Nokia is known to have cheaper products than other mobile device manufacturers (albeit at a lower quality as well).
- Connections – global electronics brands already have well-established connections, from manufacturers to logistics firms to retailers. This gives them an edge in producing, shipping and selling goods.
- Marketing backbone – global electronics brands are also known for their strong marketing power. They have the ability to advertise their products to everyone, using all forms of media, be it traditional or new media.
- Stereotypes – since they have been around for a long type, global electronics brands and their products have also had various stereotypes attached to them. For example, Dell is known for having bulkier (relatively speaking) yet more durable laptops; Sony (and Sony Ericsson) is known for having strong multimedia integration (music, video and gaming) in their devices, as well as having top-of-the-line home entertainment electronics
- Stereotypes – while generally a strength (especially if the stereotype is positive), this can also turn against global electronics brands. For example, Nokia was generally stereotyped as the leader in mobile devices, but when their quality degraded, it hurt them more than it would have if they haven’t been stereotyped/hyped up so much; generally, positive stereotypes cause higher and higher expectations to be placed on the brand, making it more susceptible to disruption from even just the smallest disappointments.
- Mistrust – the more established a brand becomes, and the more corporate it becomes along the way, the public generally becomes more and more suspicious of it. This is what happened to Microsoft; this is what’s happening to Facebook and Google. Apple, while being established, has fought (and still is fighting) hard against the possibility of such consumer mistrust hitting them.
- Size – the bigger an operation, the larger the capital involved. Generally, profits made by global electronics brands are massive (for example, Apple had an operation income of almost $26 billion in 2010), but with the high production, logistics, etc. costs entailed in such an operation, losses will also amount in the billions. As such, size is a double-edged sword.
- Vulnerability – generally, established brands are much more vulnerable to controversies, due to the amount of attention given to them by the public at large. As such, criticisms, negative reactions and even lawsuits tend to hit larger global electronics brands than smaller brands.
With that, you can say that the size of global electronics brands is actually a double-edged sword. Their only “real” advantages are their advertising largesse and their connections.
On the other hand, you, as a smaller or newer entity in the business, have the following:
- “Freshness” – you are a newcomer to the business. You have a clean slate to utilize; whatever goods you sell will not have any stereotypes attached to them, or have any heavy expectations placed upon them. As such, you can steadily build up without having so much pressure on you; you can build a stereotype to your liking, something that can be very beneficial (and something global electronics brands aren’t capable of).
- “Guerilla” appeal – people love a start-up, or a newcomer, or generally someone with that “guerilla” or “rebel” appeal; that’s where Apple and Facebook came from, and how they garnered so many followers in a (relatively speaking) short period. You have that appeal; use it to your advantage.
- Room for experimentation – you are still new; as such, people don’t know what to expect, or actually don’t have any expectations at all from you. You can use that to play around and explore, trying out new marketing strategies or branching out in unexpected (but possibly profitable) ways; that’s something larger operations can’t do (at least as easily as you will be able to).
- Low profile – you can be assured that you will not be hit by any lawsuits (since no one will have an interest on you) or controversies (since the attention given to you isn’t that big yet). As such, you can spread out and try new manufacturing sources, parts, etc. with relative safety (although do avoid any trouble still).
- Lack of established connections – you will not have much access to cheaper manufacturing and logistical costs yet; you will also have to work hard on establishing business connections to get access to those, as well as have a trusted partner in manufacturing and logistics (a partner is a very useful asset in your operation).
- Marketing – you still won’t have a “signature” (i.e. Apple’s black silhouette on a bright background using a white product) marketing campaign; as such, you will have to make one that is exceptional or noticeable, and that is something that will be a difficult process (many advertising agencies take months or even years formulating and implementing a marketing campaign).
- Mistrust – being small, the mistrust you will undergo is different from that of major global electronics brands; generally, potential consumers will ask, “Is product X (your product) competitive with Apple’s products?” Add in the initial stigma that Chinese goods have (read: substandard), and that makes for a significant mistrust hurdle, but not as significant as that of major global electronics brands (the mistrust attached to them is often one that contains hysteria; you won’t suffer that).
In a nutshell, being small and new allows you to experiment, tap into newer markets, and have a blank slate to build up a positive reputation on; your weaknesses are more on the production and marketing side, both of which can be overcome relatively easy (provided your strategy is well-thought out and your product speaks for itself).
From those generalizations, here are a few general tips or strategies in competing with global electronics brands.
- Be yourself – don’t try to act like global electronics brand or conform to their strategies, etc.; instead, be honest about your position in the market. A key example: Avis Rent a Car’s campaign, We Try Harder; they admitted (or emphasized) that they are only “the no. 2 car rental company” and that, since they are just no. 2, they “have to try harder than the no. 1 car rental company,” while the no. 1 company “can’t be bothered to try harder because they’re already no. 1.” It gave Avis a positive reputation, and even (although subtly) discredit their larger competitor.
- Branch out – there are certain niches or segments of the consumer electronics industry that the major brands are unable to tap; as such, you can branch out there easily (since you are smaller and just starting) and avoid having to directly compete against major brands altogether.
- Market your “guerilla” appeal – when making your marketing campaign, you should maximize your guerilla image, similar to what Apple did in its iconic 1984 advertisement, where it presented itself as a rebel fighting against conformity.
- Provide a high-quality yet lower-cost alternative – since major global electronics brands sell their goods at high prices (to make up for advertising and other large overhead costs in the operation), you can compete effectively against them by providing goods with similar quality but sold at lower prices. This is made possible by two things: your operation isn’t that big yet (and doesn’t entail massive overhead costs), and your goods are made from China.
In short, to effectively compete against major global electronics brands, you should
Emphasize your newness in marketing campaigns and tapping into niche markets while providing affordable yet high-quality goods.
That’s something major global electronics brands can’t do, but you can do. It isn’t impossible for a smaller brand to compete against larger or major brands; you just have to maximize your smallness in order to do so. And being new, being a rebel, is something that the electronics industry loves.