Standing Tall Among Giants

Decision : Ireland's Business Review, 2005 by Rossi, Luca, Majoli, Andrea

Titans, take note. The so-called little guys have some big strategies that, when employed skillfully, can quickly strike at the heart of an oversized opponent. A swift reminder that size and strength aren't always synonymous with victory.

Size and strength do not always mean success not on battlefields, in stadiums, courtrooms, boardrooms or in fables. Witness Goliath, Gulliver and countless vanquished giants. Size and scale matter, but they are not the whole story.

A.T Kearney recently examined the business models of five European companies that competed and stood tall against their global rivals. As a group, they attract and retain customers by differentiating their products, creating compelling marketing campaigns, and Grafting business models that build on their core strategies and competencies. In particular, these firms skillfully identify where(in what segments) and how (by competitive differentiation) they intend to compete. What principles might national firms use to vanquish their giant competitors? We suggest three: creativity, flexibility and home-field advantage. We call on unlikely experts Albert Einstein, Bruce Lee and Sun Tzu to convey these principles. This article offers brief case studies of smaller firms successfully using their principles.

CREATIVITY

"Imagination is more important than knowledge." - Albert Einstein

Giant global corporations know well how to use economies of scale to drive down costs and foster innovation. Yet low costs and new products are not the only factors, or even the most important, in motivating customers. With creativity and imagination, smaller firms can nimbly position their products, market and distribute them, and carve out secure market share. Consider Ducati's creative, clannish and carefully crafted response to the dominance of Honda.

Ducati versus Honda

Unless you are a motorcycle enthusiast, the name Ducati won't trigger images of a sleek machine careening around hairpin turns. So how can Ducati compete against the rumble and roar of Harley-Davidson, the prestige of BMW, the reliability of Triumph, or the ubiquity of Honda and Suzuki? That depends on whether you think Ducati is selling bikes or something else.

In 1995 Ducati possessed a strong brand name among motorcycle fans for its longstanding tradition of innovative technologies and performanceoriented racing bikes. These characteristics strongly differentiated Ducati from major bike producers such as Honda, which manufacture top performance bikes using the cost advantages of largescale production, but in the minds of some bikers are "without a soul."

The same year, Ducati was on the brink of bankruptcy. An investor betting on the strong brand name undertook an innovative marketing campaign focused on so-called tribal or community marketing, targeting potential customers by their specific interests and passions. Marketing to key psychological traits rather than social demographics makes sense as bike lovers span age, income and locations, but all share a deep passion for motorcycles.

A quick glance at any well-stocked magazine rack reveals a nearly endless array of "niche tribes"-sports, cars, fashion, computers, music, politics, gardening, architecture, investing, travel... and the list goes on. Ducati's creative insight was to sell motorcycles as an emblem and means to a particular lifestyle; buying the product provides entry into an elite community.

Consider the passions generated among rival sports fans, school alumni, and political partisans. What are soccer riots but violent political and cultural rallies? Oxford versus Cambridge and Harvard versus Yale are cries of tribal identity. Consider also Ford versus Chevy, Apple versus PC, and Ferrari versus Lamborghini. These tribal rivalries, although relying on shunning and derision rather than outright hazing to maintain group identities, still maintain enduring affiliations and meaning.

Many well-defined communities adopt specific jargon, symbols and even distinctive attire. Savvy marketing managers link their brands to events, people, symbols and styles that appeal to their target tribes, underscoring the must-have quality of their product. The new Ducati emphasis is on racers and those sensitive to unique technical characteristics. To this end, the company revived the performance tradition by investing in a bike racing team and sponsoring key events and races.

Today, Ducati riders often call themselves "Ducatisti." Federico Minoli, president of Ducati during its corporate turnaround, declares "We are not about motorcycles. We are about motorcycling. My plan was to take Ducati from metal mechanics to entertainment, from motorcycles to motorcycling."

The new marketing program positioned Ducati as a symbol of passionate, performance hiking. Figure 1 shows the six points that anchor the marketing strategy.

Ducati never sought to compete with Honda on product innovation and instead focused on two highly differentiated models, the "999" and the "Monster" with its unique two-cylinder engine. The company developed a wide range of accessories around the two bike models to highlight and complement the hiking lifestyle and the accompanying emotions.