In an era driven by network effects, smaller players struggle to compete against bigger platforms. The trick to gaining ground on a much larger rival, says Harvard Business School professor Felix Oberholzer-Gee, is choosing a strategy that can’t easily be imitated.
A good example is TaoBao’s strategy for displacing eBay in China. Back in 2007, eBay was the world’s largest consumer marketplace, and TaoBao was an underdog with bold new ideas about how to build trust with customers who were reluctant to shop online.
“In fact, the market that Taobao targeted ended up being so much more important than eBay’s market,” Oberholzer-Gee tells Cold Call host Brian Kenny. “[A]nd eBay eventually left China.”
Key topics include: sales, hiring, compensation and pay, communication, performance management, and leadership development, competition, competitive markets, and innovation.
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- Listen to the original HBR Cold Call episode: Strategies for Underdogs: How Alibaba’s Taobao Beat eBay in China (July 2021)
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It is no secret that small companies often struggle to keep up with their larger counterparts. Nevertheless, in today’s ever-changing business world, it is possible for small businesses to compete with and even beat their larger competitors. This can be achieved by careful planning, strategic thinking, and an effective strategy.
First, a small business must have an understanding of the industry to identify where their strengths and weaknesses lie in comparison to larger companies. Understanding competitive advantage and how it applies to the company’s product or service can help pinpoint an area where the small business can stand out.
Second, a small business must understand the dynamics of the market to determine where their customer base can be found and how to reach them. Whether it be through online marketing or an in-store presence, finding the right target audience is essential to being able to compete with larger companies.
Third, a small business must devise strategies to stay competitive. One common approach is staying flexible in pricing and offering a more customized experience or product. Many small businesses are able to quickly adapt to changes in the market due to having fewer layers of bureaucracy. Utilizing innovative technologies, such as cloud-based systems, can help small businesses keep up with the speed of the competition.
Finally, a small business must use creative approaches to generate awareness. With tight budgets, an effective tactic is identifying non-conventional marketing platforms. For example, a business can run targeted social media campaigns, host webinars, or create an affiliate program platform.
These tactics, when paired with the right strategy and planning, will help small companies match the competitive landscape of any industry they are in. With the right approach, a small business can seize opportunities and go head-to-head with larger companies to compete and win in today’s market.