Wheels of fortunes … consumer electronics entrepreneur Ruslan Kogan.
It is not easy taking on the big brands, no matter what industry you operate in; they have deep pockets and a lot of market clout. But if you play your cards right, you can take a huge chunk of their market share.
The consumer electronics industry is among the most competitive industries in the world. At Kogan we have gained a significant market share while competing against some of the world's biggest companies. Here are some tips for entrepreneurs planning to take on the goliaths in their industry.
React swiftly and innovate
A jet-ski has many advantages over an ocean liner. As a challenger brand, you must use all of your competitive advantages; one is speed and agility. Bureaucracy in traditional big companies means they can take a long time to make decisions. You must exploit this and ensure your company is on top of the latest consumer trends. For instance, online retailing has been prominent for almost 10 years but the biggest retailers are only just beginning to acknowledge that the internet is here to stay.
The big guys have huge advertising budgets with which to influence the buying public. To compete, a challenger brand must ensure that its operation is as lean and efficient as possible; that it comprises lots of little things. At Kogan we call these the "one-percenters". We run a paperless office, not just because it makes the business more environmentally friendly but because it helps us to find information quicker and keep costs down. The same goes for making our packaging slimmer, and using a VoIP service for all international phone calls. All the one-percenters add up.
Be a socialite
Big companies all know about social media and they have established various accounts, but they are using it as a one-way shouting tool to broadcast sales, in the same way they have done with television and print media for decades. Challenger brands have a massive opportunity to use social media in the way it should be used, to build communities around products and services. Social media is a great tool with which to talk to customers and find out exactly what it is they want, without spending tens of thousands of dollars on useless focus groups and surveys.
Be clever with marketing
"I know 50 per cent of my advertising is working; I just don't know which 50 per cent," is a typical comment by a marketing manager with a big company. For every dollar we spend on marketing, we know how many people it brought to our site; what they looked at; what pages they liked; what pages they didn't like, and which marketing avenues resulted in the highest conversion rates. Most importantly, we have found that the best marketing is having the world's best price. When you have a clear competitive advantage you don't even need to spend money on an advertising campaign; your customers find you.
It's not a sprint, it's a marathon
Never let short-term profitability or a few early successes divert you from building a strong business that will be in operation for many years to come, like the big companies you are taking on. It is important to have a clear goal for what your business wants achieve. It is what will make you and your team get out of bed and come to work every morning. The big guys have been around for a long time and you will not beat them overnight. A lot of people who don't know much about business often say to me: "Wow, Ruslan, you've become an overnight success." And I tell them: "Yeah, it's taken me 29 years.''
Ruslan Kogan is the founder and chief executive of Kogan.com.au.