By Steve Tsai
Market leaders enjoy many advantages that non-leaders can only dream of. The advantages are:
- Premium price due to the leader status
- Lower product cost due to economies of scale
- Lower sales cost and shorter sales cycle due to market awareness and automatic inclusion for product evaluation
- Longer product life cycle and more customer loyalty due to customers’ self interests
- Free third party product porting and support due to the economic benefits to the third party developers
- More favorable distribution terms due to more channel demands
- Easy access to decision makers of the target customers
- Get to be included in customers’ future plans
- More publicity due to the leadership status
- Easier to recruit the best talents because it can advance people’s career
Why do market leaders enjoy these advantages? Is it because we all like to back winners? The reason is that market participants gain more economic benefits from associations with the market leaders.
- Customers that buy from the market leaders take less perceived risks both for their organizations and for their own careers, have more choices in third party products and services, require less personnel training, can readily get people familiar with the products, and can find more channel participants to service and support the leader’s products.
- Third party developers benefit from the larger market to recoup their product development more quickly and get better return on their investments.
- Partners can sell more of their products by leveraging the market leaders’ greater market presence.
- Channel participants benefit because of the market leaders’ market presence and the more readily available technical pool.
As a result, a market leader will have disproportional share of the industry’s overall profits which can then fuel for further market dominance. This is the virtuous cycle if you are a leader and a vicious cycle if you are an also-run.
This is the reason why wining market leadership must be a company’s goal.
The partners at Board of CEOs understand this extremely well and it is our mantra to help our clients win market leadership.