You Don’t Have To Compete To Win

I have been thinking a lot about market segmentation and I am beginning to believe that you don’t have to compete to win in certain situations. Even as a newcomer to a market where there are incumbents, it may be possible to enter the market without directly competing.

A class example of successful market segmentation and market entry is Tom’s of Maine tooothpaste. Tom’s of Maine successfully entered into the toothpaste market in 1970. They didn’t do that by competing against P&G and Colgate though. It can be argued that they did this by identifying an unserved segment (Natural Care), sticking to their niche, and avoiding direct competition.

P&G and Colgate did not try to compete in that market for a variety of reasons. At the time, the margins were lower. Also, those companies fought to defend their brands and a new venture could dilute their brands. Eventually, Colgate purchased Tom’s of Maine. Tom’s of Maine continues to operate independently.

In a market where there are many “Greenfield” opportunities, such as the enterprise Linux market, it may not be necessary to compete to make an entry or even gain significant share.

Linux vendors have several large segments to take share in. They can convert server workloads from proprietary Unix and Solaris hardware to commodity x86 hardware. Vendors can focus on porting/re-writing applications that run on Windows Servers to Linux. The list of available market segments is extensive.

Competing to displace fellow Linux distributions in a market with many unaddressed market segments is a counter-productive strategy. In fact, the Linux space is collaborative and fighting against other Linux companies would just serve to reduce the opportunities and foster bad feelings.