Apple Brand

Brand Pioneering In Today’s High Tech World: Advantageous?

Technology brand-businesses are today’s most valuable, leading entities. According to the financial firm, Charles Schwab, Tesla, Apple, Amazon, Microsoft and Alphabet rule the roost. Were these brands the pioneers in their categories? Or, were these brands early leaders or followers? What does the success of our current brand-business behemoths tell us about making it for the long run? Just what does it take to go from an idea to powerful, valuable, great, enduring profitable brand-businesses?

There is a place for answers to these questions. 

In 1993, two professors, Peter Golder and Gerald Tellis, wrote an article titled, “Pioneer Advantage: Marketing Logic or Marketing Legend?” The article raised one of marketing’s most interesting questions: do pioneers in a category always grow and become great, enduring profitable brands? Or, are pioneer brands inventive but impermanent, replaced by an “early leader” or “follower” brand?

Following up on their seminal thesis, Golder and Tellis wrote, “First to Market, First to Fail? Real Causes of Enduring Market Leadership” (1996). This second article’s abstract stated that Golder and Tellis discovered “… many category pioneers fail while current brand leaders are not pioneers.” 

Reading the articles is like being in a brand-based way-back machine. The cited pioneering brands that created categories and were shining stars for their eras, all crashed, burned and faded away. But, early leaders and followers introduced other brand-businesses that became, and in many cases, still are the category winners.

For example, disposable diapers. Today, we have two brands that own the disposable diaper category: Pampers and Huggies. But, neither of these brands were the original disposable diaper. Before there were Pampers and Huggies, there was Chux. Chux arrived in 1935. Yes, 1935. Chux were expensive but “great for traveling.” In 1962, Consumer Reports magazine stated that Chux were “the best” disposable diaper. Chux was a brand from Chicopee Mills, owned by Johnson & Johnson. Several years later, both Pampers and Chux were evaluated as best buys. The rest is history. 

Golder and Tellis did not just look at packaged goods. They also focused on personal computers and video recording.

Let’s face it: we all believe that Apple opened the door to personal computing. And, what about HP? But, no. MITS (Micro Instrumentation and Telemetry Systems) was first. As stated in their article, Golder and Tellis recounted that in 1976, Business Week “referred to MITS as the IBM of home computers.” Additionally, Business Week stated that MITS was the “de facto standard” for the category as well as the industry. Okay, but today MITS is never thought about or, worse, unknown. 

As for video recording, something we really no longer need to do what with streaming, Ampex was the hands-down leader. Ampex created the video recorder. That was in 1956! An Ampex video recorder cost $50,000.

At the time, RCA and Toshiba were behind Ampex. The category was intriguing for Sony, JVC and Matsushita, however.  And again, Ampex went away while Sony, with its customer focus and $500 price tag, for example, endured and thrived.

Golder and Tellis discuss other pioneer brands that created a category and lost to later entrants. You may think that Miller Lite was the first light beer, but no. For those who live in the brand history repository, there is Gablinger’s.  Gablinger’s was a brand from Rhinegold (another long-gone brand-business). Rheingold was a favorite New York State beer brand: that once had 35% of New York’s beer market. Rheingold died in 1975. As for its light beer pioneering brand, Gablinger’s was never able to match the marketing heft of Miller Lite powered by Philip Morris. Philip Morris funded a marketing effort that few could match. Remember that Philip Morris had a lot of cash: the firm owned the Marlboro brand. 

And, there was the brand described in 1960 as “The world’s biggest chain of highway restaurants; the pioneer in restaurant franchising; a most strongly entrenched factor and highest quality investment; and, the most fabulous success story in restaurant chains.” No, not McDonald’s: Howard Johnson’s.

The annals of brand-business are littered with the detritus of dead brands, brands that were once the innovators. Golder and Tellis found that pioneer brand-businesses had a failure rate of 47%. Pioneering brand-businesses had a mean market share of 10% and “were current leaders in only 11% of categories. Early leaders, defined as “firms that enter after pioneers but assume market leadership during the early growth phase of the product life cycle,” had a minimal failure rate with a market share “three times” that of the pioneer. Early leaders were, at the time, brand-businesses that entered the category 13 years after pioneers.

The result of Golder’s and Tellis’ research found that early market leaders, have five critical factors that drive performance: 

  1. Vision of the mass market, 
  2. Managerial persistence, 
  3. Financial commitment, 
  4. Relentless innovation, and 
  5. Asset leverage.

Vision of the Mass market propelled Ford Motor Company. But, it was also a factor in the success of Kodak film, Pampers and Sony. George Eastman (Kodak) saw that if film developing were made easy, more people would take pictures. Procter & Gamble used its knowledge of mass market consumer products to make disposable diapers affordable. Masaru Ibuka of Sony saw the possibility of video recorders in homes around the world. 

Managerial persistence is a mindset that focuses the enterprise on long-term commitment to a product or service. This may take years. But, as successful brand-businesses know, brand building is an ongoing, never-ending process towards a North Star. P&G was notorious for its lengthy R&D behind products as were Sony and JVC. RCA spent a decade pioneering color TVs.

Having the funds to hang in there, innovate and market matters. Financial commitment allows brand-businesses the luxury of long timeframes. And, as the Golder-Tellis research showed, it is not just having the money: it is the willingness to spend it on the vision.

Relentless innovation is critical for long-term successful performance. Pioneers have an invention. But, as we have learned with technology, there is always something new, better, smaller, faster or more creative. Firms that do not have the drive to constantly and consistently innovate, fall behind. Gillette was torpedoed by the introduction of stainless steel shaving blades from Wilkinson Sword. But, determined to maintain its market share, Gillette innovated with its Trac II, followed by the highly innovative Sensor. Wilkinson Sword had the innovations but it could not match Gillette’s financial commitment.

And, finally, the professors point out that late entrants can often become leaders in a category if they already have a dominance in a related category, assets which they can leverage. For example, in the early 1960s, Royal Crown (RC) owned the diet soda marketplace. But, both Coke (Tab) and Pepsi (Diet Pepsi) were able to leverage their dominance not only in carbonated beverages but in distribution. Wisk liquid laundry detergent (the “ring around the collar” eliminator), was such a strong brand that it was able to fend off P&G for over a decade or more until P&G agreed to make Liquid Tide in the late 1980’s.

According to Golder and Tellis, these five factors were more important in determining successful long-term leadership than having the pioneering invention. And, even though these principles were observed 36 years ago, they still hold true in our high tech digital world.

Let’s look at those brand-business stocks identified by Charles Schwab: Tesla, Apple, Amazon, Microsoft and Alphabet.

Tesla is a great example. Elon Musk did not invent the electric vehicle. The first electric car in the United States was developed in 1890–91 by William Morrison of Des MoinesIowa. According to history, this six-passenger wagon could reach 14 miles per hour. But, vision, commitment, money and innovation has propelled Tesla into a leading position.  Lucid and Rivian have stumbled recently due to supply chain and inflation issues. Ford just announced that it will separate its electric vehicle group from its gas-powered vehicles to generate the focus needed to perform long-term. The Wall Street Journal stated that Ford wanted to channel its “inner Tesla.”

Apple did not invent the personal computer. But, it became a long-term performance-leader through relentless innovation and the driving vision, creativity and persistence of Steve Jobs, generating the financial wherewithal to continually design and innovate. Furthermore, Apple has been able to leverage its assets in personal computing into iPods, iPads and telephones.

Let’s not forget that being the store selling to everything to everyone was Sears. Amazon came in and made a digital version. Decades of commitment, vision, persistence and financial resources as well as leveraging its assets in data collection and management have led to its leadership. Financial commitment behind a vision allowed Amazon to buy Whole Foods. Amazon is now leveraging its digital adeptness into changing the grocery experience.

Microsoft did not invent software. But co-founder Bill Gates had a vision for mass software usage. He wanted to see a world where there was a computer on every desk. Microsoft did not make computers or desks. But the firm recognized the massive mass power of the software that ran these computers. Persistence, vision, innovation, and eventually, asset leverage, allowed Microsoft to grow and become ubiquitous.

Alphabet’s Google did not create the Internet not did it create the search engine. Its founders created a better way to search on the Internet. Again, the vision was for anyone who wanted to search the Internet, the information would be easily accessed. Persistence and continuing innovation propelled the enterprise to where it is today. Alphabet currently leverages its data, digital expertise and innovation across a broad spectrum of companies

Although none of these companies were pioneers, they are now five of the most valuable brand-businesses on this planet. Start-ups should pay attention. As Golder and Tellis conclude, “… being first to market by itself is neither necessary nor sufficient for enduring market leadership.” Seeing the mass potential, having managerial persistence, the availability of funds to power the idea, being relentless in innovation and being able to leverage established assets are what make or, if not there, break a brand-business.