The Rule of Three

There is a reason Johnson and Johnson has a rule that if you can't be #1 or #2 in the market - DON'T ENTER IT.  Seth completed his post titled #1 at the Box Office with a comment that should be clarified.  He stated "If your marketing strategy requires you to hit #1 in order to succeed, you probably need a new marketing strategy." 

First, please read The Rule of Three by Jagdish Sheth and Rajendra Sisodia.  Its about surviving and thriving in a competitive market.  They put forth the theory that just three major players ultimately emerge in all markets - such as ExxonMobil, Texaco, and Chevron in petroleum, and Gerber, Beech-Nut, and Heinz in baby foods.  The PC industry is moving in this direction as well - with Dell, HPQ (that merger eliminated one) and either Sony or Lenovo as the third. 

These three "giants" will be surrounded by "specialists" that will own niche areas.  Examples of this are Apple or Toshiba for computing (Apple owns the design and education space and Toshiba is known for its laptops), or mid-size dwellers that struggle to reach a large enough audience (Gateway).

So, to Seth's point, you don't have to be #1 to be successful.  Apple is doing very fine right now, thank you very much.  But, if you don't have a niche, its tough to survive as a mid-size player such as Gateway.  This is because you fly in the wake of the big boys, and that is not a safe place to be.   To that end, being the #3 of the three is no fun either.  You are constantly battling the bigger players for price, positioning and brand dominance.  There is a reason we don't keep troops at war for extended periods of time - it creates poor morale and fatigue. 

I hypothesize that Johnson and Johnson has this rule because its very difficult to thrive (not just survive) when you are not one of the "three".  Niche players in the long run tend get pinched out or bought (which is not a bad thing if you have equity!).  Same goes for the mid-size dwellers - but they often go bankrupt first. 

Net, its better to be #1 or #2 in your market or niche.  Otherwise you are in for a rough ride.  You can survive outside this realm, but the odds are against you in the long run.

Thus, I would humbly rephrase Seth's comment to say, "If your marketing strategy does not allow you to dominate a market or niche, you probably need a new marketing strategy." 

Comments

[Mukunth]

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