Taking on an industry giant by offering a slightly improved product is no way to make an impact. Success comes to the ‘underdog’ who doesn’t let sleeping dogs lie, and instead shakes up the market by doing things differently…
What routinely fools a Goliath is when, instead of going after their market share, someone instead goes out to create a whole new niche market right under their imperious noses. They are well practised in defending their turf against unimaginative interlopers. This is usually achieved with such no-brainers as deep discounting, leveraging their distribution clout or what can best be described as simple bully tactics. But when someone arrives on the scene with a hybrid product that they cannot pigeonhole – as was the case with the biblical David’s slingshot – it can cause massive confusion in the enemy’s ranks.
When all else is equal then the big guys will usually find a way to outmuscle any pesky upstart, so that is why the newcomer has got to make sure that the playing field is anything but level. In fact, you don’t even want to step on to their playing field – it confuses them even more when you sprint up and down the sidelines while they get bogged down in the middle. You always know it’s working when they cry foul!
So in any business where new entrants have traditionally had to buy their way in with deeply discounted fares, what do you do with someone who is suddenly pitching value for money and great customer service? Undercutting an intruder’s prices alone doesn’t work when price is just one of many weapons in their innovative arsenal.
Virgin Atlantic really muddied the equation by arriving on the side of the field with a product that was every bit as good if not better than our giant competitors’ first-class product and streets ahead of their distinctly mediocre business classes. The real trick was branding it as ‘Upper Class’, a move that made most fliers assume it to be our first class. In terms of service quality it was, but by designating it as business class and pricing it accordingly, business fliers whose corporate travel policies permitted business but not first class almost saw our Upper Class as cheating the system – which suited us just fine! We drove the spike in even harder by building in complimentary limos in Upper Class, a feature that the competition didn’t even offer to their first-class passengers. For that matter, even Concorde fliers who were paying supersonic fares had to fork out for their own ground transport.
It wasn’t all about the front of the bus, however. We learned what customers wanted and greatly improved the economy experience as well with a greater choice of meals, electronic headsets when everyone else still had those awful rubber tube things and the biggest innovation of all (next to cabin crew who were nice to our passengers) was seatback TV screens in every seat on the airplane – coach class included. This was something that was not in first class with other airlines. Our big-dog competitors thought we were certifiably insane (and maybe we were!) and with every added feature became even more convinced we couldn’t possibly sustain our presence in the market.
What the big airlines failed to recognise was that airline passengers at the time – myself included – were sick of paying through the nose for lacklustre service that had been getting worse for years. They were all in that most dangerous of states where they believed that as long as they are no worse than their competition then they were doing just fine. All it takes for this status quo of mediocrity to be shaken up is for one little outsider to step into the ring and start punching above their weight.