Defining and continuously refining the product Strategy is an important activity for Product Development. It helps to keep the Product in the market for a long time competing with the competitors effectively and also to create expected value. A Product Owner should be well versed with various Product Strategies so that he/she can use them appropriately. In this article the “Follow the Leader” strategy is explained.
The “Follow the Leader” strategy in product development refers to a company’s approach of imitating or closely mimicking the innovations and practices of a market leader, rather than pioneering its own new products or concepts. This strategy is commonly used when a company aims to avoid the risks and high costs associated with being the first mover in the market, preferring instead to adopt successful innovations from competitors once they’ve been proven to work.
Here are key aspects of the “Follow the Leader” strategy:
1. Low Innovation, High Imitation:
- Instead of investing in extensive research and development (R&D) to create entirely new products, companies using this strategy wait until a leader in the market introduces a successful innovation, then develop a similar product with some modifications.
- These companies benefit from the market leader’s investment in creating consumer awareness and demand for the product.
2. Lower Risk:
- The “Follow the Leader” strategy allows companies to reduce the risks associated with innovation. The market leader has already demonstrated that there is demand for the product, so the followers have more certainty about market acceptance.
- Followers can capitalize on the market leader’s mistakes, improving the product where the leader might have failed.
3. Focus on Incremental Improvements:
- Followers may focus on making incremental improvements to the original product or offering it at a lower price. For example, they might use cheaper materials, streamline production, or improve distribution to offer a more cost-effective or widely available version of the leader’s product.
4. Market Entry:
- Followers often enter the market at a later stage, once demand is established, but they aim to capture market share by offering an alternative that is cheaper, more accessible, or has some improved features over the original.
5. Brand and Market Power:
- Smaller or emerging companies often adopt this strategy to compete with larger, established brands by creating similar products but leveraging more aggressive pricing or distribution strategies.
Example of “Follow the Leader” Strategy:
One clear example of the “Follow the Leader” strategy is the smartphone industry:
- Apple introduced the first iPhone in 2007, revolutionizing the smartphone market by combining phone, internet, and iPod functionalities with a touch interface.
- After the iPhone’s success, numerous companies followed suit, releasing their own smartphones with similar designs and features. Companies like Samsung and Huawei quickly adopted the concept and refined it, eventually gaining significant market share by offering alternative products at different price points with unique features.
Samsung, while initially adopting a “Follow the Leader” strategy, began introducing its own innovations over time (e.g., larger screens, multi-tasking, and stylus integration) and is now seen as a leader in the smartphone space.
Downsides of the Strategy:
- Lack of differentiation: The follower might be seen as a copycat, which could hurt the brand’s reputation.
- Market leader’s advantage: The first mover often holds significant brand loyalty and may retain a larger market share.
- Limited long-term success: Companies that purely follow the leader without eventually investing in their own innovation may struggle to remain competitive in the long run.
While the “Follow the Leader” strategy allows companies to avoid the costs and risks of pioneering new products, it can also limit their ability to stand out and could leave them vulnerable to shifting market dynamics.
In the context of adopting strategies like “Follow the Leader,” it’s crucial for professionals to understand Agile methods, especially if they want to stay competitive in the current competitive market situations. To gain expertise, you can pursue the Scrum Product Owner certification in Hyderabad, which is an excellent way to deepen your knowledge of product development using Scrum. Additionally, the A-CSPO certification course in Hyderabad offers comprehensive insights into how to apply various Product Management practices through hands-on experience.
