Me too products

But Ma—Everyone’s doing it (Me too Products):
Why Good People Make Bad products II

By Paul Herbig

Last time we discussed three reasons why good companies, rich in heritage, successful innovators, leading marketers, can often create bad products. This week we will discuss other reasons products fail., in particular ‘Me Too’ products.

In Jagdish Sheth’s book, Rule of Three, he describes the industrial competitive structure as two or three behemoths in each industry sector. Number 3 is always on the fence, in a weak position. For example, in the General Discount market, Wal-Mart has the leadership, having staked out the price sensitive sector. Target has the strong number two has wisely chosen not to compete head-on against Wal-Mart on price but rather has solidly entrenched itself in the upscale, fashion-conscious, trendy sector. The number three in the market is (was) K-Mart. Unfortunately, K-Mart could not identify and stick-with a position and drifted along. One of Sheth’s theses was that when the big two started fighting each other, it was number three that suffered the most. And sure enough, Wal-Mart and Target battling each other put K-Mart in bankruptcy court. Sheth indicates that you need a critical mass of market to compete directly. Less that that and you become a niche player. K-Mart’s strategy is yet to be decided: lower itself to a niche player or attempt once again to take on the big guys. If it decides to do the latter, it will have to secure a position, a presence in the mindset of the American consumer that neither Wal-mart nor Target currently has.

Like industries, products must differentiate themselves. Unless they do so they are inevitably forced to enter that category of “Me too” products. A “Me-Too” product is one which is a Johnny-come-lately product that mimics the market leader. Most of the time these products are virtually identical to the leader and tend to have been introduced several years after the initial introduction of the first innovative product. Another choice word for “Me-too” products are clones. Knock-offs. Cheap imitations.

Companies are warned to enter the Me-Too world at their own risk. If you are an IBM (of the late seventies with the PC) or a Microsoft (of the nineties with Office Suite) perhaps you can get away with offering Me-Too products. But IBM and Microsoft had (have) an incredible amount of market power that few other firms have today. They were able to let a smaller company ‘prove’ the market existed, was feasible, and had profit potential. They then introduced their own product, typically an improved version of the original. In Microsoft’s case, inevitably the first or second version of the knock-off software is weak. However using their market power and an ability to quickly learn (the “Ready, Fire, Aim, Fire” technique of product development), usually the third and definitely the fourth versions commanded the marketplace.

But many companies do not have the luxury of market power enjoyed by those two monsters. What are the advantages of the incumbent? Typically, the product was the first to market and the market is often synonymous with the product. It has the attention of the market and the name recognition of the marketplace. Usually by the time a
“Me-Too” enters the picture, the product is well distributed and is well on its way to establishing economies of scale that provide cost and price advantages. As the military jargon does, the incumbent occupies the high ground and has secured the prime property to defend itself.

Against all these strengths, what can you, company X, offer with its later “Me-Too” product that the incumbent cannot? The answer is typically very little. To be successful, you need to differentiate yourself from the incumbent in some manner, to secure your own niche. One scenario does exist where a Me-Too product has some logic. A company which offers a wide range of products may develop and market a Me-Too product, knowing it is a clone and knowing the likelihood of a success if minimal, just to have a full set of products available for its clients (so they can purchase their entire needs from the same company). However, for most purposes, a company is forewarned that Me-Too products can be a hazard to their health.