Market Driven Leadership a Guide to

. . . . . . . .
Best Practice Principles
for Market Leadership.
How to apply the 10 Best Practice Principles of Market
Leadership to dominate your market and successfully
grow your B2B business.

Building Businesses Into Market Leaders
Table of Contents
THE REWARDS OF LEADERSHIP ......................................................................................................3
SO, WHY ISN’T EVERYBODY DOING IT?.........................................................................................5
FAILURE TO FOCUS!..................................................................................................................................6
THE 10 BEST PRACTICE PRINCIPLES OF MARKET LEADERSHIP.......................................8
1. SELECT AND SEGMENT A TARGET MARKET...........................................................................................8
2. NARROW YOUR FOCUS TO EXPLOIT YOUR UNIQUE VALUE ..................................................................10
3. ALIGN BUSINESS ACTIVITY TO SUPPORT YOUR STRATEGY ..................................................................11
4. CLAIM THE ALPHA POSITION...............................................................................................................12
5. INTEGRATE COMMUNICATIONS PROGRAMS INTERNALLY AND EXTERNALLY ......................................13
6. LEVERAGE THE ON-LINE ENVIRONMENT.............................................................................................14
7. LOCK-IN STRATEGIC PARTNERS TO LOCK OUT COMPETITORS .............................................................15
8. GROW YOUR BUSINESS BY EXPANDING YOUR MARKET SEGMENT.......................................................16
9. EXPLOIT YOUR LEADERSHIP TO DRIVE MARKET SHARE ......................................................................17
10. ATTACK SYNERGISTIC MARKET SEGMENTS ......................................................................................18
SUCCEED OR STRUGGLE? ................................................................................................................19
ALPHABRAND STRATEGIES CAN HELP........................................................................................20
REFERENCES AND RECOMMENDED READING..........................................................................21
Copyright  2001 by AlphaBrand Strategies, Inc.
All rights reserved. Printed in the United States of America. No part of this document may be used or
reproduced in any manner whatsoever without written permission except in the case of brief quotations
embodied in critical articles and reviews.
AlphaBrand Strategies, Inc., 14990 Pristine Drive, Colorado Springs, CO USA 80921
Phone: 719-487-7345 - Fax: 419-791-1748 - www.alphabrand.com
©AlphaBrand Strategies, 2001 page 2 of 21 09/14/01

The Rewards of Leadership
Much has been written regarding the benefits of a powerful brand in
the consumer markets while ignoring its impact in the B2B environment.
When in fact many of the rules—and more importantly, many of the
benefits—apply directly to the B2B environment. This paper presents the
key benefits earned by establishing yourself as the leading brand in your
chosen market segment, and the best practice principles that will help you
get there. In each market segment—in every market—there is a prized
opportunity for one brand to rise to the top and become the leader, the
dominant choice . . . the alpha brand. It could be you!
According to the Arthur D. Little consulting firm, a business can
occupy one of six competitive positions in a target market:
Nonviable: this business has unsatisfactory performance and no
opportunity for improvement.
Weak: this business has unsatisfactory performance but an
opportunity exists for improvement and it must change or exit
the target market.
Tenable: this business is performing at a sufficiently
satisfactory level to warrant continuing in business, but it exists
at the sufferance of the dominating company and has a less than
average opportunity to improve its position.
Favorable: this firm has a strength that is exploitable in
particular strategies and has more than average opportunity to
improve its position.
Strong: this business can take independent action without
endangering its long-term position and can maintain its long-
term position regardless of competitors’ actions.
Dominant: this business controls the behavior of other
competitors and has a wide choice of strategic options. This is
the Alpha Brand.
It’s a fact that most customers will prefer the leading brand, based
on the erroneous belief that the leading brand must be better. This
consumer behavior dynamic results in the market leader being afforded

significant benefits that the market does not extend to other businesses
competing for that segment. The market leader is then able to focus on
strategies that extend its lead and expand its market, while competitors
must expend a greater percentage of resources to combat the leader’s
position as the default choice. And as a result, market leaders have a
unique opportunity to exploit their position to gain:
Better profit margins
Easier entry into new markets
Stronger barriers to competition
Attractive partnering opportunities
How powerful is the leading brand? In “Brand Leadership”, by
David Aaker, he presents the following scenario: Suppose that you will be
given .01% of the stock of one of the follow companies. Which firm’s
stock would you prefer, given that following information about their sales,
profits, and assets (as of January 1998)?
SALES ASSETS PROFITS
General Motors $166B $229B $7B
Coca-Cola $19B $17B $4B
On the basis of this data, most people would pick General Motors
and turn their back on Coca-Cola. Yet in January 1998, Coke had a market
value more than four times that of GM, in part because the value of the
Coke brand equity was over twice the value of the entire GM firm. An
anomaly? Coke is the perennial #1 brand across the globe, and in 2000
51% of the company’s value—or $72.5 billion—is attributed to the power
of the brand.
Historically, you find that when a market matures, the battle for any
viable market segment generally becomes a struggle between two or three
primary competitors. As markets become more and more competitive, you
find that only businesses that are No. 1 or No. 2 in their markets get to

enjoy the rewards of market leadership, while their competitors are forced
to expend greater capital and resources as they fight an uphill battle for the
less desirable niches of the target market. The metaphor often used is 1
gorilla at the top of the food chain, 2 chimps battling for a favorable
position, and a score of monkeys fighting for what’s left and struggling to
remain viable.
Market leaders dominate an ecosystem—in business as well as
nature—and use their position of strength to insure their continued
viability. To successfully achieve and sustain a position of market
leadership means developing laser-focus on the strategies that will make
you the dominant player, and then using your position of strength as
leverage to expand into synergistic market segments where you can again
establish yourself as the alpha brand.
So, Why Isn’t Everybody Doing It?
The key question, then, is why have some companies been able to
achieve and sustain a position as market leader while others with similar
opportunities have not? All companies start with some form of strategy to
provide value to a given group of prospective buyers. In most cases, the
market segment is too broad and the strategy is too diffuse to effectively
dominate their target. In business—as in any critical conflict—you should
choose only those battles where you are clearly in a dominant position and
are highly likely to win. Otherwise the risks are too great and the costs are
too high.
Why do most companies fail? Building and maintaining a leadership
position in any market is a difficult challenge that crosses all areas of the
organization. And even though narrowing the focus of an organization
increases its ability to dominate a market, the lure of low hanging fruit and
opportunistic selling can quickly diffuse focus on necessary strategic

planning. With the increased pace of change in the B2B environment it has
become more and more difficult to perform the strategic planning that has
been proven successful over time. Many companies are simply not taking
the time to review the strategic market issues that require continuous,
executive-level attention.
Who is your customer?
What is the unique value you provide them?
What is your defined, primary target market?
What secondary markets have been defined and what is the
level of opportunity in each?
Why do your customers buy? What are their motivational
triggers?
What is the competitive landscape for each segment?
Can you expect to dominate the targeted segment(s)? What will
it take?
How are you going to distinguish yourself from your
competition?
What internal and market-facing programs do you need to
develop or re-engineer in order to be successful?
Ultimately, the market will reward the company that demonstrates
its commitment to providing continuing value to a well-defined audience,
and possesses the corporate agility required to deliver the goods. That
might be you, and it might be your competition!
Failure to focus!
Failure to focus is perhaps the most common and most costly
mistake made in business. Over and over again you see this tragic scene
played out—with the same inevitable result.
A good idea becomes a company and with hard work and a little
luck an initial group of innovators and early-adopters provide the
momentum for a viable business. Business plans and business strategies
are suddenly overwhelmed by a sweeping set of possible options and new
choices, and the company begins to reach beyond its core competitive

advantage. Now, limited resources are spread to explore new opportunities.
You begin to lose focus on your target market and the unique value you
deliver for them. You find yourself involved more and more in
opportunistic selling in areas outside of your primary target market. The
core strength of your products and services get diluted to address a more
diverse set of customer needs.
As your focus dissipates, you begin to see buyers in your strongest
market moving toward competitors offering solutions more focused on
their traditional needs. Market share in your primary market begins to
erode and you find that while you are serving more segments than ever
before, you are no longer operating from a position of strength in any of
them. You’re not the market leader in any segment you are trying to serve.
As a second-tier player, you can’t create the high levels of market
awareness that market leaders are awarded. It gets more and more difficult
to maintain your price points, and margins are getting thinner. And, key
industry vendors that seek out best-of-breed partners are no longer looking
your way. You have successfully obtained mediocrity in multiple markets,
and are faced with stronger, more focused competitors on all fronts.
In this scenario, you have a poor chance to capitalize on the
opportunity you had in front of you. And so instead of achieving the kind
of success you believed was possible, you now find yourself scrambling
for a piece of what’s left.
It’s not a pretty picture. The vast majority of new companies are out
of business within two years. Those that make it and reach the level of
market leadership do so because they have created strength through focus
and successfully exploited their position by applying best practices to
establish their leadership and grow their business.

The 10 Best Practice Principles of Market
Leadership
Best Practices are programs and activities that have been proven to
increase performance. They help you eliminate costly trial and error—and
enable you to make quantum leaps in performance by replacing evolution
with revolution. While there is no perfect structure that will work for every
company, these proven principles give you a roadmap to help you be more
successful.
The key to achieving and sustaining a position as the market leader
lies in developing excellence across The 10 Best Practice Principles of
Market Leadership. Over time, business leaders and management
consultants have synthesized the lessons for success and failure. The 10
Best Practice Principles of Market Leadership presents these lessons to
guide you in developing strategies to create market strength by developing
excellence across critical aspects of your business. Committing to this
roadmap for success will enable you to establish a leadership position in an
attractive market, and leverage your position of strength to successfully
grow your business.
1. Select and segment a target market
The first rule of business is to clearly understand whom you serve,
and what they care about. You must systematically identify and evaluate
market segments to recognize desirable business opportunities—this will
drive you to the right decisions on all other aspects of the business.
Viable market segments can be defined as groups of potential
consumers, that have fundamentally similar pain points, exhibit
consistently similar patterns of behavior, are motivated by significantly
similar forces, and can be accessed collectively.

All market segments should be evaluated in terms of purity of
composition, estimated quantity of like entities, and resources needed to
extract the value from the segment (cost of sales, market barriers,
competition, etc.). On a more granular level you should also consider,
buying behavior, pain points, motivation triggers, potential spending
power, growth projections, and saturation levels.
Over estimating your ability to be a leader in multiple markets will
result in mediocrity in all areas of the business, and ultimately failure in
the market place. Carefully choosing whom you will serve as your primary
market will enable you to concentrate your resources for this audience and
prevent you from over-extending your resources to destructive levels.
Try this simple exercise to perform an initial ranking and screening
of potential markets. By balancing the level of attractiveness of a particular
market segment with an evaluation of your ability to effectively serve that
segment—both now and in the future—you will improve your
understanding of the real potential and your chances for success.
Figure 1
Level of Market Attractiveness
Low / Moderate / High
Low/Moderate/High
AbilitytoDeliverSolution

2. Narrow your focus to exploit your unique value
Effective marketing strategies require a company to narrow the
focus of its market offering so that it has a clear competitive advantage.
This applies to both products and services. You become stronger when you
reduce the scope of your activity and concentrate your resources. It
continues to be true that you can’t stand for something if you chase after
everything. To achieve and sustain a position of leadership you must
identify the unique value that you alone can deliver, then you must commit
to delivering extraordinary levels of this distinctive value to your market.
Several key questions help define an appropriate scope of services:
What is the value that you provide to the customer today?
What value will you provide in the future?
How will that value manifest itself in products and services that
your customer will find compelling?
How will you insure that you will be able to continue to serve
this market in this way (and do you want to)?
By relentlessly driving themselves to deliver extraordinary levels of
distinctive value to carefully selected customer groups, market leaders
make it impossible for other companies to compete on the old terms.
Remember that the probability of success in dominating a market is
inversely proportional to the size of the market!
Figure 2
Very Low
The probability of your success is inversely proportional
to the size of your market !
High

3. Align business activity to support your strategy
In the best-selling book, “The Discipline of Market Leaders,”
authors Michael Treacy and Fred Wiersema identified three key value
disciplines to understand in the pursuit of market leadership: operational
excellence, product leadership, and customer intimacy. Market leaders
understand very clearly that commitment followed by execution is what
separates winners from losers in a competitive market. When you commit
to the appropriate value discipline and effectively align business programs
and operations to effectively support it, you create a natural competitive
advantage difficult to overcome.
The correct decision on which value discipline should be pursues
requires analysis of your situation from four separate perspectives,
beginning with:
What are your core strengths and current areas of competitive
advantage?
In which stage of the product life cycle—introduction, growth,
maturity, decline—is your product? Your market?
What are the business characteristics that the market has
identified as important for a buying decision?
Who currently owns the leadership position for each
characteristic and what would be required to displace them?
Understanding the structure of the market place will enable you to
choose appropriate value discipline, and aligning programs and operations
to support it will drive your success.

4. Claim the alpha position
At its root, marketing is a battle of perceptions—winning the battle
shortens the purchase cycle and maximizes margins. Analysis of buying
behavior has identified that consumers are conditioned to put things in
categories in order to simplify the purchase decision. They use this as a
screening process and apply it to products, services, and vendors. Many
vendors make the mistake of not identifying where they stand because they
are reluctant to narrow the potential markets that they could—in theory—
serve. By refusing to clearly identify “where they stand”, they have
unknowingly handed over that responsibility to the market place.
In B2B purchase decisions—as in B2C purchase decisions—the
buyer often has neither the time nor the ability to research which product
provides the best value for their particular needs. So, they short cut the
process and select the company or product they perceive as the market
leader based on an often inaccurate correlation that the leading product
must be the best product. Leadership positioning can take many forms,
including:
Quality: prestige and confidence
Reputation: the popular choice or market share leader
Price: lowest cost and greatest value
Technology: advanced functionality or ease of use
Service: customer-focused and easy to do business with
Effective positioning creates a distinct and valued place for your
company and its products in the minds of your target market. It presents
your unique value proposition in terms that clearly differentiate your
company from its competitors and stakes your claim as the clear leader in
a viable market segment. If you want to realize the rewards given to the
market leader, you must effectively position yourself as the leader!

5. Integrate communications programs internally and externally
One of the key elements of raising and sustaining corporate value is
implementing a successful branding strategy. Effective branding requires
full integration of all market messages, including pricing strategies,
packaging, promotional programs, company communications, public
relations activity and customer service. Integrated marketing is based on
the Principle that everything an organization does and everything that it
doesn’t do delivers a message and has an impact on brand value.
Every message, to some extent has one of three effects: strengthens
relationships by adding value, reconfirms current relationships, or weakens
brand relationships by reducing brand value. Implementing consistent
brand messaging and creative execution across all communication
channels helps insure that each market contact advances your Unique
Value Proposition (UVP).
Effective branding is dependent on the consistent execution of your
strategic market positioning and has a profound impact on both market
success and corporate value. Effective branding programs enable you to
avoid operating through “random acts of marketing.” As identified in a
recent brand-impact study covering 1995 through 2000, publicly traded
companies that had invested heavily in branding were able to achieve and
sustain greater levels of corporate value than those that did not.
Figure 3
95 96 97 98 99 00
IndexedStockPrice
40
35
30
25
20
15
10
5
0
Heavily Branded
Fortune 100 Average
Unbranded

6. Leverage the on-line environment
The sixth principle focuses B2B providers on leveraging the unique
capabilities of the on-line environment to effectively support marketing
programs and initiatives and strengthen your brand.
Effective on-line branding programs are built around the total
customer experience, and your web site is a central part of that experience,
the place where all aspects of your company—messages, products,
services, and support—intersect. Leaders pay attention to the entire realm
of user experience and how that experience is influenced by an online
presence. Knowing how to handle the fundamental issues that address the
customer experience is key to success. Some issues to consider include:
Are brand management elements obvious, consistent and
experiential?
Is navigation intuitive and open?
Is the content interesting, current, comprehensive and presented
in web-appropriate format?
Is the user experience easy, interactive, and rewarding?
Is there a strong element of community where continued contact
is offered and accepted?
Is your site trustworthy and is information and transactions
secure?
The on-line environment also gives you unprecedented opportunity
to interact with customers, prospects and partners.
Rich-content, multimedia conversations
Virtual education via on-line seminars
On-line communities to share knowledge and solve problems
Industry information portals and on-line libraries
Self-directed learning opportunities for customers and prospects
Surveys to pre-test products, promotions, programs and policies
Companies that build on-line ventures that live up to and/or exceed
their market’s expectations increase their market impact and extend the
strength of their brand.

7. Lock-in strategic partners to lock out competitors
The seventh principle of market leadership requires a commitment
to developing an ecosystem of alliances and partners. It is becoming
increasingly unlikely that one organization is able to provide the total
solution for their customer. To become the market leader you need to be
tightly focused on your core capabilities and your market segment and able
to quickly respond to market shifts and competitive threats. Keen focus
and corporate agility demand that you work within the larger ecosystem of
vendors providing components of the total solution. Locking in the key
players in the ecosystem is comparable to “holding the high ground” on
the ultimate battlefield—the market place.
Partners can extend your reach into new markets, expanded services,
and reduce time to market. An effective strategic alliance program will
reduce business risks and generate incremental business for both parties.
Business partnerships should be evaluated and pursued based on ten rules
for successful alliances.
There must be a common goal
There must be a compatible target market(s)
There must be commitment at the top and participation in the
ranks
There must be obvious impact for both parties
There must be a win/win balance
There must be good chemistry—trust
There must be quantifiable results to measure success
There must be a natural fit of styles and market offerings
There must be open communication channels
There must be a contingency plan—what will be done if the
relationship is a failure?

8. Grow your business by expanding your market segment
The first seven best practices concentrate on the strategies for
becoming the leader in a desirable market. Once you have developed this
position of strength, you can then leverage your strength to improve your
business position. The first goal should be to increase the scale of the
segment you dominate. Will that bring competitors into the market? –
hopefully yes!
Choice stimulates demand, and competition brings more customers
into the market. And ironically, the more choices that people have, the
more they tend to cling to one trusted brand in each category. As the
leader, you have the opportunity to aggressively promote your category for
the purpose of expanding your market. By growing your market and
expanding the product category you will in turn be able to effectively grow
your business.
Market leaders become the champion for the segment, promoting it
at every opportunity. You must become the thought leader whom the
industry listens to for perspective and vision. Focus on creating outside
validation of the impact, influence and unique nature of the segment.
Remember that until a market segment reaches a saturation level where the
majority of potential buyers already have a solution, it is easier to extend
your penetration in your existing market segment than it is to expand into a
new market.
Dominate the category, grow the category and work to obtain an
expanded share of a larger pie. Think big—it’s a global market place!

9. Exploit your leadership to drive market share
The ninth principle presents another critical execution component.
There are many accepted forms of leadership within a target market—each
with its own characteristics and strategic value.
Quality leader (prestige and confidence)
Reputation leader (largest market share / the popular choice)
Price leader (lowest cost and greatest value)
Technology leader (advanced functionality or ease of use)
Service leader (customer-centric and easy to do business with)
Ultimately though, a company must leverage their leadership
position to develop leading market share within their market segment.
Only businesses that are No. 1 or No. 2 will reap the benefits of being a
market leader—including the opportunity for price advantage often
reflected as profit margin. In the PIMS study by the Strategic Planning
Institute, research continues to demonstrate a consistent correlation
between higher levels of market share and corresponding higher margins.
Appropriate investment in aggressive marketing strategies to increase
penetration in your existing segment must be a strong consideration.
Figure 4
9.1
14.1
17.6
30
23.4
0
5
10
15
20
25
30
35
10 20 30 40 over 40
Market Share %
ProfitMargin

10. Attack synergistic market segments
Finally, best practice principle 10 directs you to leverage your
position of strength to enter and dominate additional market segments. A
position of strength is achieved when you have:
Resources (people and tools to do the work),
References (clients and customers that will be advocates for you
in the market place),
Reputation (you are known in the market place as the category
leader), and
Reliable results (you can predict with some certainty outcomes
of business engagements and potential revenue).
Determining how, when and where to leverage your current position
of strength is key to continued growth. If and when the segment’s potential
no longer meets your business requirements (size, growth rate, cost of
sales, investment levels, etc.), then you should identify adjacent segments
for which you can leverage your current position of strength. You must
determine which new segments have the greatest synergy, potential and
appeal for your expansion and growth plans.
To some extent you should revisit your earlier decisions regarding
mission and vision, and re-assess your core competencies. They will
influence your future decisions on which new market segments have the
greatest synergy, greatest potential and greatest appeal for your expansion
and growth plans.
Remember, fight the battles where you are clearly in a dominant
position and are likely to win—otherwise the risk and the cost are too
great.

Succeed or Struggle?
How can you determine if you are set up to succeed, or set up to
struggle in the battle for market leadership?
Take a moment to assess your situation. Do you have the resources
you need to be successful? Committing to path that will lead you to market
leadership is a pivot point in the life cycle of many organizations—but in
the end, the stakes are simply too high not to!
Commitment means there must be sponsorship at the top of the
organization, willing to champion new initiatives and redirect resources as
necessary. There must be participation in the ranks and coordination across
all areas of the organization that are impacted by the new focus. And, to
increase your probability for success and minimize time and costs you will
need an experienced partner to be your guide.
An experienced guide will get you started in the right direction and
keep you on course throughout the process. Your guide should understand
the B2B landscape and be able to quickly absorb the nuances of your
specific business environment. Your guide should be experienced in the
full array of marketing disciplines you’re going to cover. Your guide
should provide relevant insight to help you eliminate wasteful trial and
error. Your guide should provide you with both direction and tools, and
coach you through the process so that the work can be done quickly and
efficiently. And throughout the process, your guide should be able to create
true knowledge transfer so that your organization is able to follow through
and successfully implement new insights and initiatives.

AlphaBrand Strategies Can Help
AlphaBrand Strategies is committed to helping B2B clients grow
successfully. We developed The 10 Best Practice Principles for Market
Leadership and can help you understand how to apply them to your
unique business environment. AlphaBrand Strategies provides strategies
and services for effective marketing, enabling you to establish a leadership
position in an attractive market, and leverage your position of strength to
successfully grow your business. We will help you grow successfully by
working with you to identify and segment market opportunities, refine
your focus to concentrate resources on your unique value, become the
dominant provider in your market, and drive brand value.
AlphaBrand Strategies will help you develop clarity and focus, and
show you how to attain a level of sustainable excellence. Services include:
Strategic market planning
Brand development programs/strategies
Integrated marketing programs/strategies
Public relations programs/strategies
Strategic alliance programs
Creative services
Find out more about how AlphaBrand Strategies can help you grow
your business successfully, call and schedule an appointment to discuss
your unique situation and challenges. Call 719-487-7345, or visit
www.alphabrand.com for more information.
AlphaBrand Strategies, Inc., 14990 Pristine Drive, Colorado Springs, CO USA 80921
Phone: 719-487-7345 - Fax: 419-791-1748 - www.alphabrand.com

References and Recommended Reading
1. Competitive Advantage: Creating and sustaining superior performance,
Michael Porter, The Free Press / McMillan, Inc., 1985
2. Brand Leadership, David A. Aaker and Erich Joachimsthaler, The Free
Press, 2000
3. Value Drivers, Mark C. Scott, John Wiley and Sons, Ltd.,1998
4. Customer.com, Patricia Seybold, CEO Patricia Seybold Group, Times
Business / Random House, 1998
5. Crossing the Chasm, Geoffrey A. Moore, HarperBusiness, 1991
6. Inside the Tornado, Geoffrey A. Moore, HarperBusiness, 1995
7. Focus: the future of your company depends on it., Al Ries, Harper
Business, 1996
8. Market Ownership: The art and science of becoming #1, William
Sherden, American Management Association, 1994
9. The Discipline of Market Leaders, Michael Treacy and Fred Wiersema,
Addison-Wesley, 1997
10. The 22 Immutable Laws of Marketing, Al Ries, Harper Business, 1993
11. Free, Perfect and NOW, Robert Rodin, Simon & Schuster, 1999
12. Webonomics, Evan I. Schwartz, Broadway Books, 1997
13. The Clue Train Manifesto, May 1999, www.cluetrain.com
14. Insider Internet marketing, JDD publishing, Jim Daniels, 1997
15. Online Marketing Handbook, Daniel Janal, International Thompson
Publishing, 1995
16. The 22 Immutable Laws of Branding, Al Ries and Laura Ries, Harper
Business, 1998
17. Driving Brand Value, Tom Duncan and Sandra Moriarty, McGraw-
Hill, 1997
18. AMA Marketing Toolbox: Identifying The Right Markets, David
Parmerlee, American Marketing Association, 1993

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