Toppled Brands Create Opportunities for Small Businesses

Brand leaders, beware: once you slip from the top spot, you may never  get back up.

New research by Dartmouth marketing professor Peter Golder examines the fragile nature of brand leadership .

Based on the examination of business records spanning nearly 85 years, the research found that brand leaders outperform their competition during economic downturns, and that 95 percent of them maintain top spots from year to year. However, half of leading brands lose their leadership over a span of decades.

The research also reveals just how difficult it is for a company to regain the top spot once it’s been lost. Of the 500 industry leaders studied, only 18 of them — a little less than 4 percent — were able to reclaim their positions once a new brand leader emerged.

Golder explains that leadership must be fought for, and loss of it is a sure sign of trouble.

“It’s not just a random event. Something’s happening where your firm is slipping, your competitor is doing something right, or the consumers are just moving away from you for taste reasons,” he said.

While this could be bad news for industry giants in danger of falling from glory, it’s great news for small to mid-size businesses that are poised to take over.

When a brand leader loses its position, a member of the “pack of smaller brands scurrying for the leftovers” can swoop in and take control of the market, Golder said. Loss of brand leadership for one company means a chance to grow for another.

“The world in general — retailers, employees, consumers — is more excited about growing rather than shrinking brands, and it allocates its support accordingly,” Golder said.

The research suggests it might be wise for small business owners to be on the lookout for a crumbling brand leader . It may seem a bit Machiavellian, but if you want to rise through the ranks and reach the top, you need to be ready to seize power when the opportunity arises.

Golder’s paper, “Long-Term Market Leadership Persistence: Baselines, Economic Conditions, and Category Types,” builds upon a 2010 article that studied the relationship between economic conditions and long-term brand leadership.