This article explains the concepts of beachhead strategy using live examples and case studies. It answers some revelation about the use of beachheads in achieving dominance.
How did Facebook & Amazon become giants using it?
How are Startups & FMCG companies using it?
Defining Beachhead Strategy:
“Beachhead” refers to a World War II military strategy.
In the 1944 invasion of Normandy, the troops focused on winning a small border area of the enemy territory & securing it before moving on. The small border area, known as the beachhead, became the stronghold that allowed the Allies to regroup and advance further before winning the war.
Businesses use this tactic in the short term to gain a specific Market-Segment by using all their resources in the focused market. When they use everything they got in a focused market, the odds of winning increase drastically. It may look like a small win in retrospect, but it works as a stepping stone in the larger strategy.
How did Facebook beat the once mighty Myspace?
Facebook was not the goliath it is today. They used to be a part-time adventure of a teenager Mark that fortunately become famous among the young crowd.
So instead of competing with giant Myspace everywhere, Facebook used all its resources at Harvard University. Harvard become their hallowed beachhead here.
Once established as a dominant social network, Facebook moved to the next cluster of campus(es). The first focus was on campuses where Myspace was weak and before Myspace realized it, it had already become a legacy social network.
Visualizing Beachhead strategy:
The 'head pin' is your beachhead market. (See below image)
From this point, map out your potential follow-up market, starting with those markets which are closely related to the beachhead.
In each case, identify the pivot from the previous market - in terms of product features, geography, sector, or partners.
The image shows the beachhead strategy of an automobile manufacturer. Check how they entered using a small family car in UK, then moved both in terms of geography and product line.
How did Amazon start eCommerce?
Today, Amazon is a Trillion-dollar company selling everything from A to Z, but when it started, it focused on a single product- Books.
By creating a narrow & winnable focus, Bezos was able to build the fundamental of Amazon.
Success in the Books category created a launching pad to grow in different categories & markets.
John Wainwright made history in 1995 when he became the first non-company customer to place an order on Amazon. He bought "Fluid Concepts and creative analogies" which a quite a technical tomb.
How did Dollar Shave Club win?
Dollar Shave Club (DSC) entered a market ruled by Goliath named Gillette. DSC focused on a single product strategy- $1 razor, and on a single distribution structure- Direct to Consumer (D2C).
A similar strategy was then adopted by multiple D2C startups across the globe such as Bombay Shaving Company in India to gain market share in men's grooming space.
After succeeding in one product & having acquired a consumer base, they are selling an entire range of skin care.
Also, they started as a brand focused on males, now focusing on female consumers. All thanks to a successful beachhead execution.
Not all Beachheads succeed.
HUL failed in Nihar Oil beachhead
In 1993, Hindustan Lever acquired Tata’s Nihar Coconut Oil, a brand strong in Eastern India. HUL wanted to create a beachhead using Nihar & expand in other geographies using it.
Marico was (is) a market leader in the hair oil segment having >60% share with a strong Parachute brand.
Having the deep resources of Unilever & unmatchable distribution competency, HUL, sure of winning, started an aggressive price war to gain market share from Parachute.
So Parachute was forced to compromise its margin to maintain market share. But, they did not give in to the mighty HUL.
Baazigar move from Marico:
HUL’s endgame was to make Parachute not profitable and hence forcing Marico’s acquisition. HUL tried to replicate what Coca-Cola did to thumbs-up in India.
The story goes that HUL’s then India Head Keki Dadiseth called Marico’s founder Harsh Mariwala & warned him to sell Marico before it’s too late.
Parachute’s brand loyalty & Harsh Mariwala’s strong stand kept Parachute as the market leader & Marico ultimately acquired Nihar from HUL in 2006.
“PREDATOR BECOMES PREY”
Author: Gunjan Solanki
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