The Business Book

169

The Prius gas-electric hybrid has won a

sizable share of the low-emissions market

for Toyota. The company was willing to

invest significant development funds in

return for a market-leading position.

As long as products remain the only
one of their kind available, the
company that is first to market has a
monopoly position; this means it can
set the price, establish loyalty, and
build a reputation before competitors
catch up. When competition does
arrive, the first-mover still has the
advantage, because it has
established itself. This is generally
the case even when subsequent
products are better than the first.

It’s all in the mind
Al Ries and Jack Trout, authors of
The 22 Immutable Laws of
Marketing, developed a theory of
why the first company to market
can continue to dominate. They
proposed that the customer’s
perception of where a product or
service sits in the market is of
utmost importance, claiming that
“it is better to be first than it is to
be better.” It is easier to get into the
consumers’ minds first than to
dislodge a product or service from
their minds and convince them that
your company has a better product.
Ries and Trout argued that most
marketing stems from the
assumption that companies are

fighting a product battle rooted in

reality. But consumers are not

concerned with reality; they make

purchases based on perception.

“Being first in the mind is everything

in marketing. Being first into the

marketplace is important only to the

extent that it allows you to get into

the mind first,” say Ries and Trout.

The car in front

Japanese car manufacturer Toyota

tries to be first to market, and

imparts this message in the minds

of consumers with the slogan: “The

car in front is a Toyota.” Toyota was

the first company to introduce a

hybrid car—with an engine drawing

power from both gas and electricity

—to market. Its Prius went on

sale in Japan in 1997. Several

manufacturers were considering

the concept of a hybrid car in the

1980s, but combining an internal

combustion engine and an electric

motor required significant

investment. Despite this, Toyota

knew that if they could lead the

way, there would be a number of

advantages for the company. First,

Toyota would gain early-adopter

consumers who were looking for

WORKING WITH A VISION

an environmentally friendly driving

option. Second, creating a hybrid car

would increase access to new and

existing markets, such as the US,

where emissions legislation would

favor a hybrid car. Third, it would

enhance Toyota’s image, because of

its clear message of the company’s

commitment to environmental

protection, while at the same time

generating excitement about

Toyota’s new products and the

company‘s innovative capabilities.

The Prius went on sale

worldwide in 2001, and more than

ten years later Toyota continued

to lead the hybrid market. The Prius

was the top-selling car in California

in 2012, giving Toyota a 21.1

percent market share, compared to

closest rival Honda’s 12.5 percent.

Although other companies, such

as Ford and Nissan, have now

developed their own hybrid models,

Toyota’s first move into the market

continues to yield benefits in an

ever-growing market. ■

The key to success for

Sony, and to everything

in business ... is never

to follow the others.

Ibuka Masaru

Japanese co-founder of Sony

(1908 –99)