By John Rougeux, VP Marketing, North America at Skyfii

Why do business to business (B2B) brands in crowded markets find it nearly impossible to survive? The same reason resource-rich countries like Venezuela find themselves in economic collapse: inflation.

When inflation gets out of control, it's decimating. Not long ago, Venezuela's ever-increasing oil reserves kept its economy relatively steady. But when oil prices weakened, Venezuela had difficulty paying its debts. The government tried to solve the problem by printing massive amounts of currency, but as you might expect, this caused massive inflation. The economy is in ruins.

Unfortunately, B2B companies can fall into a similar trap -- one that can be equally decimating. In this article, I'll explain how an inflationary environment can threaten B2B companies, as well as two strategies for surviving.

How does a B2B brand become devalued from inflation?

Here's how B2B brands find themselves in inflationary environments: A hot new B2B space emerges. Then, as competitors emerge, market adoption increases. Latecomers eventually join and the market becomes overcrowded. With so many competitors, companies in the space increasingly compete on price, features and advertising budgets. The result is a highly fragmented market with much lower profit margins.

Everyone loses in this situation. Inflationary B2B environments are bad for sellers and buyers. The downsides for the sellers are obvious. It's a "red ocean" scenario in which each new entrant causes existing competitors to spend even more resources on winning that next dollar of revenue.

But buyers miss out, too. Because sellers have less revenue to pay for research and development (R&D) and support, they might not find a great solution from anyone. And trying to find the ideal solution among dozens of similar companies sucks up valuable time. For real-life examples, just look at how crowded the video conferencingmarketing automation and live chat categories are.

Fortunately, there are ways of avoiding this trap. And two of the most effective methods involve your company's brand.

1. Create an amazing first impression.

Unless your brand creates a strong first impression that convinces buyers to give you a closer look, you're not going to get very far. This is where polishing your visual identity comes into play. By turning your decent logo, website and marketing collateral into something truly outstanding, you can create the perception that you're the leader in the space.

There are challenges with this approach, though. First, success is hard to measure and improvements may be subjective. Second, polishing your identity could easily cost north of $100,000. Finally, your competitors can just as easily hire a top design agency and erode much of what you've gained.

These drawbacks don't mean you shouldn't invest in a better visual identity -- it still might be necessary. Just know that another measure might be needed, too.

2. Reframe your position.

The other option for avoiding an inflationary B2B environment is positioning your company differently from your competitors. This means describing your company in such a way that you place your brand in an entirely separate category, as Jack Trout and Al Ries outline in their book, "Positioning."

Let's look at video conferencing as an example. Instead of trying to compete in the general market, one company might position its security and recording focus as "the ideal solution for documenting legal, HR, finance conversations."

Another might focus on the needs of businesses whose employees have to make video calls without Wi-Fi. It could position itself as "the only company dedicated to cellular-based video chat."

Positioning is much more difficult for competitors to emulate. If you've already claimed ownership of a particular category, competitors would be better off focusing somewhere else. This marketing strategy takes real discipline. But if done right, reframing your position can build a defensible market for your business.

The good news: You don't have to pick.

Currencies and B2B brands are subject to the same reality: As the number of substitutes grows, the value of each entity decreases.

The good news is that you don't have to choose just one of these approaches. By creating a new category and by cementing that new position with an amazing visual identity, you'll create a strong defense against any potential competitors.

John Rougeux is VP Marketing, North America at Skyfii(ASX:SKF), providing visitor intelligence and engagement solutions for physical venues.

Published on: Oct 4, 2018