I’ve had the good fortune of working with companies that dominate their markets. My current company, Instron, is the world’s largest materials testing systems manufacturer. The name brand is so strong and ubiquitous that scientists and engineers refer to any test system as an “Instron” just as “Kleenex” became synonymous with tissue. (All this was hard earned with years of innovation, dedicated employees, and a customer satisfaction rating on par with Lexus.)
“No One Ever Got Fired for Buying IBM”
Being dominant has its privileges. Prospects know to call you when they are shopping for your type of products. You command a certain amount of industry respect and it is worth some points of trust when it comes to purchase decisions. There used to be a saying “No one ever got fired for buying IBM” meaning that no one gets fired for making the safe pick and choosing an industry leader. Other companies might have better products or offer lower prices, but they often come with greater risks. In the 1990's, the phrase became: “No one ever got fired for buying Microsoft.” The same mentality happens for other products: “Get an iPhone/iPad...you can’t go wrong”.
The “Cool Factor”
However, the market can fickle. “Name dropping” is a common sales and marketing tactic where you establish credentials by naming some of your best known customers or clients. It’s also a way to impress your prospects and show that, they too, can be in the same club as existing users. It doesn't always work. First, it’s a customer privacy issue – some users are reluctant to appear in promotional materials. In another case, some prospects are “renegades” – they just don’t want to use the same products as others, including their own colleagues. You can make an argument that some people shy away from Apple or Microsoft so that they can be seen as different. I personally got an Android phone because almost every person whom I know had an iPhone – how uncool would it to be part of the herd? Samsung came out with a brilliant ad in 2012 showing a young man waiting in line (presumably at an Apple store) with a bunch of hipsters. It turns out that he is saving a spot in the line for his parents, alluding that the iPhone 5 is meant for the older generation, and uses a Samsung Galaxy S3. So market dominance has to be carefully balanced with the danger that you are suddenly “uncool”. Facebook is no longer “cool” once kids found their parents and grandparents trying to friend them (I'm still waiting for my nephew to accept my invitation from 3 years ago).
Badmouthing the Competition
A less dominating competitor also has more of an opportunity to attack the market leader directly. Pepsi used to always attack Coke by name. It’s difficult for the market leader to reply in kind since they have to acknowledge the competitor and it looks bad when you’re number one (you have more to lose with such a tactic). Apple was able to take shots at Microsoft in the past in the PC arena (particularly with a respected cult figure like Steve Jobs and when they were a small player). Their famous “1984” Orwellian ad played on the Apple Mac liberating worker drones from a colorless world dominated by “Big Blue” (IBM). Yet such a tactic backfired when they became the "leader" in Smartphones - their recent attack on Samsung prior to the Galaxy S4 launch was deemed “defensive, classless, and even desperate” by critics.
The “Underdog” Effect
Generally, you don’t raise yourself up by talking someone down but smaller competitors seem to have some leeway here. The leeway may be attributed to the “underdog effect". People like and root for underdogs, the one who seems to be at a disadvantage and has to struggle. There’s a “feel good” to helping them especially when the buyer identifies with the "underdog". Some buyers will buy simply to give a small, scrappy competitor a chance. However, even big companies take advantage of this effect. Nantucket Nectars drink ads feature the founders – who never mention that they sold out to The Dr. Pepper Snapple Group.
Innovation and Trust
As Mel Brooks said in “History of the World, Part 1”: “It’s good to be the King!” Innovation keeps you and your product “cool” but be aware that being number one can be a two edge sword. You must continuously build trust with your customers and behave differently than your competitors to remain number one. If you’re not number one, look for a niche where you can be number one.