By Oluwole Dada
There is a scene that plays out in competitive markets, and most seasoned brand managers will recognise it immediately. A new product is about to be launched but suddenly, something shifts in the market. A competitor who had been watching from a distance suddenly becomes very active, distribution channels that were open begin to close and a regulatory query surfaces from an unexpected direction.
The battle has begun with some of the actions from the competitor showing unethical approaches. Meanwhile, the new entrant did not fire the first shot.
Marketing is, at its core, a competitive discipline and it could be regarded as warfare. Every shelf position earned is a shelf position denied to a rival. Every distributor won over is a point of leverage lost by a competitor. Every consumer converted represents a defection from an existing brand relationship. Like any contest with real stakes, the language of marketing campaigns attracts responses that range from the fiercely competitive to the ethically questionable.
This submission examines one of the most underestimated reasons products fail: not internal miscalculation, or poor pricing, or distribution gaps, but the deliberate, organised, and sometimes covert efforts of incumbents to ensure that the newcomer does not find its feet.
Every manager overseeing a new product launch must understand this dynamic. This is not to become paranoid, but to become prepared. Most incumbent players do not want any new player especially in an industry that is not growing significantly, and they will do anything and everything to achieve this.
This logic played out globally when Red Bull entered the energy drink category. The major beverage companies, with some having the most powerful distribution and marketing machines in the world, initially dismissed the product as niche. When its growth trajectory became undeniable, they launched competing products, lobbied for regulatory scrutiny of the energy drink category in several markets, and used their trade relationships to limit Red
Bull’s distribution access in key channels. Red Bull survived because it had built a sufficiently differentiated positioning and a loyal consumer base before the full weight of competitive response landed. Not every challenger is that fortunate.
Of all the competitive weapons available to an incumbent, the regulatory lever is the most sophisticated and the most difficult to defend against. It works because it operates through official channels, which gives it the appearance of legitimacy while the motivation behind it remains opaque.
A competitor facing a new entrant files a complaint with the relevant regulatory body. The complaint may concern labelling, product registration, ingredient disclosure, or manufacturing standards. Whether or not the complaint has genuine merit is almost secondary.
The effect is to trigger an investigation, delay market distribution, and create reputational uncertainty around a product that has not yet had the chance to prove itself.
The Uber experience in several African cities provides an understanding of how regulation can be used against a product. As Uber moved into markets where incumbent taxi operators had established relationships with local government bodies, those operators used regulatory channels such as licensing requirements, driver certification rules, or insurance mandates to delay or restrict Uber’s operations.
In some cities this succeeded in buying time for incumbents to develop competing platforms before Uber achieved scale. In others, Uber moved fast enough to build consumer adoption before the regulatory interventions could bite. The lesson for brand managers is that regulatory risk is not only a compliance matter.
In competitive markets, it is also a strategic vulnerability that must be mapped and managed.
One of the most dangerous assumptions a product team can make is that the market is a level playing field waiting to be contested on merit. It rarely is. Established players have spent years, sometimes decades, building structural advantages that go far beyond product quality.
They have entrenched relationships with distributors. They have historical shelf agreements with retailers. They have the financial reserves to absorb a temporary margin squeeze. And crucially, they have institutional memory of exactly what it takes to repel a challenger.
Another competitive tactic commonly deployed is the exclusive distribution arrangement. The mechanism is straightforward. An incumbent brand negotiates an agreement with a distributor, either formally or informally, that creates a financial or contractual disincentive for that distributor to carry competing products. In return, the distributor receives preferential credit terms, enhanced rebates, priority stock allocation, or exclusive territorial rights.
The new entrant arrives at the distributor’s door with a competitive product and a reasonable margin and finds that the door is structurally closed.
There are many more ethical and unethical games incumbent can play to prevent the survival of a new entrant. This will be continued in the next post.
Oluwole Dada is the General Manager at SecureID Limited, Africa’s largest smart card manufacturing plant in Lagos, Nigeria.
