The "Good Enough" Trap: How to Compete When Your Competitor Is a Low-Cost Incumbent

One of the most challenging competitive situations a business leader can face is not a fast-moving startup, but a large, slow-moving incumbent with a low-cost, "good enough" product. They may not be innovative, but they are entrenched. They have scale, established relationships, and a price point that is difficult to beat. Competing with them on price is a race to the bottom, and competing on features can feel like shouting into the wind. So how do you win?

The key is to reframe the battle. You cannot win by playing their game. The incumbent's greatest strength—their scale and their standardized, low-cost offering—is also their greatest weakness. It makes them inflexible. They are built to serve the 80% of the market with a one-size-fits-all solution. Your opportunity lies in the 20% they cannot, or will not, serve effectively.

This requires a shift from a product-centric to a customer-centric strategy. Instead of asking, "How can we build a better product?", you must ask, "Which high-value customer segments are being underserved by the 'good enough' solution?" The answer might be a segment that requires a higher level of customer service, one that needs a specialized feature the incumbent would never build, or one that is willing to pay a premium for a superior user experience. By focusing your resources on dominating these high-value niches, you can build a profitable, defensible business right under the nose of the giant.

Change the Conversation from Price to Total Cost of Ownership

A low price is not the same as a low cost. The incumbent's product might be cheaper to buy, but does it require more training? More maintenance? More workarounds? Build a clear, quantitative case for how your premium product has a lower Total Cost of Ownership (TCO) over its lifetime. This reframes the purchasing decision from a simple price comparison to a sophisticated investment analysis.

Focus on a "Wedge" Customer Segment

Don't try to compete across the entire market. Identify a single "wedge" segment—a niche group of customers who feel the pain of the "good enough" solution most acutely. Win them over with a tailored solution and exceptional service. Their success stories will become your most powerful marketing tool to expand into adjacent segments.

Compete on Speed and Agility

The incumbent is slow. Use that to your advantage. Be faster to respond to customer feedback, faster to implement new features, and faster to adapt to changing market needs. Your agility is a weapon that a large, bureaucratic organization cannot easily replicate.

Winning against a low-cost incumbent is not about having the lowest price; it's about having the sharpest strategy. It's about choosing your battles and delivering undeniable value to the customers the incumbent has taken for granted. This is the art of asymmetric competition, a core focus of our Market & Competition Strategy engagements.