Firms such as Under Armour, Bear Naked Granola, Tesla Motors, and Allegiant Air are examples of firms who entered long established markets dominated by some of the largest firms in the country, yet found a way to not only succeed, but thrive in the markets that they entered.
How do new, smaller competitive firms enter markets that are dominated by household names with more resources, money, and distribution? The key is to finding an exploitable niche.
Under Armour entered a market highly dominated by the likes of Nike, Reebok, Adidas, and others in the athletic apparel industry. Yet Under Armour found great success (they are now a publicly traded firm) in the niche market of tight fitting performance wear. Not for the casual athlete, Under Armour was intended and targeted to the high performance athlete who needed higher performance athletic wear to help maintain peak performance. Under Armour's tight fitting wicking t-shirts penetrated the football market very quickly and soon found itself serving other adjacent markets for athletes who were seeking higher performance apparel.
Bear Naked Granola is a firm that entered the long established and highly competitive granola market long dominated by the likes of Quaker and Nature Valley Granola bars. Bear Naked inspired new product innovation in a rather boring product category, much like Ben & Jerry did for ice cream. Further more, Bear Naked exploited a gap in the granola market by offering a new "snack" granola that was not packaged as a cereal or a granola bar, but rather packaged as a snack on the go that provided an alternative to other non-healthy snacks. Exploiting and playing to the huge growth in the all-natural and organic market and consumer wants for healthier snack options, Bear Naked has thrived in the granola industry since being founded in 2002.
Tesla, the high performance, all electric auto manufacturer entered a long established and dominant auto market a time when all auto manufacturers were coming out with hybrid and electric vehicles and during a time when most auto manufacturers were losing substantial sums of money. However, Tesla found a niche in designing and manufacturing high performance electric vehicles that competed against the likes of Ferrari's, Lamborghinis, and other performance sports cars. Tesla's cars are no Toyota Prius's, but rather are in a class of their own.
Allegiant Air is currently the only profitable airline in the U.S. driven by flying routes in the U.S. to small cities that are not served by any other airline. Allegiant Air is the only airline serving over 95% of their routes providing them the opportunity to effectively operate their businesses with out any competition.
Even in the most seemingly crowded markets, there is always room for new innovation, new product categories, and new entrants. Consumer needs and wants are always changing, and quick thinking entrepreneurs have the opportunity to exploit gaps in consumer needs and what is currently offered. When you own a specific category within a market, you are able to establish a strong and defensible competitive advantage. All four firms mentioned above, found a new sub-segment of the market to serve and in doing so became the dominant players in those new sub-segments that have provided them all with a strong competitive advantage, even against the Fortune 500 firms whom many of them compete against.