January 22, 2008

How to Market With Your Enemy: 6 Strategies to Form a Profitable Partnership With a Longtime Competitor

SUMMARY: You're familiar with the saying: \"Keep your friends close and your enemies closer.\" When you're suddenly tasked to forge a strategic partnership with a competitor, just how close do you keep them?

See the six strategies a marketer took who climbed into bed with a longtime opponent. By focusing on the agreement, they've seen a 200% boost in new business.
Novell has competed with Microsoft over software business for more than two decades with products including its Linux-based operating system, SUSE Linux Enterprise, which competes directly with Microsoft’s Windows.

The two companies remain competitors today, with one main difference: They created an agreement in 2006 that allows their operating systems to coexist on the same computer. The deal involved joint marketing, technical and patent collaborations.

“We did have some outstanding legal matters we were debating. In fact, we still have some. And we did view [Microsoft], from a cultural perspective, as the competition, or the main competition,” says John Dragoon, CMO, Novell. “It’s a good example of ‘frenemies,’ if you will, or ‘co-opetition.’ ”

The strategic partnership has resulted in a more than 200% growth in new business for Linux, Dragoon says. “We took on some very large customers this year -- [such as Wal-Mart and Credit Suisse] -- some very big companies who see the value of this interoperability agenda and have come to Microsoft and Novell for that.”

So, where do you start when you must market products with the enemy? Dragoon suggests looking at four distinct areas:
- Focus first on the overall agreement.
- Gather the right employees to develop the marketing plan.
- Stay competitive in the rest of your marketing.
- Prepare for a PR backlash.

Begin With the Overall Agreement
Your marketing relationship should start with the agreement created by the highest echelons of your company and your competitor.

-> Strategy #1. Know your objectives

Everyone on the marketing team must understand the terms of the agreement clearly, whatever its objectives.

“In our case, our CEO, Ron Hovsepian, talked to their CEO, Steve Ballmer, and carved out a common ground around which we would cooperate,” Dragoon says. “Having that cascade into the organizations is a lot easier when you have that alignment at the top.”

-> Strategy #2. Follow the rules

When you’re marketing with a competitor, you’ll both have many rules to follow. Among the most important are where your products will compete and where they won’t. You need to clearly understand these rules at your own peril if you don’t.

“We have very direct conversations about where we will compete and where we won’t compete, what we’re allowed to say and what we’re not allowed to say,” Dragoon says. “There remain some gray areas, and we hammer those out. For instance, we participate in each other’s user conferences and trade shows, [but] we are very careful not to participate in their trade shows and market products that are obviously competitive to theirs.”

Honoring these rules will build trust between your two companies, strengthen your partnership and keep you out of legal trouble.

Gather Best Marketing Minds
Begin by assigning the right people to work with the competition. Avoid using employees who carry any bitterness toward your new partner.

“I think we both seeded those teams with people who are relatively new to both Novell and Microsoft, so there’s not a lot of historical context that creates negative energy in conversations,” says Dragoon.

These employees should be devoted full time to the partnership. If they are still working in other parts of your company -- parts that are in competition with your new partner -- that could cramp cooperation.

-> Strategy #1. Hold planning sessions

After you’ve formed your team, gather everyone -- in person if possible -- to address basic marketing questions like:

o What are we marketing?
o Who is the target audience?
o How will we reach them?
o What themes or values do we want to promote?

-> Strategy #2. Focus on the agenda

Don’t let meetings that bring together members of opposing companies degenerate into sessions that stray from the customer-first agenda.

“What we determined quickly was that we would not talk about our differences. We would talk about the customer agenda. The main focus around that agenda would be the promotion of interoperability. Interoperability in how we would work together on behalf of the customer’s agenda of making their two dominant platforms work well together,” Dragoon says.

-> Strategy #3. Set specific goals

Set goals with milestones that do not have to translate immediately into a lift in sales. They can start as simple as:

o Create a website to focus marketing efforts
o Create an email newsletter
o Establish a search engine marketing campaign
o Deploy display advertising
o Generate earned media in blogs and magazines

These goals will help keep your marketing teams focused on business -- not competitive differences.

-> Strategy #4. Adjust goals as needed

Keep the team moving. As milestones are met or are about to be met, set more of them. Keep them focused on tasks.

“We continue to evolve, revise and enhance this campaign. We just aligned on our next six-month media plan, which is a combination of print advertising, online advertising and integrated marketing units,” Dragoon says. “We have aligned on which events and trade shows we would co-participate in.”

Never Forget: Stay Competitive
Even though you’ve forged a strategic partnership in one area, the rest of your company is still competing. Don’t let the partnership cause you to go soft on other marketing.

“Make no mistake, when a customer is deploying their next application, Microsoft’s agenda is to have them deploy that application on Windows,” Dragoon says. “Novell’s agenda is to have them deploy that application on Linux.”

In that regard, the two companies are competing head to head. No doubt about it. “Frankly, when that happens, we agree to disagree and to compete on our own respective product lines and we’ll let the customer be the final arbiter on what the right thing is.”

Beware of Customer Backlash
Cooperating with a competitor can create an image problem for your company. Members of your community might not be happy to see you “fraternizing with the enemy.”

Where Dragoon and his team miscalculated -- and an important lesson learned -- was the many stakeholders to consider in terms of their new relationship.

“There was the customer view, the partner view, the investor/shareholder view, the employee view and the one view that we perhaps underestimated, the open-source community view,” he says. “Particularly with Linux, an open source [application], many [members of the open-source community] are part of the intellectual property that create the programs that we package, distribute and sell services for.”

“Grounded in … a very vocal minority sub-segment of that community is a fairly large distrust for all things Microsoft, and so, when we did this partnership with Microsoft we got painted with a very broad brush: ‘We don’t like Microsoft, we don’t like people who do partnership with Microsoft. Novell, you have done a partnership with Microsoft, ergo, we’re not so sure we like you.’ ”

“We probably could have done a better job up front understanding this potential community reaction and marketing to it in a very objective and thoughtful way. So it was a good lesson learned.”

Useful links related to this article

Creative samples from the Novell-Microsoft campaign:

Novell and Microsoft's joint Interoperability website:

John Dragoon’s Blog:

Microsoft Corp.:


Improve Your Marketing

Join our thousands of weekly case study readers.

Enter your email below to receive MarketingSherpa news, updates, and promotions:

Note: Already a subscriber? Want to add a subscription?
Click Here to Manage Subscriptions