A more direct question would be "Why should a potential customer choose you over $established_competitor_x?"
If your best answer is "We are adding diversity to the marketplace", then you're probably doomed. If you aren't better in some way (faster, cheaper, better tech, etc...) then people are going to naturally gravitate towards the incumbent who has already shown some staying power and has infrastructure in place that you do not.
>If your best answer is "We are adding diversity to the marketplace", then you're probably doomed. If you aren't better in some way (faster, cheaper, better tech, etc...)
We have seen it over and over in tech though...some small time founder starts something and then a VC back startup eats their lunch and takes the market (of course rewriting history along the way to say they invented/disrupted the market).
The sad truth is the answer to why a customer will choose us over established competitor is because...VC capital/your money. We will use VC capital/your money to out spend/out market our competitor because they can only grow as fast as their revenue, whereas we can artificially grow using your VC money, even to the point we can subsidize the price of our widget which the established competitor can't, we will grow our market share, even if at a loss because at any time we can "flip the switch and its all profit."
That's a completely valid reason. If the competition is underserving the market and you think you can outgrow them because you have an aggressive growth plan then that's something.
Often enough though, people are unfamiliar with both your brands. So they're going to choose the person with better marketing. Sometimes marketing IS the difference, and engineers hate to hear that.
I founded a company that, in the 1990s, was implementing a Visa/Mastercard/(Amex, IBM, HP, Sun, RSA, Netscape) backed "Standard" for credit card payments. IBM had "invented" the spec's predecessor in Zurich Switzerland.
We were in Austin, Texas. Tiny, but scrappy. Our first customer was the largest card payment processor in Zurich Switzerland (blocks away from that IBM R&D lab!) and they were an IBM shop.
Somehow, we beat IBM in our toe-to-toe attempt to sell into that account. (Less marketing, and more sales "grit"). I asked their project leader later - "Why?". He said that at the end of the day, they knew that they were one of 100 IBM banking customers. And that they were our "first". When deploying "new" technology, they wanted a vendor that will kill themselves trying before they let the customer fail. They knew, simply, that we wanted, that we needed, their success more than IBM did...
If your best answer is "We are adding diversity to the marketplace", then you're probably doomed. If you aren't better in some way (faster, cheaper, better tech, etc...) then people are going to naturally gravitate towards the incumbent who has already shown some staying power and has infrastructure in place that you do not.