Posted on: December 12th, 2011 by Geoff Livingston 3 Comments
Marketing extends beyond stakeholders and organizations. Although companies and nonprofits like to pretend they operate alone in an industry, competition exists even if its just for the stakeholder’s time and money. If a marketer does their job well, and the product, service or solution is met with a warm reception, invariably the competition responds.
Moving forward, there are some common competitive responses that you can expect. Here are five of them:
1) Pretend You Don’t Exist
This out of all the responses is the most short sighted and foolish response. The ostrich approach — at least publicly (they certainly talk about you behind closed doors) — kids no one. Customers know there are alternatives, and so does the media and bloggers.
No one thinks the company or nonprofit operates in a vacuum, so when your competitor acts like that, it causes them look, like, well, marketers. It doesn’t mean anything other than people view communications from their organization to be completely transactional or brand related. Customers are less willing to trust them.
Further, it’s hard to develop industry leadership when a company doesn’t acknowledge the ecosystem, even in a general way. Apple rarely talks about HP or Dell, but it certainly acknowledges and talks about other PCs and smartphones. Car companies discuss industry accolades, which is smart, because it puts their product within a competitive context.
2) Copy Your Offering
When a company does really well, a common competitive response is to ape the product and offer the same product or service, often with less success. After Amazon launched the Kindle, Barnes & Noble offered the Nook. When Cirque du Soleil revolutionized big top entertainment, other circuses stole elements from their shows like the ribbon dance.
Holding first place is a very strong position for long-term success. In a strategic sense, first is the position of high ground. It’s always good to have established market share when this happens, but it can still be quite disconcerting.
There are instances when a company like Netflix or Google rises up and wrestles the market away, usually through some sort of technological innovation. Sometimes companies are caught in a price war.
The key here is to not necessarily over-react to the competition. Rather, to continue innovating on the product or service offering and extend market leadership. Don’t rest on your laurels.
Google recently purchased Motorola Mobility to acquire its patents in an effort to strengthen its case against Apple, who is suing the search giant for copying the iPhone iOS with Android. Other common hardball acts include talking poorly about the competition publicly, privately, stealing (er, hiring away) their talent, blocking distribution, and undercutting pricing to seize market share.
These are the tactics of war in the market. You have to be able to defend against them, not necessarily with direct engagement, but certainly by responding with value to your customers.
While these tactics are inevitable, they almost always make the market harder to work within, and can reduce customer trust sector-wide. These tactics do not grow the general market in any obvious way.
4) Go Toe to Toe
In an established market like car insurance where offerings are very similar from company to company, it is not uncommon to see advertising that directly positions a company against its competitors. This is a common tactic that Sprint takes with Verizon and AT&T with its data and service plans.
There’s not much you can do here other than to clearly state why your product is better than their’s and to engage in customer service and loyalty programs. This is about avoiding customer churn by bettering your total experience.
In the competitive wireless market, Sprint is a distant third currently, a gap that has increased over the past decade in large part because of the customer service issues the company experienced after acquiring Nextel. Having resolved many of these issues, it is now struggling to rebuild that marketshare. In a highly commoditized market, non product specific points like service can make a great difference.
Last, but not least is when a competitor responds by offering a product or service that is significantly higher quality, more cost effective or easier to use than yours. While you might have the higher ground, this type of innovation in a new offering creates green fields for your competitors. Customers flock to them.
Consider how Japanese companies beat their U.S. counterparts in the electronics and the automotive sector in the 70s and 80s by offering higher quality products for lower costs. The result was incredible losses of marketshare and reputation. Google beat Yahoo by offering a superior search algorithm.
In this instance, speed is critical. Loyal customers will stick with your brand, but only if you are able to match or better the offering quickly. Unfortunately, when faced with a paradigm shift, most leading companies fail to respond, comfortable in their way of doing business. And thus new brands seize market leadership.
What are some common responses you see from competitors?
If you have the opportunity, it’s worth a try. The Circles add a new depth of privacy, the network design is simple and elegant with strong integration into the larger Google universe, and the Android mobile app is stellar. The question becomes which online activities suffer as a result of experimenting with Google+.
Let’s face it. Unless you are an Internet personality, an organization with a full-time community manager or a professional online content publisher, there is not enough time to succeed in the multitude of social networks AND manage your own social content. Let’s consider the list of most used forms: Facebook, YouTube, Twitter, Google+ (assuming all continues to go well), LinkedIn, FourSquare, Gowalla, StumbleUpon, Tumblr, and your own site.
This means choices will be made. Some will spread the peanut butter a little thinner, trying to make it stretch further. Others will simply focus on the networks that have the most impact on their community.
The latter method is the smart way for those who are seeking to create and sustain grassroots communities. Technology adoption should be driven by stakeholder usage, needs and wants. Long term players in social media demonstrated this axiom (see Netwits post) in their common best practices researched and discussed in Welcome to the Fifth Estate.
Social media is entering a period where certain communities and demographics will migrate to some networks in favor of others. The social network market place is already competitive on the second tier below Facebook. Google+ will add to that competitiveness. Organizations should choose the ones that make the most sense in relation to their mission.
2011 has already seen LinkedIn’s come uppance in the professional social network marketplace. Similarly, Pew studies continue to show Twitter is a strong social network for mobile and urban use, with a particularly strong hold in the African American and Latino markets.
Personally, it is a struggle to offer a strong presence in many networks at once. That means if Google+ maintains its momentum and continues to be enjoyable, then time spent on other networks will drop. There is really only time to do two or three networks well.
Facebook remains a core community. The rest really depends on clients, readers, and what tools they are using. Last month, that was Google (search & reader referrals), Facebook, Twitter, and StumbleUpon, according to Google Analytics. LinkedIn and Tumblr were in the top twenty.Time will tell the impact Google+ makes.