Geoff Livingston's Blog

5 Common Actions Competitors Take

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.

3) Trash, Sue and Undercut

Image by MJ/TR

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.

5) Leapfrog Your Offering

Late 1970s Honda Civic by dave_7

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?

Geoff Livingston on Google+

Coalition Marketing for the Common Good

Posted on: August 17th, 2011 by Geoff Livingston 9 Comments

Image by jdhilger

Just as individual web site owners use affiliate marketing, small and large companies and nonprofits are engaging in teams — coalition marketing — to reach common stakeholder groups. Modern Internet tools have made coalition marketing incredibly simple. It’s easy as setting up a web site and providing the common offering or cobranding.

Coalitions take several forms. Often joint marketing initiatives are fielded where both or a group of brands are co-promoted (almost like a large summer music festival with multiple headliners). For example, consider how your grocery store may be affiliating with a gas company to provide loyalty programs. Also consider how Zoetica and RAD Campaign co-market the Nonprofit 2.0 Conference.

Another form is traditional channel sales, where a brand builds a great product or service and the other markets it to its customers. Cause marketing relationships take this form, with the nonprofit offering the service and the consumer facing business selling it as part of a package to its customers. And of course, many parts of the technology industry are driven off the channel model.

In fact, if you consider the Google-Motorola acquisition this week and the issue of patents, Google acquired one of its Android coalition partners to protect itself from lawsuits. The intellectual property had become too distributed. In marketing “Droids,” Google was both using Motorola as a channel partner and co-marketing within a coalition.

Given how companies and nonprofits increasingly fill niches, and customers need more than just one product or service type, this trend of partnering will continue. There simply isn’t enough individual brand capital to grow in a desired fashion. Teaming provides the collective might needed to succeed in broad marketing initiatives. This is particularly true of smaller players competing with large established companies. So partners who naturally operate in the same space, but don’t necessarily compete head on will start gravitating towards each other naturally.

There are strengths and weakness to coalitions. Some considerations for partnering are mutual benefit to both organizations without costing or sacrificing too much capital on one side or another. When business relationships become lopsided, they tend to disintegrate or become one-off opportunities. In addition, trial deals are helpful, too, to see if the chemistry works between brands.

Obvious Bonds Are Needed

Image by Shehal

Finally, a word on authenticity. Consumers are not stupid (see forthcoming Journal of Consumer Research article), and they know when a brand is faking it, or partners with another entity that seems out of sorts with its core mission. This is almost always true with cause marketing and the marriage between corporation and nonprofit. There needs to be obvious synergies.

But it is also true of corporate partnerships, too. The primary criticism of Google’s acquisition of Motorola Mobility is the unnatural tie forged with an Internet company owning a mobile phone manufacturer. The stretch is too much. Similarly, if Warner Brothers were to suddenly co-market Bugs Bunny with Playboy, there would be obvious issues in spite of the common rabbit icons.

Some marketers will tell you authenticity does not exist, that customers don’t want it. While this may be true for your worst individual personality defects, customers have expectations of behavior and delivery for a corporate brand. Note the difference. Frankly, personal identities that have evolved into real going concerns online need to adjust to this reality, too. When a brand is in place — regardless if it is named after a person — people have expectations of what the brand stands for, and the product/service that they will receive.

When you supersede those brand expectations in a partnering stretch to make money or paint a better brand image, customers balk. This rejection takes the form of less or no sales! It is important to be mindful in your marketing actions, and to be true to your brand’s core identity. That is authenticity, and practicing conscious awareness in business. Choose your partners well.

Geoff Livingston on Google+