Posts Tagged ‘Strategy’

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

Smartphone bar.
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

Honda Civic
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?

The Red Ocean Strategy of Miming Top Bloggers

Posted on: October 26th, 2011 by Geoff Livingston 10 Comments

Red Sea
Image by hueystar

We see many, many novices and intermediates emulating, learning from, and trying to be a top ranked blogger. This is ultimately a strategy doomed to fail, an effort that will only lead to a dogfight for a second tier position in established content markets.

If you read the book Blue Ocean Strategy, you will find a refreshing theory on strategy that focuses on creating your own market as opposed to fighting for market share. This is the blue ocean versus red ocean concept, and it can be applied to content creation.

A red ocean — or in our case, the established blogosphere — is dominated by an established leadership that owns a majority of the market. It is usually followed by a long tail of similar voices that compete on many common aspects — types of content (text), topic (for example, social media marketing), customer (marketing managers), format (blog), and delivery (reader or social networks). As such, it is virtually impossible to grow an established market and therefore new entrants are simply fighting for market share.

When you fight for market share with established leaders, it is very, very difficult to succeed. They have market share already, and as such have inherent advantages.

Consider the Ad Age Power 150 for the marketing blogosphere. Its top ten is virtually the same as it was last year (and the year before that). Even the top 20+ is roughly the same. It’s only when you get into the 50-1130 range that you see real volatility and movement. With estabished loyal readers and word of mouth mechanisms in place (social network followings and RSS subscriber bases), top bloggers are almost impossible to unseat.

A new marketing voice who wanted to break in and create a perception of thought leadership might feel overwhelmed. And they should. They will have a hard time finding success with another marketing blog that copies the best practices and styles of one or several of the top 20.

Instead, they have to create a new way to establish content and commentary that breaks the mold. In essence they have to create what Blue Ocean Strategy calls value innovation with a unique and distinguished offering that customers immediately identify as special and worthwhile.

For example, there are many bloggers who comment on marketing, business and social media. There is only one who does so successfully with cartoons, and that is Gaping Void. Hugh MacLeod’s offering is distinguished in its comedy, delivery (comics, and a strong email program), and has a witty style to it. It hybridizes new media and the comics page. It is unique.

How will your content — scratch that. How will your company’s offering rise above the established marketplace, and create its own blue ocean?