Posted on: January 28th, 2013 by Geoff Livingston 18 Comments
I re-edited this John Wall jumper photo with Snapseed, one of my favorite social tools for photo sharing.
People frequently ask my opinion about social networks and applications. While I oblige requests individually, generally I don’t proactively seek to give advice or blog about tools unless the discussion revolves around a macro trend or impacts strategy.
It comes down to positioning, long term viability and personal interest.
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?
A bubbling marketing conversation states that there are no ad, pr, social media, sales, customer service, HR or any other specific functional strategies; rather that an organization — corporate or nonprofit — only has one strategy. All actions are part of that strategy. What an interesting myth — particularly for larger organizations that have diverse brands, product lines, companies and international operations.
Consider the old GE mission of achieving first or second place in any of the business areas it operates in. Does this mean General Electric has one strategy? Hardly. It’s pretty safe to say that their railroad business has a completely different marketing strategy than its lighting group. For starters, one engages in high-end business-to-business and business-to-government sales, while the other is a consumer products group. They simply share a common goal.
How about a mid-sized nonprofit’s communications department? That department may have direct outreach methods like email, donor development and events, as well as a marketing communications group, including advertising to brand and generate leads, PR for word of mouth and earned credibility, and social media for direct relationship interactions, PR and lead generation.
Do you think the advertising approach will work in social media? How about the donor development effort in PR? No, this is often a problem, forcing a method from one specialty into a second area that requires a different approach for success. Direct marketing in social media without relationships and conversations doesn’t work. Inserting a direct ask for donations into a press pitch usually fails (disaster relief provides an exception to this rule).
Harpers Ferry Where the Shenandoah Flows Into the Potomac
Organizational strategies are like flowing water, for example a river. A river has many tributaries, some are creeks, streams, brooks, runs and yes, other rivers. All of this water seeks to find the fastest path to sea, joining forces to create a mighty body of water pushing towards the end result. Consider how many small bodies of water contribute to the Ohio River. Yet the powerful Ohio River is but a tributary of the Mississippi River.
Similarly, an organization has multiple strategies, some specific to a functional area or subset of that area (marketing and advertising, say). These strategies all dovetail together to form one movement towards the organization’s end goals and initiatives. Independently they each have their own approach towards navigating their specific terrain, but together they create the larger result.
A master strategy may involve several strategies. In order to achieve larger objectives, different tasks have to be parceled out and addressed independently. Further, smart strategies do this because to have one plan exposes an organization to too much risk. All or nothing is never a good place to be. It’s better to deploy multiple approaches.
Granted, much of this gets back to a basic understanding of the definition of strategy. Still, don’t believe the hype. One strategy is the equivalent of trying to fit a square peg not just in a round hole, but into many different types of holes.