A Strong Competitor Can Help Your Business Grow-Great Brands Embrace Rival Brands
1958. IBM passes up the chance to buy a young, fledgling company that has invented a new technology called xerography. Two years later, Xerox is born.
The late 1960s, Digital Equipment DEC and others invent the minicomputer. IBM dismisses the minicomputer as too small to do serious computing and, therefore, unimportant to their business. DEC grows to become a multi-hundred-million-dollar corporation before IBM finally enters the minicomputer market.
The late 1970s, Apple, a young fledgling company, invents the first personal computer as we know it today. IBM dismisses the personal computer as too small to do serious computing and unimportant to their business.
IBM enters the personal computer market in November of 1981 with the IBM PC.
1983. Apple and IBM emerge as the industry’s strongest competitors, each selling approximately $1 billion dollars worth of personal computers.
It is now 1984. It appears IBM wants it all. Apple is perceived to be the only hope to offer IBM a run for its money. Dealers, initially welcoming IBM with open arms, now fear an IBM-dominated and controlled future. They are increasingly and desperately turning back to Apple as the only force that can ensure their future freedom.
IBM wants it all and is aiming its guns on its last obstacle to industry control: Apple. Will Big Blue dominate the entire computer industry — the entire information age? Was George Orwell right about 1984?
- Steve Jobs’s Keynote Speech, 1983, before introducing the famous 1984 Apple Macintosh Ad.
In 1980s IBM and APPLE were arch enemies. This rivalry was the focus of 1984 ad. Steve Jobs projected IBM as the main competitor, the big brother who would like to control every human being and Apple as the savior. Though the AD never shows IBM, it had subtle references to big brother-controller of technology and bluish colors. Was there any need to talk about the competitor? Why could not he just talk about Apple Macintosh? Yes, the competitor provided the needed dramatism, so that people could remember. Were there any other reasons behind?
Apple designed products looking at the consumers than competitors, but then why need to mention the competitor?
It’s not just Apple-IBM — Many companies rival each other to make consumers buy their products. Every field, every category — we could see two major brands fighting each other to secure market leadership.
Energiser — Duracell, Budweiser — Miller, Visa — Mastercard, Adidas-Puma, Ford-GM, Toyota-Honda, Maruthi-Hyundai(India), Microsoft-Apple, Playstation-Nintendo, McDonalds-Burger King, P&G-Unliver, Coke-Pepsi.
The brands use “Contrast Principle” weapon to manipulate people’s mind without the appearance of manipulation. The contrast principle affects the way we see the difference between two objects if presented one after another. As a human being, we don’t make absolute judgments and use shortcuts like comparing with something else to judge. Brands exploit this to enter our mind.
Do brands need business rivalries? Are there any additional benefits?
Was there any market for cola before coke launched? In the 1990s, we could see a lot of Coke and Pepsi ads in Indian Televisions. What would have happened if only we could see only one brand promotion in Indian TVs? Do you think that Cola category would have become famous? Awareness and reach of Red Bull are limited in India compared to Coca-Cola? Would launch of competitor brand “Monster” would have spread the category and increased per capita consumption of “Red Bull”?
Promote Category Not Brand
Al Ries, states “To sell any product, you need to influence people’s mind. To influence, you first get your brand to get into their minds. The easy way to get into their mind is being first. To be the first means that you are the first in a category and in fact you are the one who created the category — In other words, starting something new”
Coke created Cola category, Red Bull created the Energy drink category, Paper Boat created traditional juice category, Maggi created noodles category in India.
Al Ries adds “A brand to be a leader should promote category rather than the brand. Category promotion broadens the market segment, increase the target audience”
Can a brand promote the category single-handedly? Would it be not very expensive? Pepsi actually helped Coke in promoting the Cola Category. Pepsi ads, their stocks at supermarkets, small shops-reinforced the cola category and improved subconscious awareness of the cola in people’s mind — Per capita consumption of Coke went up due to increased awareness.
When two supermarkets compete for a neck to neck in an area, a lot of small shops wound up in that region. The supermarkets were not trying to attract customers of each other — They were indirectly broadening the target segment and attracting the customers of those small shops — mutually benefit each other.
Most of us are aware of the places where similar businesses are clustered together — Electronics market — Hardware market. Are those shops worried that they would lose business when they were located next to their competitors? We could see that businesses are prospering. The congregation of similar businesses in one neighborhood attracts more customers due to the availability of opportunities for comparison shopping.
Paradox Of Choices
More the choices, more the brands, more the varieties, more confusion, the poor experience for consumers — The market becomes a commodity market — Nobody gains.
If there is no choice for your brand in your category, customers would be suspicious and think that you might charge high, try to exploit them, as there is nothing to compare with. People may feel that they were forced to buy and resistance builds up. They try their best to delay or avoid the purchase when there are no choices. If there is a choice, they feel that they have more autonomy and are in control of their decisions.
Choice Stimulates Demand.
Great Brands understand the concept of the benefits of “Business Rivalry” for their growth and indirectly welcome the competitor.
UNDERSTANDING OF CONSUMERS
Business Rivalry not only promotes growth but provide a more meaningful life for Users. No Rivalry — Cars would not have evolved — you would not have smartphones — you would not have got such high-end computers.
Good products are designed to lift a consumer’s life — For better design, one has to understand the user and the business rivalry forces a brand to understand the user to remain as a leader.
When diaper sales were struggling, P&G realized that they have lost touch with the end user and deep understanding of mother only could help in brand revival. Their earlier communication focused mainly on technology(Most absorbent diaper), but their ethnographic research showed that Mom had other concerns like Softness, Easy-to-use tabs, a snug &comfortable fit, feel, and a fun design for the product. P&G created a new product based on new requirements and within consumer’s affordability — Product was a massive success.
Business Rivalry forces a brand to be creative and innovative. Innovation drives both top-line and bottom-line growth.
Innovation is nothing but adding new meanings to people’s life.
In-depth understanding of customers helps in making meaningful innovations. Apple made a breakthrough innovation with iPod — iTunes store was a major factor in the product’s success. Apple integrated User’s understanding and Innovation to transform the lives of people who listen to music and who sell music.
GE, for decades, grew by developing high-end products for developed countries, selling them globally with some adaptations to local conditions. Business Rivalry and the market’s economic condition forced GE to create low-end products specifically for emerging markets. China or India’s rural economy could not afford GE’s sophisticated ultrasound machines(Used for Cardiology, Obstetrics, General Radiology). Conventional ultrasound machines were costing in the range of $100k and above. GE’s China Team working with local population created a portable ultrasound machine in the range of $15k, which could be used in rural clinics and also had typical uses like spotting enlarged livers, ambulance squads in the US.
As success breeds success, innovation in product breeds innovation in marketing, sales, business model and every connected field — Denis J.Hauptly
Delivery of unique value proposition to customers derive from the hundreds of activities a brand performs — Example, procuring materials, machining, assembly, molding, packing, stacking, transportation, marketing, advertising, customer service.
Business Rivalries force a brand to turn some of those activities into unique activities, which cannot be copied by a Rival Brand, thus establishing a competitor strategy.
For example, Southwest airlines offer short-haul, low-cost, point-to-point service between smaller cities and secondary airports in larger cities. Southwest has tailored all its activities to meet the low-cost model — No meals(save time in loading/unloading meals), No assigned seats, No premium classes, no interline baggage checking, No travel agents, Automated ticketing — All these activities result in faster turnaround time at the gates — keep planes flying longer — low cost — few manpower resources — frequent departures.
IKEA — Global furniture retailer that sells low-cost household furniture for middle-income earners. To achieve this, IKEA has deliberately chosen set of activities that are different from their business rivals. Ikea uses Self-Service model(No Sales personnel)-Clear, self-explanatory, in-store displays — design and manufacture its won products — modular, ready to assemble, easy to assemble -Volume production due to standardised sizes — designed for efficient packing and transportation — retail showroom and adjacent warehouse to help users to pick up products on their own-Spacious showroom — Showroom located far away from city center- lower rental — good car parking — Showroom’s extended late night working hours to target working middle-class family — facilities like in-store child-care, food court to meet the needs of target segment while shopping.
All those activities need to have some kind of fit among them to have a sustainable competitive strategy. The activities have to be consistent, reinforce each other and could be optimized (Operational Efficiency).
These activities result not only result in enhancing consumer’s life but also work towards social responsibility, less energy consumption, improving the standard of living, sustainable environment.
References — What is a strategy by Michael Porter, Influence by Robert Cialdini, Something Really New by Denis J.Hauptly, HBR’s 10 must-reads on Innovation, The 22 immutable laws of branding by Al Ries and Laura Ries, Playing to Win by A.G.Lafley, Article in Inc.com by Jill Krasny, Steve Jobs by Walter Isaacson, lybio.net-steve jobs’s 1983 keynote text, Positioning — The battle of your mind.