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Brand Management

Killer Competition: Will Your Brand Survive?

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Killer Competition- Will Your Brand Survive?

In the beginning, choice was not a problem. When our earliest ancestor wondered “What’s for dinner?” the answer wasn’t very complicated. It was whatever animal in the neighborhood he could run down, kill, and drag back to the cave.

Today you walk into a cavernous supermarket and gaze out over a sea of different types and cuts of meats that someone else has run down, killed, dressed, and packaged for you.

Your problem is no longer catching it. Your problem is to try to figure out what to buy of the hundreds of different packages staring back at you in the case. Red meat? White meat? The other white meat? Make-believe meat?  But that’s only the beginning. Now you have to figure out what part of the animal you want. Loin? Chops? Ribs? Legs? Rump? And what do you bring home for those family members who don’t eat meat?

An Explosion Of Choice

What has changed in business over recent decades is the amazing proliferation of product choices in just about every category. It’s been estimated that there are 1 million SKUs (standard stocking units) out there in America. An average supermarket has 40,000 SKUs. Now for the stunner. An average family gets 80 to 85 percent of its needs from 150 SKUs. That means there’s a good chance we’ll ignore 39,850 items in that store.

Buying a car in the 1950s meant a choice between a model from GM, Ford, Chrysler, or American Motors. Today you have your pick of cars, from GM, Ford, Chrysler, Toyota, Honda, Volkswagen, Fiat, Nissan, Mitsubishi, Renault, Suzuki, Daihatsu, BMW, Mercedes, Hyundai, Daiwa, Mazda, Isuzu, Kia, and Volvo. There were 140 motor vehicle models available in the early 1970s. There are 260 today. Even in as thin a market as $175,000 Ferrari-type sports cars there is growing competition. You have Lamborghini, a new Bentley sports car, Aston Martin, and a new Mercedes called the Vision SLR.  And the choice of tires for these cars is even worse. It used to be Goodyear, Firestone, General, and Sears. Today you have the likes of Goodyear, Bridgestone, Cordovan, Michelin, Cooper, Day-ton, Firestone, Kelly, Dunlop, Sears, Multi-Mile, Pirelli, General, Armstrong, Sentry, Uniroyal, and twenty-two other brands.

The big difference is that what used to be national markets with local companies competing for business has become a global market with everyone competing for everyone’s business everywhere.

The Law Of Division

Like an amoeba dividing in a petri dish, the marketing arena can be viewed as an ever-expanding sea of categories. A category starts off as a single entity. But over time, the category breaks up into other segments. This “division” is a process that is unstoppable. If you have any doubts, consider this on the explosion of choice:

Item                     Early 1970s        Late 1990s
Vehicle models             140              260
KFC menu items             7                 14
Vehicle styles                 654             1,212
Frito-Lay chip varieties     10             78
SUV styles                          8             38
Breakfast cereals           160              340
PC models                         0              400
Pop-Tarts                          3              29
Software titles                  0              250,000
Soft drink brands             20              87
Web sites                          0             4,757,894
Bottled water brands      16               50
Movie releases                267            458
Milk types                        4               19
Airports                         11,261       18,202
Colgate toothpastes         2              17
Magazine titles               339            790
Mouthwashes                 15               66
New book titles             40,530        77,446
Dental flosses                12               64
Community colleges       886            1,742
Prescription drugs          6,131         7,563
Amusement parks          362            1,174
OTC pain relievers          17              141
TV screen sizes                5               15
Levi’s jean styles            41               70
Houston TV channels       5               185
Running shoe styles         5               285
Radio stations                7,038         12,458
Women’s hosiery styles      5             90
McDonald’s items              13           43
Contact lens types            1             36

The “Choice Industry”

All this has led to an entire industry dedicated to helping people with their choices.  Everywhere you turn, someone is offering advice on things like which of the 8,000 mutual funds to buy. Or how to find the right dentist in St. Louis. Or the right M. B. A. program from among hundreds of business schools. (Will that help me get a Wall Street job?)  The Internet is fast filling up with dot coms that can help you find and select anything you can imagine, all promised at rock-bottom prices. Magazines like Consumer Reports and Consumers Digest deal with the onslaught of products and choices by rotating the categories on which they report. The only problem is that they go into so much detail that you’re more confused than when you started.

Consumer psychologists say this sea of choices is driving us bonkers. Consider what Carol Moog, Ph. D., has to say on the subject: “Too many choices, all of which can be fulfilled instantly, indulged immediately, keeps children– and adults– infantile. From a marketing perspective, people stop caring, get as fat and fatigued as foie gras geese, and lose their decision-making capabilities. They withdraw and protect against the overstimulation; they get ‘bored.'”

Choice Can Be Cruel

The dictionary defines tyranny as absolute power that often is harsh or cruel. So it is with choice. With the enormous competition, markets today are driven by choice. The customer has so many good alternatives that as a marketer, you will pay dearly for your mistakes. Your competitors get your business and you don’t get it back very easily. Companies that don’t understand this will not survive.  Just look at some of the names on the headstones in the brand graveyard: American Motors, Burger Chef, Carte Blanche, Eastern Airlines, Gainesburgers, Gimbel’s, Hathaway shirts, Horn & Hardart, Mr. Salty pretzels, Philco, Trump Shuttle, VisiCalc, Woolworth’s.

You Have To Be Careful

  • If you ignore your uniqueness and try to be everything for every-body, you quickly undermine what makes you different. Consider Chevrolet. Once the dominant good-value family car, Chevrolet tried to add “expensive,” “sporty,” “small,” and “truck” to their identity. Their “differentness” melted away as did their business. The brand is now behind Honda, Ford, and Toyota (Honda, 735,633 cars; Toyota, 679,626 cars; Ford, 591,010 cars; Chevrolet, 479,802 cars; total sales in 1998).
  • If you ignore changes in the market, your difference can become less important. Consider DEC (Digital Equipment Corporation). Once America’s premier minicomputer manufacturer, they ignored changing technology that was making desktop computing the driving force in the office. Their “differentness” became less important. DEC is now deceased, having been absorbed by Compaq, one of the biggies in desktop computing.
  • If you stay in the shadow of your larger competitors and never establish your differentness, you will always be weak. Consider Westinghouse. They never emerged from the shadow of General Electric. Today Westinghouse is no longer with us.

It’s an unforgiving world out there.

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1 Comment

John Mullinax on May 14th, 2008 said

As an email subscriber to this blog I’ve come to really appreciate getting your posts. In this case, I think many of your points are directionally on target, but would be nice to see some examples and data that aren’t 10 years old. The old examples may weaken the impact of your arguments – Westinghouse is back, Compaq is now HP’s discount brand, the explosion in vehicle types since the data in this article has been immense – which is unfortunate, as the issues you raise are more true now than they were 10 years ago, and the pace appears to be accelerating. It’s a great tangible face on larger (more esoteric) phenomenon: the fragmentation of knowledge domains.

See here for more in this spirit: http://blogs.msdn.com/johnmullinax/archive/2007/06/20/computing-is-a-liberal-art-part-1-education-inflation.aspx

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