Confident Market Leaders

It’s very safe to operate in the predictable realm, in the one where you do what’s asked of you – from customers, suppliers and distributors. But if you move past that – away from satisfying demands – and instead focus on building enough confidence in what your company does and what you have to offer, you’ll realize a new kind of market potential.

This holiday season, Apple^® is expanding its distribution channels to more retailers in order to sell the iPad to more customers. Ever the aloof manufacturer, Apple has communicated to retailers in no uncertain terms that if they want a piece of the apple pie, they’re going to have to play by the rules of Apple. Apple is controlling everything from distribution message and methods to price.

At first glance, you might question why Apple is being so harsh. After all, when a manufacturer sells a product to a distributor, both sides stand to gain, so one would think that bargaining power is equal. The manufacturer holds the “killer app” and the distributer has the economies of scale access to the customers. So why is Apple so free to take charge?

Because they’re confident. They know what they have to offer and they’re not shy about it.

So many companies get caught in the race to the bottom. They’re so focused on what the competition is doing and  matching every step that they trip over themselves and fall away from their purpose for existing. Apple’s snarky behavior has been known to ruffle feathers with customers and suppliers. They’re known for not listening to customers. But, they know that what they’ve got is more than you can imagine at the moment. And that gives them the power.

By strictly controlling the product and distribution, Apple sends clear messages:

• We are confident that our product meets your needs and it will be valuable to you.
• Can’t find the product in your price range? Feel free to keep looking, but you’re not going to find our product any cheaper. If you want the cheaper version, look for our competition’s product.
• You don’t like our price? Not a problem, because we’re not selling the product to you.
• You don’t like the product? That’s okay, because we had someone else in mind when we were building it.
• You still don’t like the product? Don’t worry; over time, you will because the market will. We’re confident of that.
• You like our product? That’s good; we knew you would.

When you stop looking to please the market, and instead focus on courageously expanding into areas that are new, or different than what the market is looking at, you can free your company to focus on surprising the customer. Instead of looking eye-to-eye with your customers, look beyond them.

Think about this concept:

*

So many companies operate in the bottom left-hand quadrant. They listen to what their existing customers want and on the needs that existing customers can articulate. Many times they fail to look at the potential that exists in the untapped market space by building products and offering services that customers aren’t even aware of yet.

Look at your market, think about the trends and think about the gaps. It’s safe to operate in the bottom left-hand side. But eventually, you’ll reach the edges. It takes courage to get past the edge, but it’s the kind of courage that will be good for you in the long run.

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* Graph from Competing for the Future; Hamel and Prahalad, 1994

Filed under: Marketing, Messaging, Steadfastness

The Race to the Bottom

This week, Tiger Wood’s apology was all over the news. From Entertainment Tonight to CNN and New York Times to USA Today, his face was on the television and Internet wherever you looked.
It’s an interesting dilemma for the media. On the one hand, this story is like a train wreck – it’s horrible yet you can’t look away; you want to know what’s going to happen. On the other hand, the information is not exactly substantial journalism.

The problem is that once each media outlet ran the story, they were committed. Whether or not this fit with their mission of providing information to the world, they were a part of the downward spiral. Most outlets ran the story based on what type of information the masses would flock towards. If one company didn’t publicize the story, they risked losing readers to the competition. On the other hand, if they did report the story, they ran the risk of alienating the customers who thought there should be more substance in the content.

Consider what happens to businesses that start the price bidding game. One tire company lowers their price for tires from $50.00 per tire to $49.25 to lure in an additional number of customers. In response, the competitor across the street lowers their tires to $46.00. Let’s say Tire Company #1 lured 15% of Company #2’s customers solely based on the price change. They’re going to lose the new customers unless they either match or lower price again. On and on the price game goes until it drives both into the ground, or until one of the companies provides a better value offer to customers (say, $55.00 tires with a 6 month warranty).

Overall, it’s a vicious downward spiral that will not be broken until someone steps forward to break it with quality information, a quality product or something else.

It’s easy to get caught up in the hype, the short-term activity that will vary your market position daily. Whether it’s the media sensation, whether you’re competing on price, swaying your ethics to make a decision for today, or changing your corporate values to satisfy a customer request, it’s a race to the bottom. If you do not have a firm understanding of your purpose for being in business, a long term vision for where you want to go, and a clear vision on what steps and behaviors you need to take in order to get you where you want to go, you can easily get caught up in the frenzy of doing what everyone else does, just to stay ahead.

Be careful, because hasty decisions towards perceived incremental positive gain can result in significant, unwanted changes for the future.

Filed under: Competition, Steadfastness, Vision