Case Study: Always Keep an Eye on the Competition
In the automotive industry, you see it quite often, competitors reacting to popular vehicle designs and features by copying them - after the fact.
If you didn’t look for the Chevrolet symbol, you might think someone driving a Chevrolet HHR is sitting in the better known Chrysler PT Cruiser. Do you think investing the time and money was worth it for Chevrolet? Did it increase GM’s market share or draw new customers to Chevrolet? Not really - unless you count the GM and contractor employees who get GM discounts.
Is Copying a Competitor Ever Effective?
In some cases it makes sense to invest the time and cost in copying features your competitor created.
Take the minivan industry. Most minivan customers expect a minivan these days to have a sliding door on both sides of the vehicle. If the automotive manufacturers did not copy this feature, they would actually have lost market share.
This trend is repeating itself again. Every year more minivan models have a feature where the third (and in some the second) row of seats can be folded down so that it makes a flat floor for cargo. See Chrysler Town and Country Stow’nGo Seating.
Copying a competitor is only effective when prospective customers come to expect the new features.
It is Best to Stay Ahead of Your Competitors
Awaiting FCC approval, Apple is on the verge of releasing the Apple iPhone. Many blogs and news sources rave about the iPhone being innovative and expect it to do as well as the iPod.
What do you think Palm (manufacturer of the Treo SmartPhones) is doing? I can tell you they are not sitting still. They just announced that they are getting a $325 million cash infusion from Elevation Partners and have added players such as Jon Rubinstein (former head of the iPod division at Apple) to their management team.
Apple’s iPhone is not the first competitor Palm has had to deal with. Current Treo SmartPhone competitors include Motorola (Moto Q smartphone) and Canada’s Research In Motion (Blackberry). Apple poses a new threat. With the success of their iPod product, Apple has a large source of potential customers for the iPhone.
Palm’s new blood and money will hopefully drive the innovation needed to stay ahead of the industry. The company is already working hard on rewriting their Palm operating system to compete.
Source: “Palm’s New Dough - and New Blood.” BusinessWeek, June 5, 2007.
What is Your Competitive Advantage
For small and micro businesses, your competitive advantage is to constantly keep up-to-date on the latest developments in your industry and to consistently review and update your business/market plan. The best sources of information are trade shows and magazines and customer/employee feedback. Where do you think the idea to have doors on both sides of the minivan came from?
Your competitive advantage is not to engage in price wars, but to focus on the factors that make your customers rave about you.
Resources:
- “Give Your Business A Competitive Edge“, NASE Successful Skills Workshop.
- “Spot the Next Hot Trend“, Mark Landsbaum, NASE Successful Skills Workshop.
- “Escape from Brand X: How to Build a Brand for Your Business“, Mary C. Weaver, NASE Successful Skills Workshop.
- “Starting Your Business - Conducting a Marketing Analysis“, SCORE Online Training Module.
- “Grow Your Business - Assess Your Current Status.” StartupNation.
- “Enhance Your Customer Experience.” Startupnation.com