Thursday, October 4, 2012

Growing the Pie: A look into rivalries

Anyone who's watched TV can tell you that rivalry is prominent in today's markets. From geckos telling you what insurance to buy to beer commercials with "sophisticated men", businesses and politicians alike are always vying for attention. But when is this rivalry destructive? When does it take the companies in an industry and drive them into the ground via a price war? Or when does it actually foster innovation and a better market for consumers?

To anyone who's learned about Porter's Five Forces (below is a youtube video for those that haven't), the thought of rivalries shaping an industry is no surprise. Yet, is it really relevant to describe 'how much' rivalry, or 'how strong' rivalries in an industry are? With the exception of maybe funeral services and doctors, every industry is rampant with companies fiercely competing for every cent and second of consumer attention. Our brains are so full with brand images and slogans that it's been shown that kids often know brand mascots and symbols before they know important historical figures (think knowing Ronald McDonald before MLK or Ghandi). Rather, I like to think that it's much more important to think about 'what kind' of rivalry there is in an industry.

When taking a look at different industries, it becomes apparent that those you may say are 'equally competitive' have completely different effects from the rivalry. You see industries like the air industry and insurance which have, in most cases, been pushed to the absolute smallest amount of profitability needed to stay in business. On the other end, there are industries like the computer industry (think Apple and Microsoft) which, while as competitive and cutthroat as any industry out there, has grown rapidly over the past years. 

Although much of this growth could be attributed to the overall grown of the technology sector, it can also be seen that by Microsoft and Apple have taken the rivalry as a chance to focus and differentiate, or rather, make products that aim towards ultimately pleasing a different consumer group. This is the key to what some call the 'make the pie bigger' type of industry rivalry. Instead of companies battling harder and harder for the same amount of pie, some industries have found ways to simply make the pie bigger by focusing on different consumer groups, and innovating to push the boundaries of what their industry represents.  

Make it bigger rather than changing 
the way it's divided up.

This really differentiates rivalry between the 'I can do it cheaper and I'm going to take every customer you have' and the 'I can do it better than you and therefore you'll be caught having to catch up'. Although it may seem to be a small difference, this change in the ways companies go about rivalry in an industry can drastically alter the outcome.

So which is better? It's hard to say if one is necessarily better overall. Whereas cheaper things are always good for consumers, innovation and industry growth almost certainly create even greater positive effects for the consumer. Additionally, not all industries have the opportunity to simply 'pick' which type of rivalry they'd like to have. Not only is it dependent on the other competitors (you can't make them not want to be cheaper), but it is also reliant on the ability for companies to actually innovate and change, something that in some industries, especially those seen as commodities, is not realistic or possible.

Overall, the argument on that rivalry has a significant effect on industries is one that is rather cemented as fact, yet the discussion on the types of rivalry is one that is still up for discussion. What do you think about rivalries shaping industries?

Friday, September 21, 2012

How to diffuse negative social media

Negative comments towards a brand, person, or object are immanent. Frankly, not everyone is going to like everything. But now that I'm done telling you all the stuff you already know, let's talk a little about what you should do when someone says something negative on a social platform. As a brand, or especially as the social media manager of a brand, having negative comments or a 'brand assassin', can have a drastic effect on the way your firm is perceived by others. Let's look at an example of such a 'brand assassin':

Right now if you're Wells Fargo, you're tempted to just tell this guy off. You're thinking 'he's almost certainly just overreacting and I just can't have this stuff being said about our brand'. And you may be right. So what should you do? Just tell him off and/or delete his comment and ban him from posting on your page, right? That'd solve it.

But let's be honest. When was the last time you told someone off and told them they can never come back a peaceful conversation? It may be a natural thing to get offended and try to take action, but as a brand you have to be the bigger person. Seek resolution, try to help him, and hopefully if people stumble upon this post, which judging by his Klout score (sorry for those of you who are anti-Klout) is very likely, they may think even more highly of you for your 'higher road' actions.

So how did Wells Fargo do? I'll let you be the judge of that:

Fight the inclinations to 'get even', do everything in your power to turn this 'brand assassin' to a 'brand ambassador' and always take the higher road. It's not always the easiest thing to do (we are humans after all), but over time this strategy will pay dividends over the 'quick temper' strategy far too many firms are employing today.

I'd like to thank Todd Bacile (@toddbacile), my current Electronic Marketing Professor at FSU for the insights on this topic. Many of the opinions and strategies found in this article were learned through him. 

Wednesday, September 19, 2012

The start of it all

Well, here this goes... I have to admit, I'm not much of a writer. Never have been. Probably never will be. So why am I doing this? I figured, hey, if people like some of the topics I write about then maybe I'll get some sort of following and I'll be able to add my own little influence to this digital world. If not, this will simply be another buried artifact of things tried and failed. No risk of failure with only an upside. No cost. Sounds like arbitrage to me. But we'll save more on that for later on.

For now I'll just add a little bit about myself. As of today I'm twenty years old, experiencing the years many would consider the peak. Do I agree? Certainly it has its ups, but who am I to say. I think that's one of the fascinating things this life has to give to us. You can learn and experience so much yet there is always something to learn and people to learn it from. It gives reason to keep going and living. That, I like. I go to Florida State University in the beautiful Tallahassee, FL, majoring in Finance and Marketing and an avid fitness and sport enthusiast. This is the basis for almost all of the topics I'll be writing about in this blog. It's what I experience every day and therefore it's what's on my mind.

I don't intend for any of these posts to be formal at all. As you may be able to tell. I write just like I'd talk to someone. Because of this, one of the main things I would truly love to get out of this is to simply start a conversation. Not merely just a place to store my thoughts and experiences, but a place where everyone can chime in and add their own twist to the topic. With this in mind, I'm gonna wrap up this first blog post up and hope that this is the start to something really interesting, something useful, and something that leaves a little bit behind. Talk to you guys soon!