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Don’t think of competition, think of opportunities
"t's strange how at times CEOs willfully ignore marketing insights and trends and move forward based on their intuition" writes Said Baaghil
April 24, 2013 6:52 by kippreport
Global companies such as Microsoft, DKNY, NOKIA, Walgreens, Etihad Airways and a few others are now focusing on competitiveness rather than opportunity and leadership. I believe this marketing school of thought would have worked well two decades ago, but it does not work well today. It seems even major companies can sometimes fail to grasp a certain logic governing today’s market reality, so they inadvertently undermine the expectations of a new generation of consumers who are far more reachable than in the past thanks to new communication technologies.
It’s strange how at times CEOs willfully ignore marketing insights and trends and move forward based on their intuition. Let’s look at a couple of examples of doing it right or doing it wrong Microsoft vs. Apple, and Walgreens vs. CVS.
Software giant Microsoft seemed to be convinced for a number of years that the business-to-business approach would keep it profitable. The company recently revisited that approach and changed its corporate strategy to embrace the business-to-consumer sector, a move which led to a revolution in corporate identity, but not in the brand or product lines. Things were moving so fast that the average consumer missed most of Microsoft’s messages. For example, the company killed Hotmail and introduced the web-based free email platform Outlook.com. This move seemed a bit strange to me. Hotmail already had great equity in the for-free email market. Why not add features and improve that experience? Outlook’s equity was with the Office suite; why reposition it as free web-based email? The move proved to be a deadly mistake. Though Microsoft is claiming a great number of users, I think numbers will soon stagnate. In the same vein, Microsoft outlets tried to sell the Bing search engine, supposedly to compete with Google. Google it? Or Bing it? It’s a no-brainer. Google owns the word search. The list of missteps goes on. It seems that Microsoft is exhausting its competitive advantage and draining its resources trying to chase Apple and Google. The company that led the world of software is running second or third in every category but software. This tells me that Microsoft should focus on and develop opportunities in areas it’s best at and known for if it wants to continue the legacy of Gates.
My second example is how Walgreens, the long-time pharmaceutical giant with 8,300 stores across the US, has handled the onslaught of CVS, the newcomer, now with 6,000 stores. CVS was formed in 1963, and Walgreens in 1901. Clearly, CVS has experienced phenomenal growth over the past two decades. Did Walgreens start focusing on its competition rather than on creating new opportunities? As CVS rose, Walgreens failed to innovate, and instead sought to maintain its position, while CVS, with its experience of larger retail spaces and wider offerings, offered consumers more value. The key question now is whether Wal-Mart will capture the low-priced medicine segment. It will be interesting to see how CVS and Walgreens react to Wal-Mart’s grab for that opportunity.
In the GCC, which is part of the Middle East, it has been interesting to watch three airlines—Emirates Airline, Etihad Airways and Qatar Airways—compete for the same audience, all seeking to make luxury their key concept. Emirates is by far the winning creator of that experience in the region as well as a giant player in the worldwide airlines industry. Clearly, Emirates focuses on the in-flight experience and the best destination in securing its leadership. What surprises me is how Qatar and Etihad are trying to offer the luxury concept that Emirates already owns. In what way do they imagine that this competitive approach will set them apart? Does Qatar imagine the tagline “your five-star airline” will deliver the intended essence? I think there is an enormous opportunity for these two airlines to innovate and differentiate to find new ways to serve their customers, rather than trying to imitate Emirates and contest a leadership position that brand already owns. Meanwhile, the Etihad and Qatar brands run third and fourth in the sector, and continue to be known as an option rather than a preference.
While we’re on the subject, let’s talk about Nokia and iPhone. If iPhone fails to showcase more innovations in the next year or two, Nokia could be the next leader. You think I’m crazy? Well, Nokia is heavily focused on innovation. Its only current downside is its Windows operating system, which seems limited in comparison to ISO and Android. The big question is, if Nokia were to accept Android as its operating system, would that make the innovation difference? I think that move would give Nokia new life in the smartphone category
I have always stressed that competitiveness can take you only so far, and that it will never give you the leadership position. Funnily enough, the old guard in a wide variety of sectors seems bent on taking a defensive stance, focusing on competiveness. Such efforts always fail eventually, because innovation and competitiveness are fundamentally incompatible goals.