BRAND CANNIBALIZATION: EAT OR BE EATEN
With increasing commoditization of brands, differentiation is hard to come in every industry. Consumers are now flooded with options, single company having several brands in same product category. Positioning, targeting, segmenting can serve as strategies no more. Rather it is the basic hygiene which any company needs to follow if it needs to sustain in the race for market share.
So, what should a marketer adopt as a strategy? There are unconventional approaches followed by Multinationals to address the goal of increasing their market share. With consumer demand for innovation increasing, brand loyalty being a privilege of few companies and E-commerce providing an instant comparison amongst
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While there are two school of thoughts that argue about the same, I choose to adhere to diplomacy. As it is true for every strategy, in implementation of it lies the crux. There are examples of brands which faltered in the implementation and ended up cannibalizing for no gain or for a loss of revenue and then there are these who have learnt to effectively deploy it as a successful tool. If carefully planned, we even may talk about new opportunities that can lead to increased sales and market share (Proactive Cannibalization). And if a company does not have a strategic plan for digital transformation someone else will (Passive Cannibalization).
To exemplify my stand on why the only answer is Effective cannibalization we have a look at some previous decisions. Taking the example of The New York Times, which saw newspaper sales plunge when they began posting free online versions of their stories on the internet, it would not be wrong in calling it as inefficient Cannibalization. But in this case, every other newspaper faced the same situation since if they did not provide such services, the market share of New York Times would increase, which was then undesirable. So they rushed and joined the league since “Cannibalism hurts if you eat your own toes, but it’s better than starving”.
On the contrary, a brand that uses their existing brand reputation to leverage a successful cannibalization campaign is Gillette,
There has been a tremendous amount of change in the global markets in the past few years. This has predominantly due to the fact that there is a shift in the consumer mindset, consumption patterns, changes in demography and organizational attitude brought through by advancement in technology. This has led to a change in marketing strategies and practices across the world. Marketing thinkers and companies are prompted to frequently re-think their strategies and adopt new theoretical and practical approach to address specific marketing changes and also to think beyond the scope of traditional marketing theories (Constantinides, E, 2006). A majority of the changes were influenced by the
Our team decided to choose the “Broad Differentiation” strategy as the basic strategy for our company. We will attempt to differentiate our product line in several distinct dimensions. By providing products that are vastly superior and unique from our competitors and pricing the products with an affordable price, we can gain something that is beneficial for the company in the future, which is customers’ loyalty and awareness. We may change or modify our strategy for the next round depending how it performs against our competitors.
There are many strategies that organizations can incorporate in today’s business environment. An organization can decide to take on a low-cost provider strategy, a focused low-cost strategy, broad differentiation strategy, focused differentiation strategy, and/or a best-cost provider strategy. While all of them have their own unique features and can offer a competitive advantage over its rivals, Competitive Shoes, Inc. decided to incorporate the best-cost strategy into its organization in order to compete against it rivals. By incorporating the best-cost strategy into its organization, Competitive Shoes Inc. felt that they could stay
The focused differentiation strategy largely depends on a buyer segment that seeks special product attributes (i.e. healthier food, lower comparative cost, quick service) and on the company's ability to stand apart from its rivals (Thompson et. al, 153). In its uniqueness, Zoës Kitchen has the ability to be different and had no national rivals emulating its format or menu.
Developing strategies in relation to any application of marketing suggest a marketer’s ability to comprehend and align business practices with the need of the consumer and business simultaneously. Strategies present challenges whether domestic or international markets are the emphasis. The ability to set customary prices, have market presence, encouraging advertisements and publicity, understand the competition, develop accurate communication, a complete SWOT analysis including domestic and international markets, and customizing the target market, present boundless opportunity that consumers appreciate and market recognition. At each stage of
Competition is a healthy and important part of doing business. It keeps everyone on their toes so to speak. Differentiating your business means defining your company in relationship to the competition. It means continuously making improvements and reinventing yourself. If you want to differentiate your business, you need to look at your business from your client’s point of view. By educating our clientele concerning the use of organic products that leave your skin and hair feeling vibrant and young, Impressions Salon & Spa has taken steps to set ourselves apart from our competitors. Some points of differentiation include: quality, performance and leadership, superior service, and customer support. Creating a differentiation strategy is to develop a Unique Selling Proposition. The Unique Selling Proposition is the biggest marketing weapon and is the key to differentiating your business from others like you.
In increasingly competitive markets, consumers have better choices over where they buy their products. For an organisation to meet its business objectives, it has to find out what consumers require and then identify the best way in which it can satisfy these needs and wants. Creating a competitive advantage can be difficult. A unique marketing strategy with clear objectives is vital to ensure effective promotional activity.
It has been held in the United Brands case that product differentiation acts as a barrier to entry. Product differentiation is the development or incorporation of properties such as pricing, style etc. that the intended buyers of a product perceive to be different from others and therefore desirable. In the instant case the product differentiation has been made by different annual fee for licence of patented product.
A company needs to create a series of programs to differentiate their product from those from its competitors and to appropriately price the product to achieve the maximum demand, in order to set up the dynamics of its competitive strategy (David, 2007). The competitive strategy of a company is also expected to offer better products or services to its customers, at a reasonable cost. Due to the mass influence of the external environmental on the customers’ preference, it is vital for the company to develop an available competitive strategy to be able to solve a series of problems, and ultimately to improve the company’s performance. Those problems include: how to differentiate its products or service from competitors, how to create market segments to maximize demands, and how to offer a wider range of products or services to better meet the customers’ needs at more acceptable costs (David, 2007).
Some companies choose to adopt a brand strategy and Riezebos (2003) explains that this consists of differentiating the brand and adding value to the brand. By aiming for differentiation in a strategy, it gives a brand competitive advantage.
In order for other companies to hold market share in a competitive environment, they must continue to meet their target customers’ preferences with added value to maintain differentiation form direct competitor giants.
The positioning strategy should be driven by the market, rather than by the ambitions of the product champions. The source of the problem is failure to understand how consumers' value product attributes. In all, over-appreciating a breakthrough or new technology that
“Marketing strategies can have a broad impact on the business in terms of instilling a marketing orientation among all those in the firm: the way of thinking or philosophy of the whole organization. However, marketing strategies can alternatively be seen as dealing only with the development of competitive advantages directly associated with the marketing function such as customer loyalty and distribution channel control. In the latter case, the domain is sometimes even further restricted by sole attention to the various element of the marketing mix rather than the more general issues of customer and channel relationships. There are two key
With differentiation strategy, it states the product or service which provided by enterprise should have uniqueness, which means enterprise can gain competitive advantage through satisfy consumer with their special needs. (Johnson, 2013) Therefore, according to this and the information in the case, it can be seen that Adnams conducts the strategy to produce unique product and service to gain competitive advantage, and Adnams receive many benefits from it. Moreover, the key function of differentiation is that it can help Adnams establish the customer loyalty to itself. Besides, it also forms a strong industry barrier to entry, which means it can limit the quantity of competitors, and make other competitors more difficult to share the market with Adnams. In addition, the actual operation of Adnams in differentiation strategy will be analysed in several