When I was ten years old at a summer camp I was leading in the potato sack race. To check on my competitors I looked over my shoulder
and suddenly tripped and fell. I came in last place. Even the slowest person, Marsh Mellow Matt beat me. It was
humiliating. But in the end I gained a good learning experience.
When a bargain-brand product attacks your premium-brand
space, is it still healthy to look over your shoulder? Will you trip over too?
In a robust economy it’s relatively easy
to maintain profitable growth of a premium-brand product. Conversely, in today’s economy, the competitive forces are testing the best
of us. We are entering a new paradigm of business and the days of conspicuous consumption are quickly receding. Since 2007 over 8
million jobs have been lost. We have chronic unemployment at 10%, or in reality its 17% when you add the people who gave up
looking for a job. As fear, insecurity, and the need to be frugal enter the consciousness of consumers, companies are responding
by introducing lower price bargain-brand products. What’s a premium-brand to do?
There are three strategies a premium-brand
can consider; (1) Introduce your own bargain-brand, (2) Innovate a new value product category (3) Or, maintain status quo. Let’s
consider the ramifications of deploying your own Bargain-Brand.
As Jacqueline Kennedy once said, “I don’t react, I respond.”
There’s
a saying, “Never fight a pig because you’ll get muddy and the pig will enjoy it.” The same goes for a premium-brand looking to protect
its market share against a bargain-brand. Every day we see new bargain airlines, bargain consumer products, bargain cars, bargain
food, and bargain electronics. Be careful of the panic reaction when you deploy short term tactics in price discounting and couponing. It may only deplete profits. You can hold the line, but can you afford customers who defect to lower price brands. As Jacqueline
Kennedy once said, “I don’t react, I respond.”
Seek your uniqueness
weaknesses, and uniqueness. In a recent book by Dr. Caroline Leaf, called, The Gift In You, this PhD. Researcher discovered
there are seven layers of thinking processes in our minds. The seven layers of thinking processes are: Intrapersonal, Interpersonal,
Math/Logic, Visual/Spatial, Music, Kinesthetic, and Linguistic. Starting from the most dominant thinking process, when a new
thought enters our mind it will loop into the seven layers in a different sequential order. For example, someone who thinks first
in music will be able to read between the lines to give meaning to it. While a logic/math dominant thinker performs pattern recognition
in huge numbers and reasons in a precise order. We all see the world differently and think differently. We are all unique
and so are our companies and the way we collective process our thinking. As such it’s fruitless to be like someone else such
as Steve Jobs. None of us can think like him and nor do we want to. We must learn to be ourselves by knowing our uniqueness and using
it to your advantage.
Are you an elephant or a cheetah?
As Shakespeare once said, “To thine own self be true.” In other
words, do you have the competencies to compete as a Bargain-Brand?
When launching a new product you’ll have to adjust
and adapt quickly. Is your company a cheetah that can move quickly and adapt to consumer and market changes? Or, are you a slow moving
elephant that makes decisions at a sluggish pace? A slow moving elephant should think twice when competing against fast moving
bargain-brand cheetahs.
GM was slow to introduce Saturn to compete against the Japanese, but Intel was quick to respond to constant
AMD attacks. At first, Intel’s bargain-brand chips (Celeron) performed poorly, but they responded quickly to the market and
beat AMD at their own game.
Will you divide and conquer yourself?