On request, we conduct/facilitate Capability Building sessions for clients. Late last year, I was facilitating one of such sessions for one of Nigeria’s leading Pharmaceutical Companies. We had every member of her Commercial Leadership down to all the Sales and Marketing Managers in the 2-day session. During the 1st day session, an interesting conversation came up.
They have a brand which is to them what Coca-Cola is to The Coca-Cola Company. In this case, it is not only their flagship brand, but also their main stay… contributing more than 50% to their earnings. They have scores of competitors, but they are clearly the market leader.
This drug is a very effective medication for what it is indicated for, but not very pleasant to ingest. It was so for all the products in that class for all producers. Then a major competitor introduced a ‘soft gel’ version that was not only easier to ingest but gave a more tolerable (if not pleasant) experience, and to all intents and purposes, was equally as effective.
For more than a year, they had stoutly ignored and refused to ‘respond’ to this competitive move not because of a superior understanding of the consumer or market dynamics, but purely as a matter of principle. The position of my client’s leadership was that “you should not be paying attention to or following competition”.
It was very tough to get them to see differently. (I would have said more, but they may be reading this article and I still pay bills that I pay)
Then I told them this true story.
One morning (while I was leading Marketing for Coca-Cola Hellenic), I got a call from our Port Harcourt leadership. Seven Up Bottling Company (our main competitor) had just introduced a “TDI of 8:1” (meaning that for every 8 cases of Pepsi you bought, you will get a case free). This did not make any sense. To the best of our knowledge there were no marketing nor operational fundamentals necessitating such a move. Moreover, received orthodoxy (at that time) was that you don’t discount (only) your flagship brand.
I walked next door to my boss’s (Managing Director) office to give him a heads up. We were both stupefied. After apprising him of the situation, I said “MM, what they have done is very stupid”; and my boss responded with an all-time classic “It will be stupider if we do not respond”. “We must hit them harder”.
And we did! (Permit me not to give details of what we did here, but we went almost nuclear. It almost gave me a hedonic ecstasy). In less than 48 hours SUBC discontinued the TDI and we got a “call”. Such stupidity was never repeated in my time.
It was this story that eventually ‘ministered’ to my pharmaceutical client.
I still agree with my former boss. It is “stupider” not to pay attention to your competition or respond to them when they are threatening to take away your breakfast, lunch or dinner. This does not mean you should counter or ape them or that you must always respond. It means that you must:
• have a system that can read what your competition is (likely) thinking and flags their moves in real time. We conducted a “Competitors Profiling and Analysis” for a client, and they were fully convinced that we found a way of getting “insider” information on Competition. We didn’t. You see, any competitor who has been around for any length of time or who is led by a team whose members have been around for any length of time, will leave codes behind. Your challenge is to find a way to decipher those codes. The MD of Company A moves to become the MD of Company B. Study his tenure in Company A and you can reasonably predict his moves in Company B. Only recently, a Marketing Director with Unilever moved over to Coca-Cola. As institutional as Coca-Cola is, if you study her tenure with Unilever, you can move forward with some reasonable expectations.
• Have a framework of accessing the intent and impact of Competitive actions. There is a common fallacy when companies (especially when they are market leaders) assess competitors. They wear the lens of our product is “better” or “deeper” or “solves the problem better” or is more loved. If you ever find yourself thinking this way, you are, ipso facto, a prime candidate for a shellacking.
• Where necessary, respond robustly. Occasionally, it may mean marshalling all the weapons in your arsenal for war.
I hope to find time to give my perspective on how you may handle and respond to different competitive manifestations (with some practice examples). Suffice to say that in all cases, there are 7 questions to answer.
1. Who am I? (A Market Leader, Challenger, Follower or Nicher?) and Who is my Competition? (A Market Leader, Challenger, Follower, Nicher or a Barbarian?).
2. What is the Competitive move?
3. What is the signal of the Competitive move? For example, is it a grab for Share? Driving Growth? Is it a Business Model Threat?
4. Is the Competitive move providing a “better way” of solving the problem that my product solves?
5. Has the Competitive move redefined the problem and threatens to make my solution irrelevant? (Think iPhone vs. Blackberry).
6. What is the incidence and impact of the move? Is it immediate or delayed? Is it a major strategic move or is a minor tactical manoeuvre?
7. What resources do I have (for a response or a fight)? At times, the best response may not be a fight, but a collabo or partnership. So always make sure, where you can, that there is an open free-flowing line of communication.
Your answers to these questions will help you determine whether to and how you should respond to a competitive move.
What has been your experience handling competition? Please share.