Market Share At Any Cost

Going after market share with a low price strategy may look attractive in a competitive environment with no clear differentiation between the products. But when price is the only appealing factor, companies stand to  lose value in a spiraling price war.  The lure of market share is more prevalent in consumer products where companies are destroying value and commoditizing their premium brands with price cuts.

The newly appointed CEO, Paul Polman, of embattled Consumer Products maker, Unilever, has this to say about his strategy:

We are not going to have a mentality to grow at the expense of others

He was quoted as saying that he would avoid fighting for market share at any cost, a trap that lead companies to cut prices too steep or chase low-margins products.

Mr.Polman nailed it.

Can Brands Make You Break Out In Hives?

Brands are like people, they have personalities. Well not quite, we as consumers tend to attribute human like personalities to brand. If we are allergic to certain human personalities, can we be allergic to brands too? Beach Reads recommends a 2003 novel, Pattern Recognition. It was described as “the most finely observed and entertaining text on branding that’s ever been written”, by the reviewer Karrie Jacobs. Karrie describes the novels heroine Cayce Pollard to be “literally allergic to logos. The Michelin Man for example makes her physically ill”.
While this level of brand sensitivity and reaction reads like hyperbole, there is certain truth to the emotional response. In her 1997 paper in the Journal of Marketing Research, Prof. Jennifer Aaker described five dimensions of brand personalities:
  1. Sincerity
  2. Excitement
  3. Competence
  4. Sophistication
  5. Ruggedness 

If a brand’s personality dimensions are not aligned with those you require of a brand, the brand is bound to cause a negative response.

You have the option of not standing in line

When I was walking by the Apple Store in Emeryville on the Saturday after the iPhone 3G release, I saw a line about 100 deep. Everyone in the line seemed happy “just to be there”. It was surprising to me because, iPhone 3G is not that big a change from the version released an year ago and it was the day after the release.

The people who were standing most probably wanted to and liked standing in line. Quite possibly they stood in line for every Apple product release including Leopard. These are the people who “want to be inspired”. After years of experiencing average products, these people are carried away by Apple’s design and simplicity. Despite the fact that neither the iPhone 3G nor an Operating system will ever be in short supply, they choose to stand in line.

The problem with wanting to be inspired is that one has to give up the economic decision making or worse, rationalize their actions. A colleague  of mine who had bought the original iPhone before the prices dropped, declared, ” I am not at all unhappy the prices dropped, I would not mind if they had not announced the $100 store credit, because I got to use my pone for 3 months and it was totally worth it”. Again there is a choice and if indeed a person want to put an economic value of overpaying for the pride and pleasure of using it before most, then they can. In the case of this specific individual, it is a case of managing cognitive dissonance – the person is aligning their mind to the new reality. They are saying to themselves, ” I did not overpay, I was not suckered into doing anything I did not want to, I did that on my own will because I loved the product so much and got to use it for 3 months that was worth paying $100″.

On related note, there is another class of people who have been waiting to be inspired and they found their inspiration in Obama. The problem with choosing based on inspiration and not on economical decision making process is that we choose to ignore flaws, however big and choose to be downward counterfactual. We take it to the extreme and start attacking anyone who raises a counter-point.

At the end of the day, choosing a product or president is just that, a choice. You can’t blame others for “making you stand in line”.