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Canadian Cialis: Cialis vs. Viagra How Companies Bypass Competitors Using Innovation, New Audience, and Chasing Demand Marketing on vc.ru

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Canadian Cialis: Cialis vs. Viagra How Companies Bypass Competitors Using Innovation, New Audience, and Chasing Demand Marketing on vc.ru

“Cialis” vs. “Viagra”: How companies bypass competitors with the help of innovations, new audiences and the pursuit of demand – Marketing on vc.ru

There are two main approaches to promoting products and determining their advantage – to focus on the production of goods or work on image, perception and introduce innovations. Harward Business Rewiew reviewed two of these strategies and traced what techniques different companies turn to for superiority over their …

When marketing turns into a strategy

The spirit of the industrial revolution still defines the business strategy of some companies – even years after the factories and factories that were the main source of competitive advantage were moved abroad. Still, many companies focus on manufacturing and product development. Success is determined by the number of units sold, and all hopes are pinned solely on the production process.

Any activity related to the release is perfected to perfection for the sake of maximum productivity, and those managers who pray for efficiency receive an increase. Companies know how much resources are required to create and sell a product. But everyone else is also important, and this creates a certain problem.

Changing the source of competitive advantage: from production to customer desires

Upstream activity:

She answers the question: “What else can we produce and sell?”

Search for suppliers – the conclusion of the most profitable contracts with suppliers.

Production – cost reduction / maximization of scale and productivity.

Logistics – optimization of the supply chain and distribution efficiency.

Innovation – product improvement.

Downstream activity:

She answers the questions: “What else can we do for our clients?”.

Formation of perception: the definition of a competitive group; change the criteria for the purchase; creating trusting relationships.

Innovations: design proposals, depending on the current market situation; reducing customer risks and costs.

Accumulation benefits: creating a network effect; collection and processing of user data.

Rising activities of companies, that is, logistics, selection of sources of financing and supplies and production are gradually unified or given to outsourcing, while downward activities aimed at creating positive impressions, reducing risks and customer spending, become the main source of competitive advantage.

Difference strategies

To compete more effectively, companies should shift their focus from upstream to downward, paying particular attention to how they:

determine the competitive group;

affect the criteria for making a purchase;

find new solutions to consumer problems;

create an advantage by collecting user data and network effect.

The focus on downstream activities is most relevant for companies of three types:

Acting on the commodity market (for example, drug manufacturers).

Operating in a mature market.

Those wishing to climb higher in the value chain.

Regulation of downstream activities can help such companies find new forms of customer value and achieve sustainable product differentiation.

Planning a development strategy, managers are increasingly asking themselves the question: “What else can we produce?” And, more and more often, “What else can we do for a client?”.

Customers and the market, rather than production and product, now form the basis of any business.

These changes require a rethinking of some fundamental provisions of the marketing strategy.

First, if earlier the competitive advantage of the company disappeared as other market players developed, now it is accumulated due to the acquisition of new experience and knowledge. Its source shifts outward.

Secondly, the very way of competition changes over time. Now, the downstream activity is not aimed at producing the best product, but at meeting the needs of customers and meeting their purchase criteria. Now only you decide how the market accepts your offer and with whom your company competes.

Thirdly, the activity and development of this or that market depends primarily on the change in the criteria for making a purchase, and not on improving the product or production technology.

Let’s take a closer look at how optimizing a downstream activity can reverse a traditional marketing strategy.

Competitive advantage is not always based on product quality.

In their desire to get a rising competitive advantage, companies first form a set of unique technologies, and then carefully protect them from competitors. Knowing how protected one or another area of ​​the company’s activity is, we can assume what it sees as the source of its superiority: for example, if excursions at the enterprise are under the direct control of a PR service, the production line provides the advantage.

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There is a classic experiment in the world of branding: the respondent is asked to dream up and imagine what will happen to Coca-Cola if absolutely all tangible assets suddenly disappear from her.

According to most experts, the restoration would take a lot of time, effort and money, but the company could easily attract investors, ensuring the profitability of the investment in the future. On a particularly hot day, buyers are happy to overpay even 700% for the opportunity to purchase a can of icy soda from a vending machine.

In the second part of the experiment, you need to think about this: what would happen if absolutely all consumers had partial amnesia and they forgot the name of the Coca-Cola brand and the associations associated with it? Consumers do not even remember about their stable habit – quench their thirst with soda.

In this case, experts agree, although the company will preserve the infrastructure, it will still be difficult for it to raise funds for the resumption of operations. And this is a clear example of the fact that the loss of a downward competitive advantage (in this case, a breakdown in communication between the consumer and the brand) can cause much more serious damage than the loss of the entire production infrastructure.

The formation and development of connections in a market environment creates “stickiness”, that is, the unwillingness or impossibility of customers (or suppliers) to go to a competitor when he offers similar or superior customer value. The choice of a particular brand by millions or billions of consumers in total and gives a genuine competitive advantage.

To succeed you often have to go against customers.

According to the technical definition, a company is considered market-oriented if it masters the art of listening to its customers, understanding and meeting their needs through the production of suitable goods and services.

Believing that this will help to achieve superiority over competitors, managers spend billions of dollars to work with focus groups, research and social media presence. Customer opinion has unlimited power over brands, influencing decisions related to the product, pricing, packaging, product display, positioning and promotion. But does this make sense?

The reality is that success is achieved by those companies that are not at all interested in the opinion of the target audience, preferring to shape its desires.

A revealing example is Steve Jobs. When he was asked if marketing studies were conducted before the launch of the iPad, he said his famous quote: “No. Clients themselves do not know what they want. ” And if they know, they are not always recognized, so asking them directly is often useless.

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Spanish retailer Zara, which has become a symbol of “fast fashion”, places a limited number of models every month – no more than 100 units, while other retailers produce at least 1000 units per season. This brand aims to meet current consumer behavior. Accordingly, if demand for a certain model is higher, the company immediately increases its production and, conversely, reduces the production of unpopular models.

Today, market leadership belongs to those who were able to determine which consumer qualities were decisive for their product category. Volvo relies on safety, having shaped certain customer expectations first, thanks to belts, then cushions, and more recently, side impact protection and pedestrian detection systems.

Thanks to the manufacturer of air fresheners Febreze, consumers have become completely different in their purity and comfort in the house. Nike helped shoppers believe in themselves. Buyers are increasingly using characterizing criteria to not only select a brand, but also to understand the existing market and to establish a connection with it.

Thanks to these criteria, companies segment markets, target and position products, as well as achieve a strategic position that gives them a certain competitive advantage. Thus, for a company that focuses on top-down activities, the key goal is to influence customers’ perception of the relative importance of the criteria for making a purchase in order to form new ones.

Does competitive advantage always disappear with time?

At the level of ascending activity – yes, as the rivals develop, it disappears. However, if you compete at the level of downstream activities, then over time or with the number of customers served, it grows, that is, it tends to accumulate.

Domino effect in retaining Facebook clients

Facebook’s competitive advantage is not hidden in the depths of the company’s headquarters in Menlo Park. Its employees are very talented and efficient, but the company owes its success not to them, but to the millions of ordinary users who register on the social network – they represent the most valuable asset.

Here, the network effect played a role: people want to join the social network, because most of their friends and acquaintances already communicate on Facebook. And the company is doing everything possible to remain on the Internet the only analogue of the rural area: the information that users publish on the social network can not be transferred to another platform.

Chronicle, events, games, applications – all this creates a custom “stickiness”. The more people left on Facebook, the more likely it is that their friends will stay there.

The network effect is also part of the classic competitive advantage at the downward level:

it arises in the framework of market relations;

it is carried by the users themselves;

it’s hard to repeat.

Brands may have a net effect. In the media (especially on television), advertising of BMW and Mercedes cars appears regularly, even taking into account that with the help of this channel their advertising appeal will see less than 10% of the target audience. However, the more people will admire these brands, the more desirable for the target audience will be the cars themselves.

New technology as opposing competitors on the example of Orica

The very nature of the network effect implies its gain over time. This is also characteristic of other competitive advantages, especially related to the accumulation and use of user data.

Canadian Cialis: Cialis vs. Viagra How Companies Bypass Competitors Using Innovation, New Audience, and Chasing Demand Marketing on vc.ru

The company Orica is engaged in the organization of blasting in Australia. Her clients are quarry owners who sell fragmented rock for use in construction and landscape design.

Clients needed the resulting fragments of stone (as a result of an explosion) to meet the specifications, and the price remained within reasonable limits. Since in this market the product, which was the reservoir explosion, was in fact indistinguishable, the quarry managers did not see any reason to pay more to either Orica or its competitors.

At the same time, the company’s engineers themselves knew that the organization of the explosion was a much more complex event than it might seem at first glance. The result is influenced by many factors: the degree of the plane of the mine workings, and the location, depth, diameter of the nests under the charges, and even the weather.

Sometimes a single mistake was enough, because of which granite (and with it all hopes for profit) was broken into the smallest fragments.

It was this unpredictability and annoyed customers, although they did not say anything directly. Problems were added by the need for safe storage and transportation of explosives. If it were possible to somehow reduce the possible risks and costs, then this would create a new customer value – more attractive than the possible reduction in prices among competitors.

The solution to this problem was taken up by Orica programmers. They collected data on hundreds of explosions in different quarries in different weather conditions and found surprising patterns that helped them calculate the factors influencing the final result. Employees of the company empirically found effective strategies and techniques that helped them significantly reduce the number of unsuccessful explosions.

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Now they knew for sure which faction would turn out to be a breed, and could offer the market what favorably distinguished them from the competitors: guaranteed results within the established tolerances. In response to this offer, competitors predictably began to cut prices, but customers still switched to Orica. The company not only developed a more attractive resource, but its competitive advantage only intensified with time: the more customers addressed, the more they were able to collect data and the more accurate and better work was obtained in the future.

How Cialis defeated Viagra, turning to a new audience

Redefining the criteria for making a purchase is one of the most effective ways to push back competitors and gain market leadership.

A case in point is the confrontation between the two companies – Pfizer and Lilly Icos. The market for drugs to restore erectile function was estimated at $ 5 billion. It was opened in April 1998, when Pfizer triumphantly launched the production of Viagra, setting a record for pre-orders: in just one month the doctors wrote out more than 600 thousand prescriptions to patients.

With a price of $ 10 per pill and gross margin of 90%, Pfizer could afford huge marketing and sales promotion costs. Its sales representatives visited over 700 thousand doctors per year, and $ 100 million was invested in the advertising campaign. Pfizer has created a fundamentally new market based on the key criterion for making a purchase – efficiency. Her medicine did an excellent job.

By 2001, revenue from the sale of Viagra was $ 1.5 billion. The volume, growth and prospects of the young market could not but appreciate the other pharmaceutical companies. In 2003, Bayer introduced the first analogue of Viagra – Levitra. The drug had a similar effect, but it cost a bit cheaper and was positioned according to the “me too” model.

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Some time later, Lilly Icos, a joint venture between Eli Lilly and the biotech firm ICOS, entered the market with a new product. Cialis differed from competitors in two ways. First, the validity period: “Viagra” and “Levitra” operated for four to five hours, while “Cialis” – thirty-six, which seemed much more convenient for consumers. Secondly, trial use of the drug revealed far fewer possible side effects than the competition.

For doctors, the main criteria for prescribing the drug to restore erectile function were “efficacy” and “safety.” Their relative significance was 70%, while the importance of the “duration of effect” was less than 10%.

On the eve of the launch of “Cialis”, Lilly Icos still had one unresolved question. The management of the marketing department puzzled: how to change the perception of the significance of the characteristics for the doctors? The discussion of positioning tactics in the market turned into a heated argument: someone suggested putting a plug-in effect at the head of a marketing strategy, someone would say that the duration of the effect was not.

In the starting advertising campaign, marketers still focused on the duration of exposure. The effect was presented as an opportunity to choose a convenient time for having sex within a 36-hour window. The effectiveness of the new tool was also emphasized by the higher price than that of Viagra’s main competitor.

And it worked. As a new buying criterion, it was not the opportunity to have sex that was offered, but a new way to bring each other tender and sensual pleasure. The publication Business Week published a description of the experiment conducted at the stage of formation of the positioning strategy: “Viagra customers familiar with the properties of Cialis showed a number of items, and then asked to correlate them with each of the drugs.

Red lace underwear, spiked shoes and glasses of champagne were associated with Viagra, and a terry bath robe and a whipped pillow were associated with Cialis.

In 2012, Cialis for the first time overtook a competitor in sales, breaking the bar set at $ 1.9 billion. At the same time, on the market of means for restoring erectile function, the new key criterion for a purchase was the duration of the effect, not the strength of its impact.

Do competitors choose

According to traditional beliefs, companies remain at the same level with those competitors that they have at the moment and can in no way affect the emergence of new ones. However, if you compete on a downward level, then there are three factors that determine potential adversaries:

how customers evaluate the positioning of your offer;

how do you position a one-on-one product with a competitive group within the distribution channel;

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what price do you charge.

For example, if you produce drinks that effectively restore the water balance, then you have several positioning options:

as a therapeutic drink to improve digestion;

as a drink for athletes;

as a hangover cure.

In each case, the client expects to be offered a different set of advantages and he will certainly compare your product with the competitive ones. When choosing how to position a product, managers often pay attention only to the size and growth of the market, ignoring the intensity of competition and the unique qualities of their competitors.

At a downward level, you can choose which competitive group will have your product. For example, Brita water purification filters compete with other filters when they are side by side in a hypermarket in the “kitchenware” section.

But it is worth the company to put the filters in the usual supermarket next to the bottled water, as its comparative group and consumer logic will change.

In this case, the price will be a competitive advantage, since the consumer can afford much more filtered water than bottled water per dollar spent. Of course, not every buyer is guided by price (for example, some want to quench their thirst at once), but for all others, Brita filters are a very attractive choice.

If you want to avoid comparing your product with competitors, then marketing, distribution and packaging should be done in the best possible manner. On the shelves of supermarkets is an incredible amount of the same items, take at least yogurt.

In most cases, they are sold in identical packaging, and their appeal to the customer is so inexpressive that consumers find it difficult to remember which brand they have seen. The lack of differentiation in this case gives rise to undesirable competition, which these brands are best avoided.

Finally, the price level has a direct impact on who you are competing with. When in 2002 Infiniti announced the return of the G35, it was immediately dubbed the “BMW Killer”. The car, based on the legendary Nissan Skyline, really could have fought with the BMW of the fifth series in terms of engine power and internal space, but it would hardly have been able to compete effectively with the “German” for several reasons.

Firstly, cars of the fifth series were intended for those who already had BMW cars or other premium cars. Secondly, they cost incredibly expensive, and for that amount, consumers needed not just a car, but a product of a reputable brand that possesses a specific value proposition. Therefore, as an alternative, Infinity decided to compete with the BMW of the third series. She managed to achieve this goal thanks to a suitable price, which is a key factor for many consumers, including in the car market.

And although the tactics of avoiding competitors can eliminate direct threats, it does not guarantee the absence of new rivals. However, if you did everything right and dominate one of the criteria for making a purchase, then competitors from the category of “I too” will simply be unprofitable to compete with you.

Surprisingly, the later you enter the market, the more opportunities you have to choose your competitors than its discoverers. Second-tier players may choose to enter into direct competition with existing players or to differ from them, while the behavior of the “old guard” always depends on the actions of newcomers. However, existing players are not as defenseless as it may seem at first glance: in their arsenal there is always the opportunity to arrange a redistribution of the market. To do this, just find a new criterion for making a purchase.

Are better products and services born through innovation?

A place in the minds of the buyer can be compared with luxury property in the city. It is becoming increasingly valuable and scarce, since in every product category there is a huge number of brands. Companies desperately compete with each other not for the sake of self-assertion, and then to demonstrate their own uniqueness.

Volvo will never say what makes cars better than BMW or another manufacturer – it makes them different.

In the mind of the buyer, Volvo is associated with safety, and BMW – with pleasure and enthusiasm for driving. As manufacturers focus on different criteria for making a purchase, they appeal to completely different audiences.

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In a large-scale study designed to find out what the word “delight” means for clients, respondents were asked to describe “the most impressive moment of their life.” According to the results of the study, the brightest moments of the BMW owners were related to their hobbies: someone told about how he rafting on a mountain river, someone like being at the Rolling Stones concert. Owners of Volvo, other events are impressive, such as the birth of their first child. Brands compete to convince customers of the relative value of the proposed criteria for making a purchase.

Needless to say, in this case, the improvement of the upstream activity (development of safer or faster cars) does not play a significant role. The product remains an integral attribute when positioning the brand according to the selected criterion. It is the product and its characteristics that transform the abstract promises of the brand into real benefits and advantages.

Volvo innovations really make cars safer by strengthening long-term customer relationships. But the product itself does not occupy a more privileged position than, say, effective distribution or convincing treatment.

Where else do innovations live?

The existing belief that innovation is the production and implementation of the best products and technologies, leads managers to rely excessively on bottom-up activities. However, from the point of view of improving downstream activities, it is first of all necessary to pay attention to market activities. Competitive battles are won by offering innovation to customers and reducing their risks and costs throughout the entire cycle of purchase, use and disposal.

Here is a telling example of how Hyundai survived the crisis of 2008–2009. Fluctuations in the economy worsened the state of the labor market, which is why many buyers have postponed the purchase of durable goods. Accordingly, car sales have gone to a steep dive. This aggravated the already precarious financial situation of Chrysler and General Motors, which were eventually forced to apply for state support. Hyundai, which focused on its low-income audience, found itself in a particularly difficult situation. Its sales in the United States fell by 37%.

The majority of automakers immediately responded to the general decline in demand by lowering prices and launching discount programs. Initially, Hyundai also used this tactic, but then the company abandoned this approach. She decided to ask potential clients directly: “What keeps you from buying?” Most often, they answered that the risk of buying a car in a crisis, when work could be lost at any moment, is incredibly high.

Therefore, instead of churning prices, Hyundai eliminated the risks for buyers by developing a guarantee program: “If you lose your job or source of income within a year after buying a car, you can return the car without prejudice to your credit history.”

The program, dubbed Hyundai Assurance, was launched in January 2009. By February, Huyndai’s sales had doubled, although overall the market had sank 37% for the first time since 1963. The company even overtook Chrysler, although the latter had four times more dealerships. Competitors could take a cue from Hyundai, but instead they continued to cut prices and offer preferences. Hyundai Assurance is a prime example of innovation at a downward level.

Hyundai cars are no better, the company has just become better at selling them.

The desire to reduce the risks and costs of customers is key for all activities of a downward level, and moreover is the main means to create its value. This is confirmed by the examples we have cited: Facebook reduces users’ expenses for communication with customers; Orica reduces the risks associated with explosions; Coca-Cola helps shoppers quench their thirst faster due to the availability and prevalence of Coca Cola.

Is the source of innovation always the RD department?

Product improvement is the prerogative of bottom-up activities. Many believe that the technological innovations of rivals will negate their competitive advantage. This is true only if innovation as a source of advantage is at a downward level. No need to shake with fear every time rivals launch a new product. Be wary of trying to change the criteria for making purchases to the target audience. In the end, the cause of the collapse of Kodak was not at all the discovery of digital photography, but the carelessness of management, which overlooked the change in purchasing criteria.

On the other hand, shaving technologies have been developing for more than a century, but it is Gillette who determines when the next generation of machines or blades will appear on the market. Over the past three decades, competitors are well aware that each subsequent generation of Gillette razors will have one blade larger, and a rotating or vibrating head will appear. However, they did not even try to take the lead and release their own counterparts. Why?

Because in that case their winnings would be minimal. Gillette controls consumer criteria and is trusted by consumers, so the excitement around each additional blade will be if it is a product from Gillette. But for this, you will have to invest a billion dollars in your starting advertising campaign. Four blades are better than three blades – but only when Gillette says so. In other words, the pace of development of the industry is determined not at all by technological discoveries, but by the effectiveness of marketing.

No matter how the market changes – evolutionary, revolutionary, due to new generations of the product – any changes can be explained with the help of consumer psychology.

When evolutionary changes expand the boundaries of the existing criteria for making a purchase: more powerful or more economical engines for cars, faster processors, more effective drugs.

With changes associated with the generations of the product, the new criterion is added to the already existing one, which often opens up new market segments: sugar-free soda, hybrid cars, children’s diaper pants, taking the medicine once a day.

With the revolutionary changes, the new criteria completely replace the old ones: the Nintendo Wii controllers changed the way they interact with the game, the appearance of touchscreens and the multi-touch interface changed the expectations of consumers from a smartphone, and as a result of developing a vaccine against tuberculosis, AIDS or malaria, the existing treatment methods will become obsolete within several decades.

It takes less effort to make evolutionary changes in the market than for changes associated with product generations, and much less than would be required for revolutionary changes.

In each case, the quality of changes in the product (that is, the improvement of its relative advantages compared with the characteristics of existing products) helps to shift the market, but does not guarantee its changes.

Negative ratings of introducing new products indicate that companies are not able to influence the change in consumer criteria. Technology is a necessary, but not vital factor in the evolution of the market. It is impossible without bottom-up activities, which help clients make evolutionary, generational, and revolutionary changes.

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