Rainmaking Secrets

CNN named Richard D’Aveni as one of the top management thinkers of the world. His book Hypercompetition (1994) introduced market analysis and mapping tools that have been adopted by a number of leading consultants firms including McKinsey.

D’Eveni’s latest book, Beating the Commodity Trap: How to Maximise Your Competitive Position and Increase Your Pricing Power (2010) reveals the three most common commodity traps companies face:

1. The deterioration trap. A number of industries suffer from the emergence of a dominant low-end competitor such as Zara which caused the “Zarafication” of the European fashion market.

In the deterioration trap, prices go down and benefits go down too.

2. The proliferation trap. Many industries suffer from product proliferation. In the motorcycle market, for example, Japanese motorcycle making and American niche rivals such as Big Dog and Victory have surrounded Harley’s position.

In the proliferation trap, prices go up or down, while benefits go up and down in all directions, around local firms products.

3. Escalation. Industries such as consumer electronics are experiencing price decline while benefits are increasing. In other words, the market witnesses and escalation in the ratio of benefits offered by the product to prices charged. This is what Apple did in iPods, reducing prices while improving functionality, in the process outthinking an entire raft of digital competitors.

In the escalation trap, prices go down and the benefits go up.

D’Aveni argues differentiation is not enough to beat the commodity trap. Specific strategies are required to:

1. Escape the commodity trap

2. Destroy the commodity trap

3. Turn the commodity trap to your advantage

D’Aveni’s practical strategies are based on research into thirty diverse industries - from restaurants, to retailing, to automobiles. Beating the commodity trap is a must read. Extinction is the price of fading to the commoditization war.

Popularity: 9% [?]

Market leaders are always under pressure to meet high expectations. High visibility projects can come in many forms.

Klais, a world leader in organs produced the only bamboo curtain in the world.

Belfor, another world leader in fire and water damage removal, restored 100,000 books after a large fire at the University of Vienna and earned a high profile mitigating the damage caused by hurricanes Katrina and Rita in Mississippi and Louisiana.

Otto Bock - leaders in prostheses - created high visibility by providing a service for theirs and all competing brands at the Beijing Paraplegics.

High visibility projects are often high risk. That’s why when they come off; customers comprehend why you really are number one.

Popularity: 13% [?]

Chess expert Bruce Pandollfini makes the point in his book, Every move must have a puspose, Strategies from Chess and Life, (Hyperion 2003) “nothing should be played without first considering what the opponent has just done.”

In an ideal play, in marketing as in chess your moves should always do at least two things in convert: foil out opponents aims while fostering ours. “We cant do either properly  if we do only one, and both can be accomplished by first assessing what the other player has done.”

Yet, social scientists who observe chess players eyes note beginners usually restrict their eye scans to just their side of the board. by contrast, experienced players inspect both sides.

I have found the same in marketing, negotiation and sales. Beginners ignore theire competitors. yet seasoned professionals first look at their opponents moves then plan theirs.

Popularity: 5% [?]

Leading competitive intelligence consultant, Leonard Fuld believes FORTUNE 1,000 companies together spend over $500 million on competitive intelligence each year.

When I first wrote about Fulds pioneering work on competitive intelligence in a 1990 book on negotiation, competitive intelligence was a fledging industry. Today, many major companies appear to have special units devoted to gathering competitive intelligence.

The gathering of competitive intelligence is perfectly legal, if confined to analyzing public information.

Fuld predicts that the budget for competitive intelligence will balloon to $10 billion by 2010.

How much time and money are you spending on systematically gathering competitive intelligence? How much are your competitors spending on analyzing the information you release to the market place?

Popularity: 4% [?]