Friday, February 6, 2009

Consumers Only Need One Best Buy

Imitation may be the purest form of flattery, but it doesn’t make for good business. Take Circuit City, for example.

While we’re not privy to all of the inner workings of Circuit City, it has been obvious for some time that they were heading down a dangerous path. Not only was Best Buy the first retailer to “warehouse” the electronics industry, they have proven to be fairly good at it. Circuit City followed with essentially the same offering, and the differences between the offerings became fewer and fewer as Circuit City’s financial troubles mounted. Following the leader was its demise. And it appears that Ultimate Electronics might be heading in the same direction with their “shop the competition” tactic.

The problem with companies following the best practices of a category is that it produces nothing but carbon copies. Two or more identical offerings provide no benefit for consumers and as a result the category leader typically wins because they are the default choice. The leader’s ubiquity reassures people. Familiarity creates routine. Absent an intervening event, consumers have no reason to reconsider their behavior. Which isn’t to say that category leaders can’t be displaced. They can, just not with an identical offering.

Ideally, all companies should have the strategic fortitude to think for themselves. Some ideas are worth stealing; however, just don’t mimic the competition. Every tactic can be executed in multiple ways. And every organization should have a unique perspective on how it would execute a similar tactic differently than its competition. If it doesn’t, it should take a step back and focus on strategy rather than execution.

3 comments:

  1. Wow, a thoughtful and insightful blog on the biz of differentiation. Everybody says it. Nobody does it. Except the leading brands that we all talk about. Apple. Target. Southwest airlines, Ben and Jerry's. Fed Ex. All the followers want it, ask for it, and end up just talking about it. It's very hard work to get it done. It requires sacrifice. It requires saying and actually doing things differently than others, even successful others, say and do. It requires counter intuitive leaps. Leaving low hanging fruit unpicked at times. It's too hard for the timid, the unimaginative and the "research as a means of covering your ass," driven.

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  2. Except Best Buy may not be able to survive the year. The industry is changing and consumers are moving online.

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  3. I'd encourage you to read The Competition Isn't Who You Think It Is.

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