Join 'em, fight 'em,
or move away from 'em:
Three approaches to beating low-price competitors at their own game
In the beginning there was Wal-Mart, built on the single-minded commitment to everyday low prices. By obsessively focusing on cost management, applying brutal pressure on its suppliers, and strictly adhering to founder Sam Walton's words of advice, Wal-Mart succeeded in building a $345 billion empire.
Then came Southwest Airlines. Like Wal-Mart, Southwest was committed to low prices, but with a twist -- a certain extra attitude and personality. A Southwest Airlines flight is cheap, yes, but also fun -- even when you have to queue up in one of its A, B, or C lines for its first-come, first-seated flights. And now there's IKEA, Target, Trader Joe's, JetBlue, and a host of other brands with new variations on a "value-plus" offer-value plus design, plus service, plus variety. Value-plus positioning has become a driving force in the marketplace and a real threat to companies that have held on to a mainstream positioning.
If you find yourself in this position, with value-plus competitors hard on your heels, you really have just three options. You can
- Join 'em: Extend your brand to the value segment.
- Fight 'em: Compete in the value segment with a different brand.
- Move away from 'em: Distance yourself from the competition by moving your brand upmarket.
Each of these options has its risks and rewards. But none is so risky as doing nothing.
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About the author:
Martin Bishop is director of brand strategy in the San Francisco office of Landor Associates and has worked on strategic branding programs for a broad range of clients. He has specific expertise in addressing clients' needs in brand architecture and portfolio strategy.
Martin has more than 20 years of national and international marketing experience with both global industry leaders and start-up companies. He has worked in Germany, the Netherlands, South Africa, Switzerland, and the United Kingdom.
Martin holds an MBA from the UCLA Anderson Graduate School of Management, and an MA in economics and psychology from the University of St. Andrews in Scotland. He is a frequent commentator on brands and brand strategy and writes a branding blog: brandmix.blogspot.com