You see, Alice is faced with the same problems many businesses face. Confused? Don't be. Here's what each aspect of the Croquet game represents:
- Card Men: They represent the market place, and as a business person you have to anticipate changes, or you could lose the game.
- Flamingo: These "croquet mallets" are perfect examples of technology. It is always changing, and is hard to control. Just when you do begin to master it, the market has changed and you have to learn a new technology.
- Mole: These cute little guys represent your customers and employees. You need to use technology to somehow reach your customers and employees so you can be successful in the market. Failure to motivate your workers and reach your customers will result in your inability to keep pace with market changes.
The true catalyst here though is the Cheshire Cat. I think he(?) represents all that can go wrong if you don't work to secure a competitive advantage. There are 6 ways to avoid having him "pop" in to ruin your company:
- Being the first mover/entrant into the market
- Niche dominance
- Cost Leadership
- Product/Service Differentiation
- Market Share
- Government Protection
Each of these strategies have pros and cons, but the two I find most interesting are Niche dominance & Product/Service Differentiation.
Niche dominant companies go after specific portions of a market and strive to be the best in that area. While there are a few success stories for companies serving a niche, I think the best has to be Nintendo. In 2002 Nintendo was left for dead by many gamers, game developers, and market analysts as the PS2 was the dominant player in the Video Game industry.
However, Nintendo recognized that the casual gamer was largely being ignored by Sony, Microsoft & themselves in their quest for dominant market share of the hard core gamer. So the powers that be over at Nintendo decided to change their business strategy, and focused on developing a console that the casual gamer would enjoy...and enjoy we did.
My friends...Allow me to introduce The Nintendo Wii:
By changing how video games are played, Nintendo has found the "Power-Up" they needed to take back the crown as No. 1 video game company in the world.
Product/Service Differentiation strategies require a bit more finesse. If this is your strategy, you'll have to convince the market that what you're offering is unique and therefore worth the higher sale price. When searching for companies that employ this strategy, I think most people will look at companies like Starbucks, Whole Foods, or Neiman Marcus because of their push to separate themselves from the pack by offering higher quality products and service.
It is this market perception that allows them to charge higher prices and to do so succesfully. Each of these companies saw a market that was overcrowded (or untapped in the case of Starbucks), and jumped in with a business strategy that allowed them to create a brand that symbolizes a premium good or service.
A good strategy doesn't aways lead to huge sucess in the market. That's why you play the game. Ultimately though, no matter which of the six strategies you choose to employ, be sure that it is of your own choosing, and after careful thought to the pros and cons...a bad strategy will set you in the wrong direction every time.
7 comments:
Josh,
I think you are really creative in your analysis on this particular blog. Until you mentioned it, I never realized that was what Nintendo has been doing this whole time. I'm not a hard-core video game player, yet I find myself attracted to the Wii. I guess it really is true that their niche market are people like me. And I think that they will sustain it. Their marketing activities is certainly reflected in your analysis. I love how the Wii representatives in the commercials just go to random places (retailer, your house, airport) and say their classic catchphrase, "Wii (We) would like to play." And then all of a sudden, everyone (common non-hard-core-player folks) would just drop everything and start playing.
As for Starbucks with their differentiation strategy, I agree that that is their strategy. I love how they refuse to accept the fact that all they really are selling is coffee. It's so funny how they try to make themselves upscale by calling their employees baristas and giving their cup sizes weird names like venti. It makes no sense and everyone fell for it.
But I think their sustainability is at risk. They are losing money, after all.I seriously think people are snapping out of it and realizing that Starbucks coffee is exactly that, it's coffee. They may add foam or froth or caramel and charge you $5.00 extra, but it's still the same as what you'll get at Dunkin' Donuts! Their sustainability relies heavily on an image that is currently fading. People are realizing $7 for a cinnamon mocha soy latte cappuccino is not worth it! (I just made this drink up but I'm sure Starbucks serves whatever this drink is). There is no value to purchasing such a drink.
Ramon
Hi Ramon,
Thanks for the feedback. I agree that the Wii is in a strong position right now. I own and enjoy using my Nintendo Wii.
However, their success may be hurting them. For the last two years, they've been unable to produce enough consoles to meet demand. In year one it wasn't such a big deal, but the XBox 360 and PS3 have come down in price, and last years Wii shortages resulted in greater PS3 sales.
In regards to Starbucks, I agree that their problem right now is that the market is catching up. Dunkin Donuts, McDonalds, and even independent coffee houses are taking sales away from Starbucks. The weaker economy makes it that much harder for people to fork over the money it costs to buy a beverage there.
If Starbucks can't convince its customers that there is a difference in experience or quality, then they'll need to change their strategy.
I think if they play up the fact that you can sit in their cafes and have a relaxing cup of whatever (play up their niche), versus their competitors they can regain some of their speed. I think they're also trying out smaller cup sizes as well to offer less expensive drinks that will compete with the substitues offered by their competitors.
Thanks again,
Josh
The nintendo Wii is great. Every age gets addicted from 5 to 40 years old. However I think that the Nintendo Wii needs to come up with better gets because the games start to get old. I see people all the time who have young kids that I babysit for and they are now begining to sell those Wii's because they get boring. Thats my opinion.
Starbucks however, I agree that they sell just coffee and use the differential strategy but I think what really makes them unigue is that they allow their customers to sit as long as they want. I do not like to spend moeny their because it is over prised and i can get a cup of coffee for $0.50 and be satisfied. However, when i want a place to just sit and study or talk to someone I go there and relax. I pay $6.00 for a cup of coffee and then sit their for hours. Other places such as library i can not bring coffee and usually if i can i am limited to how long i sit and have to buy more to stay or you are rushed. Question: Do you think this affects them at all when customers come in and want to sit but there are like 5 tabels where people have 1 cup of coffee and do sit for hours and hours? Does this affect customers who want to come in also and just to to drink coffee?
I think Nintendo did a great job with the release of the Wii. However, I don't think they will hold their niche marketing advantage for much longer considering Apple will be releasing applications for the iPhone that are similar to the idea of the Wii. Soon, all iPhone users will be able to purchase applications and games that allow them to shake or move their iPhone in ways to replicate real-life movements, as we already do with the Wii. And considering you don't have to be sitting in front of a television to use your iPhone, the Nintendo Wii might be in trouble.
I agree with your analysis of the Nintendo Wii. I still remember waiting for more than a year before I was able to get one because it was constantly out of stock at the Nintendo stores. I believe it was solely successful because of Nintendo really differentiated their new console from PS3 and Xbox. The other companies were too focused on increasing the capabilities such as graphics of their next gen consoles and completely disregarded a new gaming experience that the players would like to have.
However, I do feel people get tired of the Wii really fast. It was fun at first because it was something new to the players. If Nintendo wants to sustain its market share, then it must keep coming up with creative products that players want.
I think that while the Wii is successful now, it will not hold as the leader unless some changes are made. Third-party developers did not anticipate the Wii's success and have been slow out of the gate with quality games. Many of the Wii's third-party games have been poor ports of games from the last console generation. Also many Wii games are focused on mini-games and rely on gimmicks. Nintendo's poor implementation of online multiplayer gaming support will also prove to be an Achilles Heel. I am a Wii owner myself and I hardly touch it anymore due to the lack of quality games and combined with console shortages and price drops on the Xbox 360 and Playstation 3 the Wii will move to third place by the end of the year.
Wow, lots of insightful comments! I'll try to respond to each in kind.
Stradeego: I agree with your comments on the Wii. I am facing this same dilemma. I think the fact that Starbucks lets users sit and not feel rushed or pressured to buy more is critical to their differentiation strategy. I go there sometimes to study as well for the same reasons you mentioned. I think the other customers get this and take it in stride. The bigger problem is just that it costs $6 bucks to get a cup of joe.
Vannessa Dispensa: The niche that Nintendo is chasing is the casual gamer. Most of these people are too young or too old for the iPhone market I think. So while I think there is a chance of Nintendo losing some steam, it has more to do with their own content than that of Apple.
Sunny: I agree with you 100%. They need to keep pushing the envelope with games because they are in their own domain right now. They just need to get some third parties in the mix as well. Which we're starting to see now.
Alex Martkovsky: I agree with what you said right up until your sales forecast. Assuming the company is not under estimating demand again the Wii should be plentiful this December. The company has also strategically released new name brand every quarter to keep the system relavent with gamers. The real challenge has been getting the third party developers on board. I think we're starting to see really unique game play interfaces for games that are across all the platforms. Games like MLB 2k8 make use of all the Wii features, and keep the elements of the game fun for gamers of all types.
Lastly, I think what makes the Wii (and Starbucks) successful is the social element they bring to their product. There apply no pressure to do anything, and you enjoy it just the same as someone who spends a ton of time engaged. The downside is that because it requires social interaction to be enjoyed, it has a Board Game type feel, and I often find myself putting it away when guests leave.
Thanks all for your comments,
Josh
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