Insights on Competition, High-Technology Take-Offs, Social Entrepreneurship and Business in Asia

European Business Forum, Winter 2005 | Go to article overview

Insights on Competition, High-Technology Take-Offs, Social Entrepreneurship and Business in Asia


EDITOR'S NOTE

The in-depth section of EBF--which you will find in the next 23 pages--represents a change of style and pace for the reader. While the preceding EBF debate dealt with a specific theme, here we broaden the focus to look at a variety of topics that affect businesses across Europe and around the world. Marketing, innovation, business and society, and business in the fast developing markets of China and Southeast Asia are among the themes discussed

Competition as an inspirational marketing tool

The tension between competitors keeps markets active, inspires managers to innovate and creates value for consumers

Not every entrepreneur or marketing executive will agree with the sentiment expressed in the title of this article, especially when prices and profits are under pressure, as is currently the case, for example, with supermarkets and airlines. Nevertheless, the title comes from a statement by Jan de Soet, a former senior KLM executive and supervisory director of the food giant Wessanen: "Competition is an inspirational marketing tool." Bill Smithburg, who has led Quaker Oats for the last 15 years, agrees: "If you don't have a tough competitor fighting against you, you should invent one. Competition is a way of living."

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The quotations from Soet and Smithburg emphasise the stimulating effects of competition. Like chess players, skaters and football players, entrepreneurs and marketing executives must have opponents. It keeps them on their toes, ensures a dynamic in the marketplace and stimulates the search for better solutions to meet the needs of buyers. In recent years, consumers have seen many benefits from competition, most notably in the world of high technology, where there is a steady stream of new products.

Such progress in the marketplace is chiefly the result of the process of competition among--and within--companies. The economist Joseph Schumpeter called this the process of 'creative destruction', the process of innovation in which competing entrepreneurs continually engage in an effort to find better products, services or production methods, leaving the old ones behind. In many sectors, competition and market dynamics are currently very fierce. Market dynamics, such as those in high-technology and higher education, arise when competing organisations repeatedly create new supply. Major breeding grounds of innovation are new technologies, changing market conditions and new consumer groups with different consumer needs. The main task of marketing is to realise new, innovative supply based on these sources. The marketing process carefully studies client needs, continually translating them into optimum supply that dovetails with such needs. However, competitors try to do the same thing, even better or even sooner. It is precisely this competitive situation that drives and inspires marketing executives to develop the most creative and suitable solutions.

However, by definition, the process of creative destruction, which is essentially constructive competition, has another side: some companies and products can no longer compete in the marketplace. KLM, for example, had to face the fact that it was no longer a strong enough player to survive the global competition for passengers on its own. In highly competitive markets, with strong pressure on prices, companies find it difficult to keep afloat. In such circumstances, competition is perhaps not so inspirational: less favourable competitive aspects appear. It is well known that many methods are employed to reduce competition, to defend or improve one's own position vis-a-vis the competition.

A notorious example is Procter & Gamble which, precisely 10 years ago, destroyed a new product, Omo Power, launched by its competitor Unilever. There had been widespread publicity for this product, a new, revolutionary and powerful washing powder that would enable Unilever to recapture its position as market leader in detergents. …

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