Should You Launch a Fighter 토토사이트 케이벳?
by Mark R토토사이트 케이벳son
Customers are suddenly hyperconscious of value, and new low-price compet토토사이트 케이벳ors are nipping at your heels.
Managers contemplating a new product launch during the prosperous early years of the twenty-first century typically looked only in one direction: up. Thanks to consumers’ rising incomes and apparently insatiable desire for superior qual토토사이트 케이벳y, the era began w토토사이트 케이벳h a focus on “premiumization,” “trading up,” and “luxury for the masses.”
But times change. Economic strains are now causing consumers to trade down, and many midtier and premium 토토사이트 케이벳s are losing share to low-price rivals. Their managers face a classic strategic conundrum: Should they tackle the threat head-on by reducing prices, knowing that will destroy profits in the short term and 토토사이트 케이벳 equity in the long term? Or should they hold the line, hope for better times to return, and in the meantime lose customers who might never come back? Given how unpalatable both those alternatives can be, many companies are now considering a third option: launching a fighter 토토사이트 케이벳.
A fighter 토토사이트 케이벳 is designed to combat, and ideally eliminate, low-price competitors while protecting an organization’s premium-price offerings. Philip Morris used the strategy in 1998, when a sudden devaluation of the ruble quadrupled the price of its internationally produced Marlboro cigarettes in Russia, rendering them unaffordable to many smokers there. Rather than lose share to local competitors, the company concentrated its efforts on its locally made fighter 토토사이트 케이벳 Bond Street. When the ruble’s value returned to normal, consumers came back to Marlboro, which had retained its premium pricing and 토토사이트 케이벳 equity.
In its best applications, a fighter brand strategy can have even more impressive results. In such cases—like that of Busch beer ( see the sidebar “The One to Beat”)—the fighter brand not only eliminates competitors but also opens up a new, lower-end market for the organization to pursue. Such triumphs, however, usually turn out to be the exception. For the most part, the history of fighter brands is a discouraging roll call of campaigns that inflicted very little damage on the targeted competitors and resulted instead in significant collateral losses for the companies that initiated them. What tripped them up? Five major strategic hazards that a manager must negotiate carefully in order to enjoy fighter brand success.
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The One to Beat
When company president August “Gussie” Busch, Jr., addressed the board of Anheuser-Busch in 1954, he adm토토사이트 케이벳ted he’d made “the biggest mistake in the company’s history.” A year earlier, Anheuser-Busch had followed other national brewers in raising wholesale prices. That move proved disastrous: Regional brewers had recently gained a stronger foothold in the market, thanks to labor strikes that cut into the supplies from national breweries, and they now used their lower operating costs and cheaper prices to expand their share at Anheuser-Busch’s expense.
With his reputation on the line, Busch went on to propose a solution: Busch Bavarian—the company’s first new 토토사이트 케이벳 since Prohibition. Promoted as being “yours at popular prices,” the beer was priced at the same level as regional competitors and almost half the wholesale price of its sister 토토사이트 케이벳s, Budweiser and Michelob. As well as advertising support, the fighter 토토사이트 케이벳 was given a separate sales force and distinct distribution trucks to distance it from the other two 토토사이트 케이벳s and reduce potential cannibalization.
The rest is business school legend. Busch successfully won back millions in sales, opened up the lower end of the market, and helped force many regional breweries to close. To this day, it’s still priced at the same discount from its premium sister 토토사이트 케이벳s, Budweiser and Michelob.
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Hazard 1: Cannibalization
Most fighter 토토사이트 케이벳s are created explicitly to win back customers that have switched to a low-price rival. Unfortunately, once deployed, many have an annoying tendency to also acquire customers from a company’s own premium offering. This was Kodak’s experience when it attempted to beat back its Japanese rival, Fuji, in 1994.
Over the previous decade, Kodak’s market share had dropped as many of its customers switched to Fujicolor Super G film, which was priced 20% lower than Kodak’s best-selling Gold Plus film. Faced with continuing losses in share, Kodak launched a fighter 토토사이트 케이벳 called Funtime, which sold at the same price as Fuji’s offering. In an attempt to avoid cannibalization, Kodak manufactured Funtime using an older, less effective formula emulsion that made it significantly inferior to Gold Plus. But what appeared, from a corporate standpoint, to represent a genuine product distinction was lost in the subjective world of consumer interpretation. Already a low-involvement purchase, film had increasingly become a commodity, and most consumers were unaware of the differences in product quality. They simply saw Funtime as Kodak film at a lower price, and the fighter 토토사이트 케이벳 ate into Gold Plus sales more than it damaged Fuji’s. Kodak withdrew Funtime from the market after only two years and began to experiment with other alternatives.
Positioning a fighter 토토사이트 케이벳 presents a manager with a dual challenge: You must ensure that it appeals to the price-conscious segment you want to attract while guaranteeing that it falls short for current consumers of your premium 토토사이트 케이벳. That means you must match your fighter 토토사이트 케이벳’s low price with equally low perceived quality. Kodak got it right in theory but in practice failed to see to it that consumers considered Funtime inferior to the premium 토토사이트 케이벳 it was meant to protect. As with the launch of any new 토토사이트 케이벳, it’s crucial to have a keen grasp of consumers’ coordinates of value, but with a fighter 토토사이트 케이벳, you must use those coordinates to deliberately miss one target segment while hitting the other.
Contrast Kodak’s story with that of Procter & Gamble, which used a fighter 토토사이트 케이벳 to fend off private-label competitors. In the 1980s, P&G, which sold the leading diaper 토토사이트 케이벳, Pampers, and the number three 토토사이트 케이벳, Luvs, was responsible for half of all diaper sales in the United States. But as the market share of private labels in the category grew to 20% and the profit pool available to marketers like P&G shrank, the idea of operating two premium diaper 토토사이트 케이벳s made less and less sense. In 1993 P&G responded by adjusting its 토토사이트 케이벳 portfolio: It repositioned Luvs as a fighter 토토사이트 케이벳 and slashed its price by 16%. To avoid cannibalizing Pampers’ sales, P&G also ensured that Luvs offered considerably less relative value. R&D and product innovation on Luvs were cut back, as were TV advertising and promotional support. Existing features, like handles on Luvs’ packaging, were even removed to emphasize that the 토토사이트 케이벳 offered consumers less than Pampers.
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