Many businesses with low-cost production, operating
or selling cost advantages automatically charge lower selling prices. But many
businesses with low-cost advantages invest that extra margin to create
competitive advantages. Mars (the candy company) is a great example of a
company investing extra margin to create competitive advantages against a
larger rival. Here’s part of an article I recently read about Mars’ strategy to
create a competitive advantage.
“Since the 1980s, Mars has held a distinct cost
advantage over Hershey’s in candy bars. Mars chose to structure its range of
candy bars so that they can be produced on a single super-high-speed production
line. The company also utilizes less-expensive ingredients (by and large). Both
of these choices greatly reduce product cost. Hershey’s and other competitors
have multiple methods of production and more-expensive ingredients and hence
higher cost structures. Rather than selling its bars at a lower price, Mars has
chosen to buy the best shelf space in the candy bar rack in every convenience
store in America. Hershey’s can’t effectively counter the Mars initiative; it
simply doesn’t have the extra money to spend. On the strength of this
investment, Mars moved from a small player to goliath, Hershey’s main rival,
competing for overall market share leadership.”
Two other good points the author made: “(1) You
don’t get to be a cost leader by producing your product or service exactly as
your competitors do, and you don’t get to be a differentiator by trying to
produce a product or service identical to your competitors.” (Sounds like common sense to me.) “(2)
Many companies like to describe themselves as winning through operational
effectiveness or customer intimacy. These sound like good ideas, but if they
don’t translate into a genuinely lower cost structure or higher prices from
customers, they aren’t really strategies worth having.” (Why have strategies if they don’t give you the results you need to
operate more efficiently or profitably?)
When you need a little humor in your life, remember
the name of writer and humorist Joyce Wadler. When you see her name on a blog
or an article, get ready for a treat! Here’s a “taste” of her style and humor
from an excerpt from a piece she wrote February 28 for The New York Times, called “On the Road, With Mothers.” Her humor
still brings a smile.
“I went on a road trip with my mother in Northern
California a few years back, and if you were heading down the mountain on Route
101, you probably remember us. That’s because cars were lined up behind us for
at least three miles. Once in a while, a driver would become so unhinged
driving 35 miles per hour for 40 miles he would hit the gas hard in a no-pass zone,
risking death in a ravine -- an option, after being on the road for four days
with my mother, I was wistfully considering myself.
“I’ve have been thinking of writing a book, ‘How to
Travel With Your Mother,’ but it would be a very short book. That is because my
tip is: Don’t. Do not ever travel with your mother. Unless maybe you are disposing of her ashes. And even then, there’s a good chance you will
hear her voice in your head: ‘You packed the box with my ashes without double
wrapping it in Saran Wrap and putting it in a baggie? Look at this box, it’s cardboard,
it’s nothing. What if I spill all over this suitcase? By the way, how are you
planning to do this? If there’s a wind, make sure it’s not blowing at you, and
when you open the box, make sure you don’t pour it over your head.’”
What does your brand stand for? Seth Godin,
considered by many a marketing genius, says if you told him your “brand stands
for service and quality and customer focus, you haven’t answered his question,
because a hundred other brands stand for that. If you are what others are,
then there’s nothing to own or protect or build upon. Hyatt, Marriott,
Hilton…they don’t stand for anything, do they? They can’t, because they
stand for precisely the same thing. Puma vs. Adidas vs. Nike…they all want
to stand for winning. How substantial are the differences? Make your
own list of differences and the extremes for your brand, and start with
that. A brand that stands for what all brands stand for, stands for
nothing much.”
Objection from a former sailor to a newspaper
editor regarding comments people make about our President and our Congress: “To
the editor: I object and take exception to everyone saying that Obama and
Congress are spending money like a drunken sailor. As a former drunken sailor,
I quit when I ran out of money. Bruce L. Hargraves, USN Retired.” I hope
that brought a smile.
In case you were wondering, the least popular
clothing color in 2012 was…manatee gray! Supposedly, it was a real color
choice, but I hope the person who chose it to use in a ladies clothing line has
a different job today. Picture, if you
would, a manatee gray dress and the lady wearing it, or a manatee gray car and
the person driving it. Are you smiling yet?
