Where competitive successes will come from in the future

Forrester’s own David Cooperstein wrote a tour de force in competitive strategy in the age of the consumer. If you have a subscription, it’s well worth a read.

The high level summary is that the economy has evolved from competing on factory size, to competing on distribution, to competing on information, to now, competing on consumer. The way that competitive successes will be generated in the future, during this age of the consumer, is by competing on the consumer.

You don’t have to buy the thesis to think about it.

Here are a few points to consider:

Sometimes it really is the thought that counts

Identical items, packaged and marketed differently, cause difference in preference, loyalty, and retention in the population. Even identical items, consumed at different times, can fool experts. Change the label on a bottle of wine and you change the preference.

Many firms compete on thought. The competitive advantage that is wrought through branding enables them to shift the demand curve exclusively in their favor. That power might be eroding among CPG’s (Consumer Packaged Goods). That won’t hold as true for software or physical services.

Firms that foster thinking and optimization of the consumer experience, and actively incorporate them into their strategy, stand to gain amongst the markets that value those experiences. That just means there has to be very strong alignment between the consumer-problem-solution fit.

Sometimes the thought doesn’t count

Take, for instance, Ryanair. They compete on price and price alone. People hate the way that Ryanair makes them feel and flying Ryanair. And yet, a sizeable market segment of the population continues to prioritize price over experience.

Such a segment will continue to exist for at least a generation. It’s entirely likely that the segment will never disappear. That’s a sustainable market segment.

Maybe price is part of thought

If one factors in price as part of the consumer experience (Endogenize that variable right into the model. Go ahead! Just for a minute.) Ryanair likely is putting their specific consumer experience right in the heart of their strategy. The best experience is at the time of booking, not at the point of flying. And they keep coming back to it.

Conclusion

Competitive successes, according David, will come from the consumer.

It’s an interesting thesis.

It means that firms are going to have spend a lot more time actively thinking, planning, and working on the consumer. It means a lot more time and energy will have to be invested in experience design. And, it means that consumers ultimately will have more choice about what they want to consume, and how.