Case Scenario: Thriving in a Crowded Industry by Creating Meaningful Value and Differentiation from Competitors
Firms do well in a crowded industry when two conditions exist:
(1) they create meaningful value for customers at a fair price and
(2) they effectively differentiate themselves from competitors.
In fact, diminishing the impact of three of Porter's five forces rests largely on these factors. A firm is able to withstand rivalry among existing firms and is able to deter substitutes and new entrants by creating value for its customers and offering something that people can't get anywhere else. The following are examples of three businesses that are creating unique value in their industries and have differentiated themselves from their competitors. Each industry is very competitive, yet these companies are growing and thriving. Hipmunk Talk about a crowded industry, consider the options a consumer has for booking an airline flight. Choices include tavel agents, airline websites, and online travel sites like Travelocity or orbitz. never mind-Hipmunk, an online travel service, launched in 2010, offering travelers what they believe is an improved way to plan travel. Hipmunk's premise is that existing travel sites provide too much information in a less-than-optimal format.
It differentiates itself by tackling that problem and displaying results in a more appealing manner. Here's how it works. For airline travel you go to Hipmunk's site and enter your departure airport, arrival location, departure date, and return date just like any other travel site. Then things change. Instead of offering pages of results, Hipmunk displays its results on a single page. The flights are color coded-each color represents a different airline. The flights are displayed as bars, and the length of the flight corresponds to the width of the bar. Flights can be sorted by price, time of day, and "agony," which is a score based on the best combination of price, duration, and number of stops. The flights with the least amount of agony are shown first. Flights that are similar to the ones displayed, but are more expensive or have a higher agony score, are automatically removed from the results. Thus, the only results shown are the ones that make the most sense to purchase. Hipmunk doesn't release booking numbers, but it is reportedly gaining momemtum in the travel industry.
A similar easy-to-use interface is available for booking hotel rooms. Hipmunk is aggressively moving into the mobile market, and its app is highly ranked in the Apple App Store. element bars Another tough industry is protien bars. Seriously, how many choices does a consumer have for buying protein bars at a store? In 2007 Element Bars launched with a new twist in the energy bar market. The company would differentiate itself by offering fresh, nutritious bars that could be sold online and "customized" by its customers. Here's how Element Bars was orginally set up, and how the company operates today. Customers log on to Element Bars's website, and in five steps they can "build" their own energy bar. They are first asked to pick a basic texture, with options such as Chewy, Crispy, and Datey. They then add their choice of fruits, nuts, sweets, and boosts (such as whey protein or fiber) to create their customized bar. A nutrition label on the right portion of the screen changes as ingredients are added, so the creator can see how different ingredients affect the calories or the grams of saturated fat in the bar. After the bar is built, the final step is for the consumer to name the bar whatever he or she wants. once the order is placed, the bar is made and is shipped in just a few days. Along with selling customizable energy bars via the Internet, Element Bars sells directly to speciality retailers who want to create their own branded energy bars.
Its difficlut for fitness centers, for example, to sell wellknown bars like Clif bars at a premium, when their members can buy the same bars at Walmart or a similar type of outlet. By branding their own bar via Element Bars, a fitness center can sell the bars for a premium and capture higher margins. benchprep BenchPrep is competing in the hyper-competitive test prep industry. For standardized tests such as the SAT, GRE, GMAT, LSAT, and MCAT, there are many print test preparation guides, online courses, smartphone apps, and face-to-face short courses taught on college and university campuses to help students prepare for the tests. BenchPrep differentiates itself by selling cross-platform test prep courses. What this means is that not only can students access their courses on their computers and mobile devices, they can also sync their progresss so they can pick up right where they left off regardless of what device they're using. As a result, a student could start a practice test on her/his laptop in the morning, answer a few questions during the day on an iPhone, and finish the test in the evening on a desktop computer. BenchPrep differentiates itself in additional ways. The company partners with the world's top publishers, authors, and subject matter experts in preparing its courses. BenchPrep's test preps give students progress reports to show where they are excelling and where performance needs to be improved. In addition, the test preps have social features, and allow students to study their progress and performance against other students preparing for the same test.
Questions for Critical Thinking
1. What are the common attributes across the three companies in this feature? How do these attributes help the companies thrive in otherwise competitive industries?
2. In what ways are each company's features redefining the customer experience in their industries?
3. of the three companies featured, which one do you think has the most potential to remain competitive? Which company do you think is the most vulnerable to increased competition from competitors? Explain your answers.
4. Find an example of another company that is thriving in a highly competitive industry. Analyze the company and discern what sets it apart from its competitors.