Kid: “Mortal Kombat on Sega Genesis is the best video game ever!”
Billy: “I disagree, it’s a very good game, but I think Donkey Kong is the best game ever.”
Kid: “Donkey Kong sucks.”
Billy: “You know something? YOU SUCK!”
I bet you never thought Billy Madison could teach you about marketing strategy. However, this exchange in Adam Sandler’s movie is very relevant to the topic of this post. A month (maybe two) ago I had to great opportunity to hear Michael Porter speak here in Chapel Hill. Porter, who hails from the Harvard Business School, came up with the “Five Forces Analysis” as well as other theories like the value chain and the diamond model of international business (how’s that for name dropping?).
Anywho, part of what he talked about was how the worst error you can make is to compete to try and be “the best” in your category. What you SHOULD be doing is competing to be unique. Why shouldn’t you want to be the best, you ask? Look at the situation in Billy Madison. Billy thinks Donkey Kong is the shiznit. The little twerp kid thinks Mortal Kombat is the bomb dot com. Who is right? That’s the problem! When you compete to the best, you’ll never be the best because people have very diverse needs.
Instead look at your goal as striving to uniquely serve the needs of your customer. Focus on satisfying a certain set of needs extremely well, instead of trying to please everyone. This way, the customers whose needs are met by your product really like your product. Inherent to this strategy is the fact that you will be making other customers unhappy, but, who cares?! They’re not who you’re targeting! As Porter said, “Strategy requires that you make customers unhappy.” An extension of this is that to create a winning strategy, you have to sacrifice something. Why is this? Because if you don’t sacrifice something, there is nothing to prevent other companies from copying it! The tradeoffs you make in uniquely serving your customers is what will protect you from imitation.
Okay, let this all sink in. This goes against everything you’ve ever learned probably. Here’s a tremendous example to illustrate the point.
Confession: I’m a video game fiend. Not only do I enjoy playing my Xbox and Wii, but I’m fascinated by the business side of video games, especially the battle of the consoles. If you look at the recent generation of gaming consoles: the Nintendo Wii, Microsoft’s Xbox 360, and Playstation 3, you’ll find the theory stated above played out perfectly.
A little background for you. Nintendo dropped off the planet after the Gamecube and watched Microsoft and Playstation 2 battle it out for the leading console (with PS2 winning). What was driving the competition? It was to see who could be the best. In video game world, this meant which system had the best graphics, framerates, online capabilities, and game lineups. Some PS2 games had better graphics, some Xbox ones had better graphics. It was really a matter of PS2 having a head start which gave them the lead.
With the introduction of the “next generation” consoles, the war continued between MSFT and Sony, who could produce more lifelike games through their super machine consoles. They would battle it out again while Nintendo watched from afar, choking on the dust they were left behind in.
Today, Nintendo’s Wii is #1. But wait, what happened?
I’ll tell ya what happened daggummit! Nintendo took Porter’s theory of uniquely serving your customer and took it to the bank! They decided to NOT focus on graphics and essentially creating a super computer. They decided to invent an entirely new and innovative control system that was remarkably intuitive for all ages and flippin fun too. The Wii’s graphics are years behind those of the Xbox 360 and PS3 and they can’t attract “hardcore gamers” with their family friendly games, but that is the sacrifice they were willing to make. And sure enough, Microsoft and Sony aren’t willing to compete with Nintendo because they don’t want to lose their hardcore gamers or give up graphic power.
So there you have it, Nintendo decided to uniquely serve its customers and its rolling in the dough (lets not get into their supply issues). Their strategy required tremendous sacrifices, but this is what made it a successful one in the end. Mr. Michael Porter: You’re a genius. That’s all I have to say about that.
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“Wiimarkable Marketing Strategy” – http://bit.ly/nPAeS – new blog post by @jackieadkins3