Happy 9th Blogiversary (Not April Fool)

My first blog post was on 3 April 2009. As shown above, the most popular post (by far) is Yes, competitors are stakeholders written more than 5 years ago and updated several times more recently.

Unquestionably, competitors are truly stakeholders of any marketing organisation, from the smallest single-person operation to multinational giants. Remember, stakeholder is defined as 'a group or individual that has an interest in or can potentially affect the marketer's performance and activities'. Surely competitors qualify because they have the ability to begin or escalate price wars, influence market share and marketing trends, influence customers and suppliers and so on.

An academic paper found six good reasons to include competitors as stakeholders. McKinsey has noted that organisations must try to anticipate competitors' strategies so they can plan ahead to deflect challenges.

At times, a marketer may want to collaborate with competitors on issues of mutual interest, such as industry standards or sustainability projects. Not on pricing--such collusion is illegal in most nations--but on larger issues that affect many stakeholders, including the public.

Most popular marketing posts ever

According to my blog's statistics, the most popular post ever in nearly nine years of blogging is 'Yes, competitors are stakeholders'. At left, the statistical count shows this post has been viewed more than 12,500 times since I wrote it five years ago.

One reason this post attracts so many views is that when you do a search for the phrase 'competitors as stakeholders' my post is the first result after the top three scholarly articles.

Although some experts believe that competitors should not be considered stakeholders, my post explains why competitors really are stakeholders (click here to view).

Other popular posts are about Tesco's marketing plan and strategy (which continue to evolve as the marketing environment changes), Christmas adverts and #GivingTuesday.

More blog posts are on the way for 2018, including additional ideas about competitors as stakeholders.

Competitors as Stakeholders: More Collaboration

COMPETITORS COLLABORATE

 

Once again, I'm revisiting the topic of competitors as stakeholders--because of the increasingly popular concept of collaboration amongst competitors.

Earlier this year, I quoted Net-a-Porter founder Natalie Massenet on the vital importance of collaboration: Competition creates win-lose scenarios, but collaboration benefits us all.

More examples of competitors collaborating are emerging. For example, the founder of an online media network says that 'The Carousel Network was formed with the view that working collaboratively with other publishers is the smart way forward if we are going to look at a strong future of influence and reach'. By banding together with others in the industry, Carousel gains in strength and moves closer to achieving its own goals.

Collaborating on something that builds goodwill for all the competitors involved--such as a charity event or an event to increase awareness of a city or country--can result in positive outcomes for customers as well as companies. In one case, chefs from competing restaurants worked on a 'local dinner' menu that showcased their best meals and enhanced the reputation of the area as a magnet for food-lovers.

Competitors are also seeking to collaborate on new technology and new tech standards that will affect the overall industry. And of course, competitors have been collaborating (through industry groups) to tackle social responsibility and sustainability issues. Watch for more collaborative initiatives in the future.

Aldi's strategy for higher market share

Known for low prices and limited services, Aldi is also making a name for itself in own-label wine, nappies, organic baby food and other categories. Expanding private brands is part of Aldi's strategy for attracting shoppers and increasing its market share in the intensely competitive UK grocery industry.

Online retailing is another winning element in Aldi's marketing plan. In addition to wine sold by the case, Aldi's online store now features 'special buys' on non-food items such as home goods and small vacuum cleaners. For now, groceries are not part of the e-commerce initiative, due to the investment needed to manage the physical distribution and delivery of online orders. The company says its e-commerce site has 1 million weekly shoppers.

Aldi has been investing in logistics and physical distribution to support its ever-growing store network. It recently opened a large distribution centre in Over Holton, where it will manage both logistics and training. Next year, it will open a large distribution centre in Wales.

Are competitors stakeholders? Aldi definitely thinks so. Consider the following statement by Aldi's chief exec for UK and Ireland. He's discussing rival discounter Asda's goal of narrowing the price gap between Asda and other competitors to no more than 5%. The Aldi head points out that competitors will make moves that affect Asda's ability to achieve that goal: 'Whether Asda gets to 5% is not just their decision; it’s ours as well. We will not let any competitor get to 5%. That’s a concrete commitment'. In fact, Aldi has been reducing prices steadily to maintain pressure on its retail rivals.

Competitors as Stakeholders, Collaborators and Customers

COMPETITORS ARE STAKEHOLDERS

No matter what business you're in, your competitors are, without question, stakeholders. I've written extensively about this topic, including identifying the top four reasons here.

Remember, stakeholders are people and groups that can directly or indirectly influence or be influenced by a company's performance.

More and more marketers are viewing competitors as potential collaborators and certainly as customers, in the right situation.

Natalie Massenet, founder of the highly successful online luxury retailer Net-A-Porter, writes in Wired that this year, 'the most successful businesses will be characterised by collaboration between businesses in the same sector, different sectors or with their customers'. Her bottom line: 'Competition creates win-lose scenarios, but collaboration benefits us all'.

Netflix competes with Amazon in the market for streaming entertainment, yet Netflix buys its cloud storage services exclusively from Amazon Web Services. Why? Because Amazon has already solved the most challenging problems that Netflix would face if it built a cloud system on its own--and Amazon continuously improves the services that Netflix buys. So Netflix turns out to be an excellent customer for Amazon, and the relationship benefits both.

Notice that I'm not suggesting competitors collude to set prices or do anything else that is unethical or illegal. Competitors can and should be fierce rivals. Still, they can also consider collaborating when both parties would benefit or buy from each other when the situation makes sense.

Competitors are definitely stakeholders

COMPETITORS ARE STAKEHOLDERS

 

There are four key reasons why competitors are stakeholders that any business must consider when analysing the marketing environment for a marketing plan.

• What one competitor--the most innovative or the strongest--does can affect the entire industry. This doesn't only apply to price wars (such as those in the UK grocery retailing industry). It's also a factor in the digital payments world, where Apple Pay has made a big impact in a short time. Or look at the smartwatch industry, which Apple is about to enter with a lot of promotional momentum. Having Apple as a competitor will force every business to be nimbler and better in order to survive.
• New or tiny competitors may be the most innovative. Ella's Kitchen, a 2014 winner of the new product award by The Grocer, is an example of a startup with a compelling value proposition: all-organic, tasty baby foods. The innovator attracted the eye of a larger company, which bought Ella's Kitchen and is using the brand to expand into new products and markets. Imagine what competitors think about the combination of Ella's Kitchen's innovative ideas and the financial strength of Hain Celestial. 
• Competitive scandals can hurt the entire industry. The horsemeat scandal of 2013 caused some consumers to switch from supermarket meats to local butchers' meats. Frozen hamburgers didn't sell well for a time, either, although price promotions helped increase demand. Not every company was implicated, but all were affected by changes in consumer confidence and perceptions.
• Competitive pressure can encourage the industry to do more for people and the planet. Just look at the Fairtrade movement, which has improved the lives of many farmers and food producers and encouraged sustainability. When Cadbury Dairy Milk committed to Fairtrade cocoa in a big way, that put pressure on other mainstream chocolate marketers to show their Fairtrade support. Mars, another chocolate giant, is now embracing Fairtrade cocoa for its Mars Bars. Fairtrade fruit and vegetable and coffee products are widely sold in mainstream grocery stores, partly because of competitive pressure and partly because of consumer demand. One competitor that gets a lot of media coverage for social responsibility activities can be the catalyst for others wanting to follow suit.

Grocery retailing challenge: Competitors as stakeholders

Stakeholders (also known as publics) are groups such as community residents, media representatives, stockholders, financial analysts and others who have an interest in or some influence on marketing performance. Obviously, customers, employees, managers, suppliers, government regulators and others can directly influence a business and its performance, meaning they're particularly important stakeholders.

As I say in my texts and here on the blog, competitors must also be considered stakeholders, because every rival can, directly or indirectly, affect the performance of its competitors. This is particularly true in the grocery retailing industry, where activities such as price-match guarantees directly affect what competitors do.

Sainsbury's situation shows this in action. To be competitive, Sainsbury (with 1200 UK stores) has to offer good quality at good prices, as well as making sure its stores are the right size and in the most convenient locations for customers.

Its competitors are using price wars as a key element in their marketing plans--which puts the pressure on Sainsbury to cut prices, too.

Sainsbury recently complained that a Tesco matching price promotion unfairly compared some Sainsbury products with Tesco products. The high court disagreed. But taking this to court indicates that Sainsbury is concerned about the effects of Tesco's price policies.

In fact, Sainsbury just announced a major price-cut promotion of its own to fight back against what competitors like Tesco and Aldi are doing to attract customers and increase market share. Competitors are, as this shows, influencing Sainsbury's decisions and performance.

Seeking to analyse its strengths, weaknesses, threats and opportunities, Sainsbury has revealed that up to 25% of its stores are either the wrong size or not in the right location. That presents a challenge because of the company's real estate commitments. Can Sainsbury improve its financial position, fix its store situation, keep prices low and improve profits? Stay tuned.

Top four reasons why competitors are stakeholders

Should competitors be considered stakeholders? (Stakeholders are people and groups that can directly or indirectly influence or be influenced by a company's performance.)

Yes, competitors are stakeholders. No, a company shouldn't consult with competitors when developing marketing strategy, nor should it replicate a competitor's successful strategy. But you, as a marketer, should carefully study what others are doing, anticipate trends and be ready to make adjustments as the competitive landscape changes.

Here are the top four reasons why competitors are stakeholders:

1. A competitive move can affect the entire industry. Whether it's a pricing change, a new product or a company going into administration, what a competitor does can significantly influence each company in that industry. Think of Apple's iPad and how the introduction of those innovative new devices affected competing firms. Suddenly tablet computers were the hot new category, and competitors had to race to catch up. Then Apple was feeling the competitive heat when competing devices flooded the marketplace with new features and functions.
2. A competitor that appears weak or small may become a strong or immediate influence overnight. Snapchat didn't make much of a competitive impact when it initially introduced its "disappearing" photo feature. Now that Snapchat has attracted millions of users, however, others want to add similar functionality for competitive reasons. So a startup that appeared on the periphery at first has now become highly influential and a factor to be considered in many competitors' marketing plans.
3. A competitor's unscrupulous move can affect other stakeholders who are critical to your company or industry. One unscrupulous company can make customers suspicious of an entire industry, which may hurt your business as well. One firm's unethical action can prompt regulators to change the rules, affecting every firm that serves the same market. Remember, you can't control what stakeholders such as competitors do, but you must be aware of their policies and actions and, when necessary, make your voice heard about the situation. 
4. A competitor can lead others to be better corporate citizens. Walmart gave its reputation a green boost when it began to aggressively support sustainability initiatives, in part by participating on industry councils with competitors. Now Walmart's marketing clout is behind many new products and services, bringing together suppliers and competitors for environmental improvement initiatives. Whether your firm supplies Walmart or competes with Walmart, the retail giant's sustainability activities will affect what you do.

One final thought: Monitor the marketing environment carefully. You never know where your next competitor may be coming from.

Yes, competitors are stakeholders

Stakeholders (also known as publics) are groups such as community residents, media representatives, stockholders, financial analysts and others who have an interest in or some influence on marketing performance. Obviously, customers, employees, managers, suppliers, government regulators and others can directly influence a business and its performance, meaning they're particularly important stakeholders.

So why consider competitors as stakeholders? Because every company can, directly or indirectly, affect the performance of its competitors. Often a marketing plan is designed to capture market share from a particular rival or reinforce customer loyalty in the face of competition from a new up-and-comer. Doesn't that make you a stakeholder in your competitors' performance (and your competitors stakeholders in your performance)?

Consider:

• Comet's recent descent into administration is largely due to intense competition from online electronics retailers. If those online competitors didn't exist, Comet would likely still be in business. The competitors intended to increase market share and turnover, and the unintended consequence was that Comet couldn't survive.
• Amazon's Kindle Fire directly competes with Apple's iPad. Amazon actually offers a head-to-head comparison to show how its product beats the iPad. Clearly, both Amazon and Apple are competing for the same customers, with implications for market share and for ongoing revenues from downloaded content.
• BSkyB has seen customer enrollments slow due to more competition from Virgin, BT, and others that are offering good deals to attract customers. Subscribers aren't one-time buyers; losing a customer means losing future revenue, just as gaining a customer means gaining future revenue. The stakes are high.

Show respect for your competitors and take their actions seriously, because what they do may very well change the course of your marketing. I'm not suggesting that competitors consult with each other or collude, because antitrust rules make certain kinds of competitive agreements and coordinated actions like price-fixing illegal.

I am saying that a healthy, competitive industry is in the interests of all participants, including customers. New choices emerge when many companies compete, whereas customers face fewer choices when firms like Comet go into administration. In fact, competition can spark real creativity and innovation when companies are motivated to overtake rivals or recapture market share from rivals.

UPDATES: (1) Natalie Massenet, founder of Net-A-Porter, believes competitors can and should be collaborators. Read more in my 2016 post here.

(2) For quotes from four companies that consider competitors to be stakeholders, look at this 2014 post from my US marketing blog.