Friday, January 30, 2015

Competitors ARE Stakeholders: The View in 2015

Competitors ARE stakeholders. Here's just one example: Imagine you're a retailer in Canada--and you suddenly find that Target, a feared competitor, is leaving the market. How does that affect your customers and your marketing strategy?

Remember that the definition of stakeholders is: "people and groups that can directly or indirectly affect a company's performance OR that are directly or indirectly affected by a company's performance."

I'm not saying a company should make marketing decisions that would benefit its competitors OR coordinate its decisions with any competitor. No, I'm saying a business must consider what competitors are doing or plan to do, as they prepare their marketing plans and set goals and objectives. Especially big competitors can make a big difference in how consumers act and the health of the overall industry, which in turn affects any one firm's performance,

Target's decision to withdraw from Canada must be a big relief to retailers of all sizes in the area. It stumbled badly in Canada (from a merchandising and a pricing perspective) and is cutting its losses because profitability is too far in the future. Of course, Target's not the only US store to run into difficulties in Canada: Sears is another biggie, among others.

With Target out of Canada, other retailers won't have to worry about its pricing power, its online presence and social media power, its weekly sale flyers, or its diverse, shabby chic product assortment. So if a marketing plan was designed to blunt the effect of Target's shopper attraction, the retailer can go back to the drawing board and revisit tactics and investments. And take Target off the list of groups that can directly its performance.

Yet competitors that are aggressive and savvy--which Target usually is--can bring out the best in what other businesses do to compete. Its withdrawal may result in some stores becoming complacent because they don't see any immediate threat as compelling as Target. And that's a mistake.

Interestingly, Sony will be shuttering its stores in Canada. This move will save money. But it will also mean Sony must depend even more heavily on its retail network to sell in Canada. Sony is a stakeholder for those retailers, and although no brand stores means less image-building for the brand, it could lead to more sales transactions for other retailers.

My earlier posts on competitors as stakeholders are here. Another way to look at competitors as stakeholders is a post I wrote for my UK blog here.

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