Are Competitors Really Stakeholders? Yes!

By far the most popular posts on my marketing blog are those about competitors as stakeholders. Definition of stakeholders: "People or organizations that are affected by or that can affect an organization's performance."

So for the record, let's say it again: Competitors are definitely stakeholders. One academic paper gave six good reasons why this is so--starting with the fact that competitors' interests are not in direct opposition to the interests of a particular marketing organization. In many instances, a rival's goals and situation will be so close to yours that you absolutely must take its actions into consideration. Not to copy that rival but to anticipate and defend against competitive challenges--that's the real reason to look at competitors as stakeholders.

When a competitor introduces a new product that directly competes with your existing product, it's going to have some influence on what happens to your product. When a competitor changes a price (either up or down), that will likely change industry demand and therefore have an impact on your organization. When a competitor trumpets its sustainability initiatives, it could very well have some impact on how customers and other stakeholders compare what you're doing to what that rival is doing. More than ever, consumers care about the ethics and social responsibility of the brands they see. They also have changing preferences that competitors may detect or influence, adding to pressure on you and your industry.

A great example is Amazon vs. Walmart. Each watches the other closely, you can be sure. Walmart is playing catchup in e-commerce but doing a very credible job, even as Amazon encroaches on traditional retailing. Don't forget that this rivalry is having an impact on the rest of the retail industry, as well. The giants make moves, and even other giants must be ready to defend or deflect or initiate something new and different to influence consumer behavior.

As you scan the marketing environment, be sure that rivals are on your stakeholder list. NOT because you want to coordinate price changes--collusion is illegal in most countries--but because your strategy is necessarily influenced by the strategy and tactics of competitors. Be ready.

McDonald's Serves Up Value (Again)

Did you know McDonald's rings up $25 billion in annual sales? That's "billions and billions" of burgers, fries, soft drinks, Egg McMuffins, and other popular menu items sold every year.

In fact, its "all day breakfast" initiative has helped turn around the fast-food giant's sales momentum.

But value remains a key element in the consumer's perception of fast-casual food. And that's why McDonald's is planning to rev up its value menu--again. This time, only a few items are priced at $1, with other special deals at $2, $3, and $5. Not to mention the "Extra Value Meal Deals" that bundle a sandwich and a beverage and a side for customers morning, noon, and night.

The idea is to attract price-conscious fast-food fans and preserve some of the profit margin. And have more weapons in the price war with competing fast-food chains.

What's more, McDonald's is putting coffee front and center with hot and cold, tall and short offerings, targeting coffee-lovers of all ages and all value perceptions. A recent Snap "disappearing coffee" bitmoji is an example of engaging content created especially for a younger targeted segment, for instance.

With more than 75 million Facebook likes, 3.5 million Twitter followers, and 2.8 million Instagram followers, plus a presence on Tumblr and YouTube, McDonald's has a gigantic social media audience. The fast-food giant is leveraging this reach to encourage more visits, stimulate product trial, and reinforce brand loyalty.

Today Is the Second Annual Amazon Prime Day

Partial screen shot of Amazon Prime Day home page

Today is Amazon's second annual Prime Day--a shopping day designed to rival Black Friday with low prices and speedy shipping exclusively for members of the retailer's Prime program.

One goal is to attract new Prime members, who pay an annual fee for benefits such as free two-day shipping, access to audio and video entertainment, early notification of bargains, and more. As always, consumers are invited to enroll in Prime for free to try it for 30 days. The more people who try, the more who are likely to remain members after the free trial.

Another goal is to increase interest in and usage of other Amazon offerings such as Alexa, the virtual shopping assistant who's the voice of the Echo speaker. This year, the retailer is offering a number of Alexa-related specials.

Of course, Walmart is taking aim at Amazon by offering its own special deals today. Actually, some of the deals began yesterday and will continue for the week, with free shipping thrown in to combat Amazon's shipping deals for Prime members. Like Amazon, Walmart is relying on sale-priced electronics to catch the eye of shoppers, mixed in with other low-priced products.

How will Walmart do? Will Amazon Prime Day surpass the 2015 sales record? How many new Prime members will sign up--and how many will stay after the free period is over?

Price Wars

Procter & Gamble is defending its market share with price cuts in batteries, shampoos, liquid detergent, and other categories. To get ahead of rival Energizer, it added more batteries to its Duracell battery packages, which meant customers were paying less per battery. Then Energizer fought back with lower prices, which drew P&G more deeply into what has become a battery price war.

But are price wars worth fighting? One classic Harvard Business Review article by Rao, Bergen, and Davis suggests that marketing managers pick their battles carefully:

It is generally wise to not stir a hornet's nest by starting a price war with a competitor that has a significantly larger resource base or a reputation for being a fierce price warrior.

Ralcorp, which owns the Post cereal brands, touched off a breakfast cereal price war earlier this year by cutting prices. Now Post's profits are hurting, as are Kellogg's profits.

Marketers of e-book readers have become embroiled in a price war that is bringing the category into the mainstream and pushing profits down, down, down. Only three years ago, Amazon's Kindle debuted at $399 and today there's a $139 Wi-Fi-only model. All the players in this price war are big enough to keep it going strong through the holiday selling season.

Watch for more price wars as the economy remains sluggish and marketers fight for every customer, dollar by dollar.

Price War in E-readers

When Barnes & Noble cut the price of its Nook e-book reader just a few days ago, Amazon responded quickly by slashing the price of its Kindle (above) to $10 below the Nook's price. Suddenly e-readers are priced below $200 and the price war is attracting consumer attention.

Meanwhile, the iPad is being touted as an e-book reader (among other functions). And Toshiba is one of many manufacturers launching new e-readers with buyer-friendly features and pricing.

CNBC asks an intriguing question: Why doesn't Amazon just give Kindles away? Amazon, after all, makes most of its money from selling content. Razor manufacturers price new razors low to get consumers to buy their high-margin blades. This is what CNBC suggests for Amazon, especially given the intense competition from Apple's iPad, which some predict will crowd one-function e-readers out of the market in the very near future.

In my opinion, the shakeout in e-readers is leading to consolidation that only the strong will survive. That's good news for buyers, who will get better products at lower prices. And ultimately it's good news for marketers, who will concentrate their efforts on fewer but better e-readers. Only the strongest will survive.