Why do people choose one brand over another?
Downstream activities—such as delivering a product for specific consumption circumstances— are increasingly the reason customers choose one brand over another and provide the basis for customer loyalty. They also now account for a large share of companies’ costs.
What is the power required to push a revolutionary change through the market?
The power required to push a revolutionary change through the market is greater than that required to move a market through a generational change, and that power in turn is greater than the market muscle required to introduce an evolutionary change .
Why are network effects important?
Network effects constitute a classic downstream competitive advantage: They reside in the marketplace, they are distributed (you can’t point to them, paint them, or lock them up), and they are hard to replicate.
What is the traditional view of upstream?
The traditional upstream view is that as rival companies catch up, competitive advantage erodes. But for companies competing downstream, advantage grows over time or with the number of customers served—in other words, it is accumulative.
What is market oriented?
A company is market-oriented, according to the technical definition, if it has mastered the art of listening to customers, understanding their needs, and developing products and services that meet those needs. Believing that this process yields competitive advantage, companies spend billions of dollars on focus groups, surveys, and social media. The “voice of the customer” reigns supreme, driving decisions related to products, prices, packaging, store placement, promotions, and positioning.
Where are Brita filters placed?
Brita filters compete against other filters when they are placed in the kitchen appliances section at big-box stores , for instance. But Brita changes both its comparison set and the economics of the consumer decision when the filters are placed in the bottled-water aisle at supermarkets.
Where is downstream competitive advantage?
Downstream competitive advantage, in contrast, resides outside the company—in the external linkages with customers, channel partners, and complementors. It is most often embedded in the processes for interacting with customers, in marketplace information, and in customer behavior.
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