Do you work in a competitive industry? Yes you all say! Of course you are
in competition, who isn’t? No I mean really, really competitive. I mean, where 1
cent or 1 penny makes all the difference between keeping or losing thousands or
even millions of customers.

Products are all the Same

Generally, the more popular a product is, the more competition there is. A
clever trick is to diversify the product so that yours is slightly different
than the rest. Not so clever, though when the product is so bulk standard, so
tried and tested, that you would fiddle with the formula at your peril. By all
means spin off some added-value versions, but don’t mess with a staple, high
volume product! Why do you think the highest sellers are all basically the same?
Over many years the producers have fined tuned their offering to exactly match
the expectations of customers. So they all end up the same, as poor selling
brands change the product to match the specification of the most popular brand.

Marketing Trough

If you cannot make your product unique, perhaps you can change perceptions of
your product. By using smoke and mirrors marketing you can associate your brand
with a lifestyle that is preferable to the lifestyle represented by another
brand. You are effectively selling an idea as an accompaniment to the product.
Even if we are not talking about clothes, your product can have the designer
label feel. It will be the height of food fashion if it is edible, or the safety
screw top to be seen with it is a detergent. This is not only possible, but it
has been done. However, this requires incessant marketing so that consumers keep
getting the message. It also eventually goes the same way as all fashions - it
becomes yesterday’s news. In fact, over time, a staple product would probably
not benefit at all from such a campaign as the peaks and troughs would cancel
themselves out leaving a big marketing bill, which leaves a net trough, I guess.

Take the Taste Test…

Take milk, for example. Is all milk the same? Well I think it pretty much
is. I am not talking here about specialist dairies, spin-off products or
organic. I am talking about bulk standard milk where all the milk from lots of
cows is mixed up to produce a homogeneous mass. I know some expert will email me
in disgust, but I would not pass the blind taste test. To me, one large dairy’s
milk will taste exactly the same as the next. I suspect few of us would pass the
taste test for milk.

Packaging?

So, if the dairy can’t compete on product quality or taste of milk and it tries
and fails to make the difference through lifestyle marketing, what is left?
Packaging? Well, yes…but, remember the golden rule: don’t fiddle with a winning
formula. Changing packaging means a hefty investment in new materials, machinery
and working methods. And even after successful pilots, what if the novelty wears
off, as it so often does? Even if you pull it off with the world’s first
non-drip milk carton (I’m sure such a thing already exists), it would only be a
matter of time before your competitors have got around the patent and managed to
come up with better and smarter non-drip dispensers.

Price Knife Edge

So what is left? Well, nothing really, except, that is, price. For some very
high volume staple products, price is effectively the only way a product can
compete with an almost identical product, and that is scary.

So what is the problem, you may say, if the volume is so high? Well, that’s the
really scary bit. A fraction off of the price could turn millions or profit into
millions of loss. A fraction on the price would leave you with lots of stale
milk (yoghurt?). So the solution is to do as little as possible! Do not change
the specification or formula, do not change the brand image, do not change the
packaging and keep your hands off the nuclear button, the one that alters the
price.

Trouble is, even doing nothing doesn’t work. The problem lies with external
events. Inflation or the exchange rate eventually forces you to change your
price; or one of your competitors takes on an aggressive CEO who decides to go
for the kill (he won’t last long!). Whichever way, something will force the
Mexican stand off to end.

A price war in a highly competitive arena can be catastrophic, not just for the
companies involved, but eventually to the consumer. Price wars are not just
products of glut and over-supply. They are not just a response to poor economic
times. Sometimes, just like an avalanche, they just happen. When your competitor
cuts the price, you naturally cut also. The big decision is, do you undercut
further, perhaps to teach them a lesson. The dilemma is often that you cannot
afford to cut and you cannot afford NOT to cut.

This problem doesn’t just apply to individual products. It can be applied to
services as well. Specifically it applies to retailing where prices are
advertised widely and easily comparable. Retailers work on miniscule profit
margins. Price wars are often as scary for them as for dairies.

Cutting Costs

If profit growth cannot be achieved though the enormous pressures I have
described above, what gives? Well, eventually there is only one path to go down
and that is cost cutting. If you cannot make money at one end, then you need to
spend less at the other.

Companies in highly competitive arenas would have, for many years, dedicated
much time and effort reviewing every nook and cranny of their operation, looking
for ways to reduce costs. In the early days, although painful, this would have
been fairly straightforward. As time passes, the cost cutting opportunities
become harder to find. Competition amongst some companies, such as retailers, as
become so intense that the cost cutting exercise has become a competition in its
own right. Just as staple, high volume products tend to be the same as each
other because that is what people want, so competitive companies have aped each
other’s operation. So, now, because they work in exactly the same way, it is
easier for one company to copy another’s new operational practice.

Time Wars

So now, we go from a competition over cost cutting ideas to a point where such
efforts result in a stalemate. There is only one thing left. That is time. If
company A can implement a good cost cutting exercise quickly knowing that
company B will spend a year implementing a copy of the idea, that year of
advantage will make all the difference, perhaps the only difference between
them.

Companies that are on this knife edge are constantly on the look out for these
kinds of innovations that will buy them a year, or a few months or even a few
weeks of advantage.

Pally

5es is a company that specialises in innovations that will make this difference.
It is exclusively selling the Sumo Glove in the UK, a product that is worth
billions in product damage savings. Its roll cage insulation covers and pallet
covers have also dramatically cut costs for companies who no longer need to
build and maintain cold rooms and can run vehicles with fridge units turned off.

And now a new product has just been announced. The Loadhog Pally from 5es. This
product is a cross between a pallet and a dolly. It can be transformed from a
static pallet to a wheeled dolly - and back again - by simply pushing a foot
pedal. And all this while it is under load. The productivity savings alone are
enormous, not to mentioned the fact that pump trucks are no longer required.

One thing is true about companies that are in highly competitive arenas - there
is never a dull moment. In fact there will be no moments spare, dull or
otherwise, in the scramble for the Pally.

Vernon Stent is the content writer for many companies, including
5es Transit Packaging which sells and rents
the Pally, which is a pallet
and a dolly