When you look at the car industry, you’ve got options. From Vauxhall to Maybach and from Smart to Ferrari.
The contrast I’ve made has different coordinates: size, power, status, even number of seats. But sometimes, we can compare cars in the same class. And, more interesting, they can be, on paper, very similar.
Not only that, but somehow all these companies do good, i.e. not failing, in what may look like perfect competition. Think of a classic example. Audi, BMW and Mercedes.
They even use similar system to classify their car ranges, so it’s easier for us to put them head to head.
Audi A4, BMW 3 series, Mercedes C Class.
Audi A6, BMW 5 series, Mercedes E Class.
And Audi A8, BMW 7 series, Mercedes S Class.
The answer for “how can they all sell” is a familiar one: brand. The usual discussion is invoked: “if we would all be rational buyers…”.
But anyways, the point is — we’re not rational buyers. We’ve got options and even in what can technically be a minimal increase, all three models sell in different places and in different audiences.
What does that tell us? That in the car industry, brand sells. Because of status, tribe affiliation and whatnot.
At the same time, there’s not that much brand when it comes to comparing Amazon. Or Walmart/Tesco (I wouldn’t know Walmart since I haven’t ever lived in the US).
No one says
“Damn, I really want to buy my juice from Costco, no way in hell I’m going to Walmart if they haven’t got it. I’d prefer waiting 2 more months without my juice until they bring it back in stock, rather than going to Walmart for it now.”
But someone says that every day, if you replace Amazon and Walmart with Mercedes and Audi.
What does this teach us?
It shows us how there are markets where you can differentiate on brand, and markets where it doesn’t matter that much.
Amazon understood this and invented Prime. But the others caught up (or will catch up) shortly.
Amazon has got brand value, but what they sell doesn’t really allow them to get the kind of brand value Mercedes could get over Vauxhall. Or maybe even over BMW, if they’ve done a really good job.
The conclusion is pretty evident: in the type of markets where you can differentiate on brand, there could be competition. In the markets where it doesn’t matter as much, it’s likely to be a “winner takes all” situation.
Look at Google. Yes, Google’s got brand value today, but at the beginning of the previous decade it wouldn’t really matter. And they’re arguably in a position of “winner takes all”, depending on what area you choose as a benchmark.
Now going down on the SaaS micro — tech is most of the time a “winner takes all” situation, since it’s more about the utility value. And we’ve seen it time and time again.
But utility value and brand together… that would be a beautiful combination. Especially if it’s a community around the concept of a personal brand.
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