I don’t know who says this phrase more often – my oldest daughter talking to her little sister or B2B technology and service providers talking to the competition.
The ease with which competitors can match each other on functions and features is just one of several trends forcing companies to reevaluate their competitive strategies, what they offer, and the way in which they approach marketing. First, it’s becoming increasingly difficult for customers to see what makes one company different from or better than another. Second, enterprise business problems, processes and technology infrastructure have become so complex and interdependent that customers want vendors to bring them complete, integrated business solutions, which are often a combination of products and services provided by several companies partnering together. This requires a business model that’s very different from what most companies have.
For emerging sectors such as cleantech, there is a significant market development challenge: Providers are introducing new technology or new ways of doing business; they are asking customers to buy an entirely new type of product, such as solar technology, or somehow change their business processes. This calls for positioning and marketing practices that go beyond traditional approaches.
In addition, the barriers to entry in many business-to-business markets are very low. In services, just hang out a shingle, and you’re in business with little capital investment and low risk. Or just partner with another company, and you’re off and running. As a result, new entrants jump into the market every day.
The copycat trend comes from the speed at which some markets and competitors move. Software providers, particularly those offered as a service via the Internet, can match one another on functions and features in a matter of hours or days. Even highly specialized products such as optical technology or telecommunications routers and switches rapidly become commodities. These companies are so accustomed to operating in fiercely competitive environments that they are very nimble and responsive to market changes. As soon as one competitor adds a new product or set of features, others match it.
Many products are software driven, meaning what used to be physical features are now software. Back in the day, a change in a product feature set meant a change to the manufacturing process and possibly even the supply chain. Changes were not easy to make, so competitors couldn’t match each other easily. Now it’s often a matter of modifying software code. Competitive barriers have almost evaporated.
The bottom line is that, with time, B2B technology and service providers within a market all start to look and sound alike. As a result, they become commoditized and increasingly pressured to compete on price. And that’s a big problem.
Next up: It Stinks to Compete on Price.