Battling the Oligopolies
Do oligopolies even augur well for the businesses who tend to take an active part in them? How is it all played?
What’s the one thing that could be perceived as the lifeblood of every org. / business?
At a very basic level it is Revenues / PnL / Commercials / Income / Turnover. Call it what you want, they all point in one direction & that is profitability. Any org. needs to be profitable as a rule of thumb for survival & ought to look to continually improve on those very figures strategically targeting & optimizing for some significant (x) that can help them move that needle over the metrics that are considered prime.
But look at the world around you & you know how some orgs. have constantly pitted themselves against each other & not just managed to survive all kinds of market situations but have each individually emerged successful controlling a significant share of the market.
Talk to someone at one of those orgs. about their immediate competitors & you’d see how the perception has gone from “RIVALS” back in the 90s to more of merely “COMPETITION” over the recent past. That’s perhaps a classic example of going from destructive & detrimental or living & operating in the shell / constraints defined by the very rivalry towards constructiveness & structured thoughts thinking truly about how they could outsmart each other.
No doubt, such markets with such oligopolies augur well for the users / the customers. But on ought to spare a thought for the orgs. & the people working at those orgs.
Some common duopolies are: -
Pepsi + Coca Cola
Mc Donald’s + Burger King
Pizza Hut + Domino’s
Airbus + Boeing
Apple + Samsung
“If you think about it, it’s perhaps the healthiest thing to happen for businesses out there given the focus, the collaboration, the energies getting channelized towards learning from the competition, competing at a strategic level outsmarting the others in a battle of wits”
NOTE: In a similar vein a duopoly is a thick competition between just the 2 major market players & that is pretty common as we know & have witnessed across industries for long now.
Types of Oligopolies
Given the subject of 2 major orgs. competing healthily for market share at the top, such oligopolies could run into multiple types given the basis for the competition, some of which are:
1) Cournot competition
The competition here between orgs. is over the amount of output produced, what is colloquially termed a “volume game”. Orgs. in this case find themselves in an endless struggle to outrun the competition in terms of the <total number of goods produced> over a certain cohort towards gaining market share & gaining on revenues.
For ex: The Airbus & Boeing duopoly where either of them has been running side by side & successfully for ages now.
2) Bertrand competition
The 2 major competitors here would essentially compete on pricing their products in the market based on how the other moves in the market. When orgs. would be looking to outsmart the others by launching newer products towards capturing newer market segments largely gunning for the first mover advantage but could also get snowballed into a price war owing to how the products could almost mirror the other.
For ex: Cola wars between Pepsi & Coca-Cola whose duopoly has been around in the market for decades
3) Stackelberg competition
There usually is one of the orgs. who strategizes & focuses on innovation towards capturing a giant market share at times also disrupting the whole market space as well, with the other orgs. just playing the waiting game & looking to follow the leader towards gaining on them. When that could still be arguable as to whether or not it even holds as a strategy for product people, it could end up seeming like a significant one for the orgs. who want to be fast followers.
For ex: Apple’s iPod & the iPhone disrupting the mobile phone space ruling the roost as for market share & the other orgs. producing what could be termed cheap imitations of them. Now whether or not the ones who aped those strategies, replicated those products ended up being successful or not is a debate for another day though.
Now, it is more or less agreed that in such a market of duopoly / oligopoly, the most important thing is to try and be an early entrant, disrupt the market with a brand of innovation that could mesmerize, gunning for that first-mover-advantage. But is there any other way to really try & break the jinx, thinking away from just looking to follow the competitor’s strategic path?
Let’s explore a few possible ones here.
Dealing with Oligopoly Strategically
1) Focus on Innovation
Nobody chooses to be in the rat race as nobody would feel comfortable in being there as a part of it given how it could all feel like a serpent trying to swallow itself from the tail & thereof. The best way to deal with this situation is to take it head-on & focus totally on innovation. Yes of course, one is trying to be a first-entrant in the market & looking to capture pole position always. But, there’s no better feeling than managing to stay up there for a really long period of time.
To get there one ought to have a solid base rooted in thorough nuanced market research driving change across those problems discovered both major & minor. In the SaaS era, this could translate to a well pruned backlog of EPICs that consistently score higher on the relevance to customer problems. Although it could make total sense for one to address some minor problems related to the experience (UX). there ought to be one major feature release targeting a sizeable user base. And that ought to translate to continuous value addition to the users.
2) Prioritize Customer Service
Whether it is the 1900s or the 2025s, the one thing that still remains crucial & will do so for ages to come is the service you provide to your customers. Most may bracket customer service as post-sales support. When that isn’t altogether wrong, embedding it as a motto across all teams right from the stage of prospecting by the sales teams right until such time that the users keep using the product does indeed work well, which is also what most SaaS orgs. are known to be doing as of today.
So, it could be absolutely right to say that a customer service strategy is incomplete without a strong user onboarding strategy. Given the SaaS era & growth models like PLG (Product Led Growth) the need to put your head into the problems the users are facing on an ongoing basis, engage with them towards resolving those blockers towards helping them realize the value over every one of those sessions.
3) Build Customer Loyalty
Prolonged & great customer service is what could lead to building loyalty. When most of the orgs. tend to talk a lot about this loyalty aspect very few actually are willing to actually put in the extra miles in terms of pleasing their users. When there are ample reasons to prioritize areas that could lead to immediate conversions translating to the addition of revenues, there could be very little focus on long term customer retention or loyalty. And that could be pretty tough to pull off given the competition breathing heavily down one’s throat. But the orgs. who implement a few strategies targeted at building loyalty are that ones who may have an upper hand at the end of the day.
Also, the perception that every loyalty strategy somewhere somehow translates into a loyalty program ought to go. It is very possible that most users as of today don’t even fall for those programs where there are some points added in the account & how they could be redeemed against goods that are totally irrelevant to them. Remember, a customer has stayed with you throughout your journey & if you are talking of rewarding them it better be something great, something relevant to the product / feature they are using & quick with an awfully low TAT.
4) Establish Legal Boundaries
Yes, it is stiff competition & that’s how it was & will be for long now given the Oligopoly. When focusing on pathbreaking innovation is one thing, there ought to be enough focus allotted towards establishing boundary walls towards protecting & safe guarding your prized innovation for long. Yes, I am referring to patents and the like. But alongside that it could also be essential to hire a legal team towards getting the right advice around safeguarding those products.
At the end of the day a customer would obviously be more interested in what value they are getting from using your product alright. But, for those who are looking at your product / brand from the outset & are yet to use your product it becomes absolutely necessary that you do all that you can towards instilling the confidence by fronting them with a glimpse of the processes you’d follow in terms of helping them reap value continuously.
5) Build Strategic Partnerships
At instances where there is absolutely stiff competition given the strategies one is crafting towards building & taking products / features to the market it could end up looking unidimensional at a certain point as time elapses & how one seems to be going neck-to-neck with the others. But as it is said, you either define the rules of the game or just play along & leaders never tend to play along. So, changing something or looking from the humdrum & doing something totally different / tangential, yet relevant to the market space & users could do the trick.
The one thing that does work in such situations is partnering with someone, an individual or an org. towards copromoting each other & their products could end up being just the shot in the arm towards regaining market share. Now, there is obviously no restriction on the type of engagement with the partners & that could range from merely simple strategy like hiring an influencer towards building some content (influencer marketing) or getting together to build something entirely new like say, Nike & Apple building an App targeting fitness or Nike partnering with Michael Jordan to design a new range of shoes.
6) Dynamic Pricing
Leverage the demand that’s evident in the market into pricing products has been a pretty common sight & still effective even today. Although many businesses used to price their product / suite of products at a certain (x) price during launch & increase it thereof over a period of time post establishing demand, the strategy has been molded & given a different appearance as of today with the ubiquitous & popular freemium models in SaaS products.
Given the oligopoly & how one could be neck-to-neck with competition it could be absolutely crucial to tap into that demand, factor it into the pricing strategy. It is usual amongst SaaS orgs. to change the pricing model from daily usage & toning it down to per hour impacting revenues significantly. When most may see that as a retrograde move, it could end up multiplying revenues overnight at times given how a significantly large number of your users are now hooked to your product. Yes, but the timing, the parameters used to establish demand & the sentiment of the users & your market, the stage your org. is in, ought to dictate the move barring which it could also end up spoiling things entirely. This strategy goes well when clubbed with a few others like say for ex: a strategic partnership to build an App & then the usage driving pricing decisions.