Behind the scenes of business. How do big brands compete?
A small piece of plastic, the great revolution
One of the most interesting examples that Brown presents in his book is the history of the blockbuster rivalry with Netflix. When Netflix launched in 1997, blockbuster was the undisputed king of the video rental industry. Between 1985 and 1992, the fixed-line rental network grew to more than 2,800 locations worldwide. Netflix appeared as a response to new customer needs, while completely changing the formula of renting movies. It was not at all about video streaming, because in those days no one had yet dreamed of a rich library of films, serials and programs available on every possible device, because people did not even have the right equipment.
“After analyzing hundreds of possibilities, Randolph offers Hastings something that has potential – renting movies by mail. Initially intrigued, Hastings rejects the idea after investigating the problem; delivering a properly packaged video cassette round trip makes such a rental pointless expensive. And then there are rumors from Japan that there was a completely innovative form of home watching movies-DVD. They’re about the size of a CD, but they can hold an entire movie in high definition. They can displace both video cassettes and laserdisks from the market and become a typical form of home cinema ” – reports David Brown.
But more importantly for the blockbuster’s competition with Netflix – they could easily be sent by mail. A year after Netflix was founded, Hasting and Randolph created a website where anyone interested could buy or rent a movie. Although the company was very small, it immediately became a direct competitor to blockbuster.
Netflix profits, Blockbuster goes bankrupt
In 2004, blockbuster launched its own website and even waived heavy penalties for late submission of films, which was an important part of their business model. By 2006, the number of subscribers to blockbuster’s online services had grown to more than two million people, but in the same year, the number of Netflix subscribers reached 6.3 million. No one knows how things would have turned out if the landline rental giant hadn’t let go of its online activities in 2007, but when Netflix turned into a streaming platform and signed a contract with Starz to stream about a thousand hit movies and programs on its service, the fate of this rivalry was essentially foregone.
In 2010, Netflix signed deals with such companies as Sony, Paramount, Lions Gate and Disney, and blockbuster was removed from the New York Stock Exchange and filed for bankruptcy, listing… billion dollars in losses. What brought this company down? Fear of change? Fear of competition? Too much confidence? We can only speculate on this.
Faster, better, more and cheaper
A great example of a business war is also the rivalry between clothing companies. Every fashion lover knows that there is no such thing as the right styling-there is only the right moment for a particular styling. Two well-known companies-Zara and H & amp; M-are also well aware of this.theoretically, they are completely different, but these are only appearances. Although their approaches to the customer are different, they both have a common goal-they want to deliver fast fashion, which a few years ago put the whole industry on its head.
What is it? Every year in the spring and autumn the stores receive large shipments of the expected new collections. H & amp; M and Zara broke the vicious circle by shortening the cycle from months to weeks-and thus changed the face of fashion forever. Both chains deliver the latest models much faster than regular retailers, and not being able to overtake competitors, they have to compete with each other, directing their offer to people who want to change clothes often, but stick to the budget.
Good copying is not bad
The success of H & amp; M and Zara was based on copying the successful ideas of other companies. However, it is not about sloppy fakes-both companies took care of the details. Despite the low prices, they offered good enough quality for the customer to return after a few weeks for another garment straight from the production line. “From the very beginning, the priority for both companies was the speed of action to keep up with the changes taking place in fashion, but beyond this convergence, their development stemmed from different strategies. H & amp; M liked to experiment: for example, it sent catalogues to customers so that fashion could reach their homes, and it also started using e-commerce early on. Ortega, in turn, stubbornly focused on the speed of production, constantly improving Zara systems from the experience in sales Ortega learned that trends can change within a month. To maximize the flexibility of Zara, he decided that the company will deliver to stores only a few pieces of clothing in each style and possibly accumulate a minimum amount of stock in warehouses. This strategy was compensated by deliveries so frequent that the company could quickly adapt to the changing demand for each product, “reads the ” business Wars”.
What did H & amp; M do better? In marketing. The company was eager to reach for famous faces, celebrities and supermodels. And it was a perfect shot. Celebrities such as Versace, Roberto Cavalli, Alexander Wang and Stella McCartney began to prepare their own collections for H & amp; M. “Zara fended off H&M’s aggressive marketing and high-profile collaborations with designers, pumping money into real estate instead of television commercials and celebrity contracts. The company bought the best seats in the top shopping arcades around the world. Unlike H & amp; M, Zara promoted itself in a physical way-the company showed its clothes, placing stores next to luxury brands such as Prada and Gucci ” – explains David Brown.
This war changed the fashion world
As a result, the long-term rivalry between the two clothing brands led to the fact that others began to take an example from their sales model, which was supposed to exceed the expectations of customers and every now and then bombard them with completely new series, and the fast-fashion model, which both companies created together, turned into just fashion. There is no doubt that the business war between these two brands, which continues to this day, literally changed the world.
There are many more such examples in brown’s book, but these two stories prove how important it is to understand what one wants to achieve. Whether it’s the world of entertainment or fashion, the rules are the same. If you fall behind, you lose. And the longer the race goes on, the more the rules of the game change. We, the customers, profit from this.
A business book worth reaching for
David Brown in his book took to the workshop many other interesting “business Wars”: Ray Kroc vs. MacDonalds, iPhone vs. BlackBerry, IBM vs. UNIVAC or Netscape vs. Microsoft. Each of the chapters contained in this entry exhaustively answers not only the question of why some companies won against the competition, but also why their competitors lost the battle for the customer.
The stories contained in the “business wars” are exciting, while giving invaluable lessons: about determination, creativity, patience, finesse, perseverance and what makes one company eventually beat another in the market. The lessons from this reading will be useful to everyone, from freelancers to directors of international corporations. Read more in the book Business Wars Sqn publishing.