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China Is Learning
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We were startled to note that China is quickly picking up on repositioning as a strategy. It s a story about plum juice, which isn t a juice but a kind of herbal tea. There is no proper English name for it, and it is a drink with more than a 300-year history in Beijing. There is a big brand called Kang Shi Fu and a smaller competitor called Jiu Long Zhai. The big brand has about two-thirds of the market and costs considerably
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REPOSITIONING THE COMPETITION
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less. Jiu Long Zhai plum juice is 40 percent higher in price. It looks like a case for repositioning. The reason that the big brand costs less is that it cuts a lot of corners in its recipe by using a lot of synthetics. (Sound familiar ) The smaller, more expensive juice is an all-natural product. So the obvious repositioning story is to hang unnatural on its big competitor as a setup to tell about Jiu Long Zhai s all-natural positive. Here s how the story was told, and it starts by admitting a negative, its high price, to get a positive of all natural.
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What we don t do is why Jiu Long Zhai costs more. We do not mix with malic acid, caramel and edible flavor. We keep things natural. Jiu Long Zhai. Because doing things the natural way is the right way.
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Uh, oh. China is pretty good at making things cheap. Wait until it gets pretty good at marketing, as it will then be a force. It looks as if the Chinese are learning fast.
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CHAPTER FOUR
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CHANGE HAPPENS; EVOLUTION IS REALITY
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After the rise of competition in recent decades, the acceleration of change is the next big problem that has made business life more difficult. And what s driving this change is technology. No one has presented all this better than Clayton Christensen in his book The Innovator s Dilemma. I would urge everyone who hasn t read it to get a copy. Even just reading the foreword is worth the money. Christensen has coined the concept of disruptive technology as the enemy of established technology and the businesses it supports. Just to give you a sense of what is driving change, Table 4.1 gives some examples borrowed from the book. It s pretty scary.
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CHANGE HAPPENS; EVOLUTION IS REALITY
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REpositioning
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CHANGE HAPPENS; EVOLUTION IS REALITY
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Evolution Is Critical
Consider the carnage in the computer industry. IBM dominated the mainframe market but missed by years the emergence of minicomputers, which were technologically much simpler than mainframes. Digital Equipment Corporation created the minicomputer market and was joined by a set of other companies: Data General, Prime, Wang, Hewlett-Packard, and Nixdorf. But each of these companies, in turn, missed the desktop personal computer market. That was left to Apple,
REpositioning
Commodore, Tandy, and IBM s stand-alone PC division. But of all those big, once-successful companies, only three are still with us: IBM, Hewlett-Packard, and Apple. The reason: they evolved IBM into integrated computing, Hewlett-Packard into laser printing and PCs, and Apple into the Mac, iPod, and iPhone.
Real Mail vs. E-Mail
Nothing dramatizes the problem of technological change more than the current dilemma facing Pitney Bowes, the king of the real mail market. In 1901, Arthur H. Pitney patented his first postage stamp device. Those mailing machines, which were a big deal many years ago, have been in a steady decline as the world has shifted more and more to e-mail. Why mail it when you can BlackBerry it No handling. No stamps. Instant delivery. Now that s a disruptive technology. This sure is a case for repositioning. And what to do is obvious. First of all, the company should recognize that the Pitney Bowes brand is riding into the sunset. How long a ride it will have is uncertain. But the money that the remaining machines earn should be invested in a new horse or brand to ride. Not feeding a brand that s been around for more than 100 years is never easy for any organization. But all that history isn t going to help. It s
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