Saturday, July 11, 2015

Data wars - The new Competitive Strategy?

Talk about iphone's market share, netflix's popularity, Facebook owning the "social graph", Google's monopoly - all have created a value for customers that no competitor could replicate or offer. Competitive advantage through head-start, uniqueness, loyal customer base, skilled talent or strong data analysis has been a part of winning strategies for almost all big players in any industry. Cola-Wars that have existed for more than decades now is a testimony of how far companies go to get an unfair advantage. McKinsey's article and What happens next stresses upon the change in strategies organisations are adopting considering the new global market, disruptive technologies.
These disruptive technologies has made information a critical part of strategic plans. Netflix's strategy of a strong recommendation engine that uses the customer's information and history has given it a competitive edge. The huge amount of data that Google owns gives companies like MakeMyTrip an opportunity to collaborate with Google (buy customer search history) to send relevant offers. Where aggressive marketing and sales, campaigns and offers were enough to entice the customers (As seen in cola wars), the game to win over customers is changing rapidly. 
Casinos is a good example where customer information is aggressively analyzed to give promotions, send real-time offers - if a repeat customer is in the casino all the previous information is retrieved and depending upon the type of customer an offer is given. Harra's Casino, one of the earliest to venture into the gaming industry then into casino gambling has come come a long way from its inception in 1935. In an industry of low entry barrier, competitive strategies of Harra started by expanding to different states of U.S, dealt with competition from online gambling and sought strategies to maintain a loyal customer base. They decentralised the organisational structure to make it easier for the clients. It allowed clients to register once and then a common database would be used to get their data from whichever casino of Harra they went to. They focused on customer satisfaction, relied on customer feedback and formulated strategies based on the data collected from cameras, patterns around the gaming slots, repeat history, customer's  previous wins and loses.
Retailers are using customer behaviour to analyse the trends and patterns. Gaining only 1% competitive advantage can make survival possible. Coles in some places uses beacons (small chips that send notification to phone app) to track consumer behaviour. These patterns and co-relations are used to create strategies ( should coke get more shelf space or getorade). Digital disruption has created a battle ground where data is analysed to gain competitive advantage even if it is 1%. 
Advantage in any fight is necessary to win. It is interesting to see how strategies to gain this has evolved over the years.

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