Both H&M and Hermes are “brand leaders”, but they have very differing approaches to the market. Ryanair is a leader as well – I don’t think they fit well into your model.
Your hypothesis on competitive advantage doesn’t “cover the field” – likewise your examples of buyer behaviour apply only (at best) to individual consumers. Pick any business model (here’s Porter’s competitive forces model - I picked this because it’s been around for 35 years and is still being taught): http://en.wikipedia.org/wiki/Porter_five_forces_analysis and look down the list of competitive threats. Any successful business requires a strategy that eliminates threats of superior entrants – the corollary being that your own business is superior is a sufficient set of these areas. Typical strategies can include: a) Superior customer service (which you’ve mentioned) Or any of the following which you haven’t mentioned: b) Lowest cost (achieved through economies of production scale, superior logistics, lowest acceptable quality) <- Ryanair fits here c) Convenience of location(s) – whether that be online or physical locations d) Brand awareness (achieved through superior marketing, brand differentiation etc.) e) Technical or quality superiority f) Product feature differentiation g) Control of supplies of inputs h) Ability to retaliate against new entrants i) Monopoly (whether legislative or natural) j) Many, many more. The world is full of leaders – from Ikea to Johnnie Walker to Nordstrom to Aldi to Coca Cola to mPesa. They all have differing ways that they “go to market” – it’s not just “customer service” that defines the leaders. Cheers Ken From: [email protected] [mailto:[email protected]] On Behalf Of Kurt Buff Sent: Thursday, 24 April 2014 7:58 AM To: [email protected] Subject: Re: [NTSysADM] OT: Corporate Support of Open-Source projects Service incident, illustrative #1: I did one of my major Saturday shopping days there last year.I rolled the cart back into the store after unloading and drove home. I realized at home that I had left the pack of Fresca that my wife wanted in the bottom of the cart. I returned the next day while getting some things that were not on the list and mentioned it to the checker, to whom I nearly always go. She said just to grab one from the shelf, and not to worry about it. Service incident, illustrative #2: Several times I've special ordered cuts of meat that weren't available in the coolers (usually English style beef short ribs). Several times, they've been able to accommodate me within 1/2 hour, but if not by then, usually in the next day or two. The only other place I've found with service at the meat counter anywhere near that good locally is QFC. As for products, they have cheese, olives, beer and wine selections that I don't see anywhere out of specialty stores. It's a smaller local store, but it's bigger sibling a few miles further down the road has outstanding bread, cheese, meat and seafood departments. All told the chain has 6 or 8 stores throughout the area, and each one that I've visited has provided me with the same level of service. Other things: They've performed product searches for me several times when out of stock. Most times it's because the product has been discontinued, but they're always willing. The staff there are long-term. My favorites throughout the store have been there for years - most of them more than 5, and closer to 10. Kurt On Tue, Apr 22, 2014 at 7:28 AM, Jonathan Link <[email protected]<mailto:[email protected]>> wrote: You haven't even described the service that they provide, merely that they have different products than the corporate chain stores. So, the only thing that we can evaluate that store on, is that you say they have good customer service and they have a good selection of products that the large corporate chain store has. So, since we have no description of what their customer service entails, it's a stretch to say that customer service wins. It may very will be that their different product selection is enough to win. It may boil down to a lot of things that make that store win. However, that store likely doesn't scale nationally now, does it? If it did, there would be more of them, right? On Tue, Apr 22, 2014 at 10:11 AM, Kurt Buff <[email protected]<mailto:[email protected]>> wrote: True, but as I stated, they also have customer service, and I wouldn't shop there without it. They are genuinely nice folks who routinely make me happy to have shopped there. Kurt On Tue, Apr 22, 2014 at 6:06 AM, Jonathan Link <[email protected]<mailto:[email protected]>> wrote: Product selection is not customer service, per se. Understanding one's market, making a niche market is not a function of customer service, it's good business. Customer service would be like loading your car, assisting you down the aisles, picking your order on your behalf, and/or delivery to your home. It may be that they survey their customers extensively to see what they want to buy, but that's not customer service. On Mon, Apr 21, 2014 at 11:48 PM, Kurt Buff <[email protected]<mailto:[email protected]>> wrote: No, not all category leaders are good at customer service. As MBS has pointed out, those who have monopoly grants from the government often prosper without customer service. Those who offer retail Internet connectivity (often WISPs), have customer service as a differentiator - sometimes it's their only differentiator, because they're shut out by law from string cable/fiber, and can only occupy a small niche, usually well outside of a metropolitan market. As well, I'm fairly sure not all companies with good customer service are category leaders, though I think that's more often true in smaller markets - but if I were to run across such a company, I'd probably prefer to buy their stock, and would definitely give them my custom. However, in most free(ish) markets, category leaders are often, though not always, very good at customer service. It probably depends a lot on the market in question. Take groceries, for example. My wife and I don't shop at the large corporate chain stores that are local to me (Albertsons, QFC, Safeway, etc.). We shop at a smaller locally owned store, where they have very good service, and a really good selection - not just the basics, but nice stuff that it's hard to find at the large chains that focus on the lowest price at the cost of service and selection. Their prices where I shop are usually within a percent of the large stores. For me (and obviously a fair number of other people, as the store is doing well), customer service wins. Kurt On Mon, Apr 21, 2014 at 3:20 PM, Andrew S. Baker <[email protected]<mailto:[email protected]>> wrote: So, only the category leaders (and those vying to be category leaders) offer customer service? Are there any category leaders that *don't* offer customer service (or anything approaching real customer service), while others in their category do? ASB http://XeeMe.com/AndrewBaker<http://xeeme.com/AndrewBaker> Providing Virtual CIO Services (IT Operations & Information Security) for the SMB market… On Mon, Apr 21, 2014 at 10:07 AM, Kurt Buff <[email protected]<mailto:[email protected]>> wrote: On Mon, Apr 21, 2014 at 5:56 AM, Steven M. Caesare <[email protected]<mailto:[email protected]>> wrote: >> Re: Companies' incentives: That's not universally true. I refer you to >> companies that have as at least some of their core operating principles the >> ideas of customer service - > > That's an ends to a means. That customer service exists to promote goodwill > with regard to the customer buying products the sell, > > The litmus test for these: > > Cold the company conceivably exist by eliminating the "extra mile" customer > service? Yes. Could they existin by eliminating product sales? No. Hrm. I don't think that's the right yardstick. I believe the question should be: Would these companies be category leaders if they didn't have such good customer service? And I believe the answer is no. Kurt
