Selling Power has a short article up about Hermann Simon’s, Frank Bilstein’s, and Frank Luby’s (Simon-Kucher & Partners Strategy and Marketing Consultants) new book –  Manage for Profit, Not for Market Share – Harvard Business School Press 2006 (psssssstttttt…  you boys ever think about managing for PROFITABLE MARKET SHARE?)

Their book advocates a curious strategy. Read the following as they describe their notion of peaceful competitors:

Peaceful competitors instead “build an entire strategy around preserving or increasing profit,”
say the authors. “They refuse to see themselves locked in a zero-sum
competition for market share, which fosters a ‘kill or be killed’
mentality. They would rather be different than be the ultimate
‘winner.’” In other words – and here’s the tough part for many managers
to swallow – when a competitor threatens your position by offering
lower prices for a similar product, your first move should not
automatically be to jump in to undercut him. In many cases, it is far
wiser simply to walk away.

So if an upstart competitor goes into your best account and undercuts your price you walk away? You don’t fight for the account? Sounds very Blue Ocean.

The authors miss the fact that you don’t choose your competitors or their tactics. And that your competitors and customers will have a lot to say about the effectiveness of "your strategy built around preserving or increasing profit". So while you’re out trying to find this special little niche, your competition will be in their trying to shoot your ass off. See in the life of every firm there comes a time when it is necessary to kill or be killed.

But what’s really curious about this curious strategy, coming from this well regarded strategy firm, is the opportunity for a well placed competitor to use this tactic against the SKP client. In other words, if you find out your largest competitor has retained SKP to develop their pricing strategy – wait six months (it always takes these guys six months to figure out what’s going on), then go out and begin implementing selective discounts for your competitor’s key accounts. You’ll own the market in short order and can then return the pricing back to more profitable levels once you’ve scared off the peaceful competitor. SKP will even help you do this. They publish their client list. See if any  of their clients are in your industry.

Download vSente’s Free Campaign Planner to learn more about how we help marketing managers battle larger competitors.