Category: Strategy

For a long time we have been shopping only offline, in „traditional“ retail stores. With the likes of Amazon.com and eBay people started the perks of online shopping. However, traditional retail is far from dead. Actually, traditional retail makes up about  92 percent of total retail sales. There are several reasons to that. Besides infrastructural reasons (e.g. bad logistic for home-delivery) the biggest reason is  the physical presence of objects. In fact, when asked why they do not shop online, around 30% of respondents in the UK said that they need to see the physical object first. Buying known products is different from buying innovations Studies about e-commerce attractiveness falsely assume that customers buy known objects and innovations in the same way. However, this is not true. Take you back to the 18th century an imagine there were only e-commerce shops and no traditional retailers. You hear about a new invention that cleans your clothes without your help called „washing machine“ . How willingly would you spend, let’s say $500, on an unknown product that „automagically“ cleans your cloths? If you are not an innovator or early adopter you probably would be very skeptical. What you would do is wait for a friend or colleague to

When a company recalls a product, it makes sense to assume that competitors can gain market share. However, a recent study published in the Harvard Business Review’s November 2106 issue suggests otherwise. Product recalls harm you and your local competitors The study refers to what is called perverse spillover: Here, one brand’s recall creates consumer concerns about the recalling brand as well about competitors of the same origin, but boosts the business of foreign competitors. According to the study, this is especially significant for highly dominant brands or models. For instance, if Toyota’s top-selling Corolla were to be recalled it would have a much stronger spillover on Japanese competitors than the recall of a less popular model of less popular brand like the Nissan Sentra. How do deal with product recalls The study also suggested tactics for companies faced with a recall: Recalling firms should avoid apologies: This would only increase awareness of the incident. Local competitors should avoid action: They should not try to take advantage of the situation as it would lead to increased visibility and reinforce the spillover effect. Foreign competitors should embrace action: They, however, should try to take advantage of the situation: For them it makes