Don’t compete at generic level

Ben Chiganze
A Bassfisherman’s Approach

LAST Thursday, I invited my friend Alfred for a fishing outing at Featherstone Farewell Dam. I had fished in that dam four times last month and I thought I had a rough idea of the good fishing spots and the rubbers which are conducive in that dam.

It was Alfred’s first outing at Featherstone Dam and as such he did not know what to expect. I have been beating Alfred in all the contests that we have competed in this year and I assumed that it was a foregone conclusion that I will always beat him in any fishing contest.

In my mind we were just going through the motions but I would eventually emerge the victor. My confidence was boosted by the fact that I had more varieties of rubbers which historically have never let me down in that dam.

What I, however, forgot to ask was is it the variety of historically performing rubbers or the quality of the present basket of rubbers that counts?

I took the first bite of the cherry when I caught a 2kg bass after a few minutes into the dam. Alfred appeared to be headed for a thorough beating.

How wrong I was, at the end of the day I was convincingly beaten by Alfred. His junebug with red spots carried the day for him.

Though I knew that at this particular time of the year, black, green and brown rubbers with red spots do well, it never crossed my mind that the blue junebug with red spots can do as well.

I always opted for junebugs with green spots.

Fight at customer-centric level not on generic level
I was competing at generic level and Alfred was competing at customer-centric level. In any industry there are what are referred to as “known” customer needs and “correct” customer packages which must not be tempered with most of the time.

These are sold as standard benefits and packages particularly for the services industry. In these types of set-ups there is rarely a real single dominant player (or a champion).

There is stagnation of ideas creativity and innovation. Their modus operandi is sometimes referred to as “business as usual”.
In most cases the industry will be at growth to maturity stage of its life-cycle. Here and there, errant players resort to undercutting prices in order to try and eat into the market share of other players but rarely is there intense competition in creativity and innovation.

Even in relatively newer industries, innovation will cease to be the major driving force when everybody else starts doing almost similar activities with market leaders having a slight advantage over their competition.

This is akin to competing at generic levels. For the purpose of this instalment I will only focus on commercial banks and short-term insurance companies.

For a long time commercial banks in Zimbabwe have been operating on a “one size fits all” philosophy. They offered almost identical products (be it savings accounts, corporate accounts, investments and credit facilities).

All of them over relied on fee income and bank charges. They all seemed to believe in the power of their extensive branch network to attract clients.

Are their customers looking for a wide branch network or for convenience? They also appeared to believe in the power of legislation to protect their market from new players than dynamic service quality.

With the exception of automated teller machines and to a small extent internet banking, there has been little innovation in the industry either because of the risk averse nature of these commercial banks or they are too content with the current status quo.

They all queue to give very few clients, mostly “favoured” companies, loans. If one of the few favoured companies collapses, four or five banks will be badly exposed yet the rest of the country is unbanked. In short, they were operating at generic level.

Before the emergence of a customer-centric organisation, the market appears guaranteed to be retained by the previous market leaders.

However, the entrance of Steward Bank has sent shivers down their spine. Within a short time Steward is now the market leader in terms of numbers of depositors (500 000) and it does not need a rocket scientist to predict that it is on its way to becoming the biggest bank in Zimbabwe.

Its blue rubber with red spots is EcoCash, which is aimed at bringing money that is outside the banking system into the formal system.

Amazingly all banks were aware that there were huge amounts of cash in people’s houses but they could not change their operating methods to extract value from these huge deposits of funds.

Short-term insurance companies in Zimbabwe can also be said to be competing at “generic level”. Surprisingly, some of the key proponents of this kind of behaviour in 1990s such as Commercial Union Assurance are no longer visible on the economic landscape worldwide.

Most short-term insurers offer identical insurance products (generic products) even though some of them boast of reinventing the industry with innovations and are daring enough to be different.

They are selling the same products they were selling since 1980 probably what has changed are the rates and excesses to the client.

Their marketing strategies are similar, taking brokers out for lunch or fishing in Kariba (in a houseboat) radio and newspaper advertising and playing golf with brokers.

They take it for granted that market agreements (as regulated by Insurance Council of Zimbabwe) are strong enough to protect them in the event that a new player comes up with innovative products.

They conveniently avoid learning from Chibuku which demonstrated that attention to quality and customer care can overcome any restrictive city by-laws which were restricting its market.

They compete on superficial grounds such as capital levels by buying assets such as buildings which are sometimes overvalued to boost their capital levels.

There is no real competition in terms of actual meeting customer’s needs which should be the major strength of any company.

Companies who fight at generic level invest very little amounts of money in research and development in order to meet the customer needs.

Most commercial banks spent the whole year whining about how the loss of fee income (from penalising the depositors) has been affect their bottom line.

Now they are busy thinking of ways to stop EcoCash from further penetrating their long preserved and reserved market.
They believe so much in regulation to protect the status quo never mind how the customer will benefit or lose out.

For the period prior to 2010 Nokia and its competitors were comfortably operating and competing by offering generic product offerings (with Nokia being the market leader).

However, the entry of Apple smartphones was a wake-up call for the industry. Now every time Apple introduces a new smartphone it raises unprecedented excitement in the market, which has never been experienced before in the industry.

The results are there to be seen by everyone else, Nokia has sold its handset division to Microsoft. If the short-term insurance industry players fail to change, a new player is bound to emerge and take over most of their business by doing what these companies are reluctant to do.