The era of conspicuous competition

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The era of conspicuous competition

Ten years ago, AmorePacific introduced a cosmetic product that never existed before in the market. It was the “cushion,” a sponge soaked with liquid sunblock and foundation, and it became a big hit for its convenience and effectiveness. Users said they were able to halve the time it took to put on makeup because the cushion replaced several products.

Its explosive popularity led other Korean and foreign competitors to follow. This June, French cosmetics maker Chanel launched its own line of cushion products, and four of the world’s biggest cosmetics companies — L’Oréal, Estee Lauder, Shisheido and LVMH — all have cushions in the market. It is now a familiar product for consumers around the world.

A corporate executive recently complained to me that it is hard these days to introduce a new service or product. It’s not easy to differentiate oneself because a new concept can be immediately copied by competitors. So I asked him what he would do if a rival company presented a service or product that caught his attention. He reluctantly admitted that if there were positive expectations for it, the company would have to make something similar. He was complaining about rivals imitating his products, but he was also doing the same.

“Be different or die!” Businessmen are obsessed with this idea, but reality also works the opposite way. While companies advocate differentiation and innovation, they are increasingly presenting similar products. The trend is more evident in highly competitive industries where companies sensitively watch rivals and imitate each another. In the end, consumers find it hard to distinguish between products. This phenomenon exists in nearly all industries, including food, communications and finance. As digital communication expands, the rate of imitation accelerates.

Companies are anxious and want to highlight the slightest difference they can offer, but consumers find everything to be more or less the same. Prof. Moon Young-me at Harvard Business School calls this “conspicuous competition.” Just like the idea of conspicuous consumption introduced by Thorstein Veblen, many companies spend time catching up with rivals and lose the original purpose of differentiation.

If a majority of companies continue to fly like migratory birds, keeping consistent distance from one another and moving at a similar speed, differentiation and innovation will be hard to attain. It might be lonely to break away from the flock, but when one looks at the world with fresh eyes, the true meaning of differentiation can be found as it had for Ikea when it began selling DIY furniture, and Heelys when it put wheels on shoes.

JoongAng Ilbo, Aug. 28, Page 34

*The author is head of the Innovation Lab at the JoongAng Ilbo.

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