Inter-Organizational Studies - Academic article review
"Social Comparison Among Competing Firms"
Authors: Kim, Kwang-Ho and Tsai, Wenpin
This is a very interesting article from the February, 2012 Strategic Management Journal. The authors extend social comparison theory to study the positive and negative effects of firms, US automakers in this case, intentionally drawing comparisons between themselves and their more successful competitors in order to boost consumer perception of the target firm. The authors labeled these positive comparisons as "self-asserted comparisons". The authors also study the effects of what they call "self-dismissed comparisons", whereby firms intentionally avoid comparing themselves to an inferior, or similarly-regarded competitor. The study found that both cases resulted in a measurable positive impact on sales for the target firm.This is an important topic, with significant implications on marketing strategy for firms trying to differentiate themselves in competitive markets. The marquee example cited in the study was Dunkin' Donuts successful campaign to position its coffee as a competitor to ultra-premium brands like Starbucks. Without changing its recipe, its ingredients or its suppliers Dunkin was able to position itself as a competitor to Starbucks by making these kind of "self-asserted comparisons" in its marketing. We've since seen other low-end sellers of coffee, McDonald's for example, utilize the same tactic.
The authors formulate and test the hypothesis that by creating comparisons with higher-prestige competitors and avoiding comparisons with lower or equal-prestige competitors a target firm can increase sales. Testing methods involved an exhaustive analysis of all automobile manufacturers in the US market for mid-size sedans during 2004. The authors examined the comparison data distributed by these manufacturers through their web sites and other marketing materials scanning for "self-asserted" and "self-denied" comparisons and measured relative sales performance of those brands being compared.
In conclusion, the authors show that a firm tends to be better off both when it compares itself to a more reputable competitor and when it does not compare itself to a less reputable competitor. As suggested by social comparison theory, this kind of image management is an important factor in inter-organizational competition.
Article Info:
"Social comparison among competing firms" Kim, Kwang-Ho and Tsai, Wenpin
Strategic Management Journal; Feb2012, Vol. 33 Issue 2, p115-136, 22p, 3 Charts, 2 Graphs
I couldn't get the article to come up from your link, but your blog was very interesting.
ReplyDeleteI see this type of marketing strategy everyday on tv, but never thought about how it could translate to better sales for the less successful competitor. I'm not a marketing major and am not well versed in lot of marketing strategies, but I think positioning your product as equal to or better than the more sucessful product, especially if you have a lower price or better service, is a brilliant way to get an edge on the competition and get your product out there for the price conscious consumers (like me).
In an interorganizational relationship, getting the competitive edge through good customer value and service will only improve sales and the bottom line for all stakeholders, and it appears that this type of marketing strategy is one good way to achieve that. By upwardly comparing itself to the more successful firm, a company creates a more positive image in the public's mind by projecting itself as being as good or better than the more successful firm. So sales increase- which is good for all of the partners in the inter-organizational relationship.
Nice post. I read about this some in a marketing class I took. I like the psychological effect of it.
ReplyDeleteI think this is an excellent strategy as long as the comparisons can be believable and the quality measures are relative to some extent. How can you really argue that Starbucks coffee is superior to Dunkin' Donuts? It really depends on the individual.
The link didn't come up for me either, but I was wondering about how Dunkin' and Starbucks played out. I get that Dunkin' used "self-asserted comparison" to Starbucks. Yet, if you follow the theory through, Starbucks should have not acted on Dunkin's marketing efforts because of "self-dismissive comparison". That would be a pretty convenient position for Dunkin' Donuts -- or any company using this tactic.
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ReplyDelete(Sorry about the above deletion, I unintentionally hit submit before I was finished) I really like the point made in the previous comment. This is a brilliant strategy, because by the logic of this theory if you compare yourself to a superior company, than that company can't really respond to your assertions because of the "self-dismissive comparison." I hadn't really noticed it in advertisements though until I thought about it after reading your blog. You see companies advertise their products as equally reputable or superior to a big name product, but you almost never see a company marketing their product against an inferior product (except politicians!). The only real example I can think of is some car insurance companies, but they never say the lesser known company by name, but call them a .com company or internet insurance company.
ReplyDeleteThat is a pretty interesting article. The psychology behind such a theory makes a lot of sense, and I could see how it would work well. I find it interesting what a little bit of pyschology can do in a marketing strategy.
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