Tuesday, August 6, 2013

Competition and the Hammacher-Schlemer Promise

Hammacher Schlemer, catalog seller of gadgets and gizmos, claims to be the “oldest continuously published catalog in the United States”.

But if you look at the catalog, none of the items in the catalog is billed as the “oldest” or the “first.”  Reason?  That’s not a valid competitive differentiation.

If you tell me your company was the first to make widgets, you get points for innovation, perhaps.  If you tell me you are the oldest widget maker, I guess you get points for doing something right, although sheer longevity is not an indication of that necessarily (think of the Postal Service).

Every item in the H-S catalog is either the best or the only in its category.

And that does make for competitive differentiation.  The only other superlative that differentiates would be “cheapest”.

I have challenged some of the companies Valhalla Partners – my firm – invests in to come up with a “Hammacher Schlemer” promise of their own:

We are the <best-or-only> <maker> who makes <widgets> for <benefit>.

Some examples:

  • We are the best social network for staying in touch with your friends (Facebook?)
  • We are the only web retail site with all the books in the world (Amazon?)
  • We are the best word processor for making sure your doc will be readable by someone you send it to (Microsoft Word?)

There are some finer points here.

First of all, an “only” promise is significantly better, but harder, than a “best” promise.  “Best” is debatable.  “Only” may be false, but it’s not debatable in the same way.

Second of all, a promise is as much a challenge or an aspiration as a statement of fact.  Are there some books you can’t get on Amazon?  Undoubtedly.  Do you have a better chance of getting a book there than elsewhere on line.  I think so; that’s where I head first.

Third of all, an “Amazon-style” promise – a promise that, if you come to my site you will find all of something – is a very powerful promise.  New York Times: “all the news that fits the print”.  Visa: every merchant, not just (like Amex) some.  Etc.

When you present an investment idea – a company or a service or a charity or a new business line – your listeners will want to hear 1) a respectful treatment of your competition and 2) a Hammacher-Schlemer promise about how you’re going to get the better of them.

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