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  MAGIC, Marketing Actions Given Intelligent Competition

A good marketing plan cannot be effective if any other company can follow it.

MAGIC strategies allow the marketing plan to succeed.

Every company would like to think that they are smarter than their competition. And they hope that their competitors at least act intelligently. Sometimes, however, this is not the case. Competitors can do things that hurt everyone, including themselves. We call this "unintelligent competition."

Unintelligent competition takes place when one company takes actions that result in matching actions by other companies with little, if any, prospect of the total market expanding. This situation can result in enormous marketing costs and reduced profitability for all competitors in the market.

But when companies do act intelligently, there is a hierarchy of actions that they can take to be really smart.

Companies should:

  1. Take actions that can not be matched.
  2. Take actions that probably will not be matched.
  3. Take actions that are not readily visible.
  4. Take actions that induce gamesmanship.

Gamesmanship is not unintelligent competition. In some product categories—notably consumer packaged goods—new product introductions are invariably accompanied by a routine of advertising, cents-off coupons, end-of-aisle displays and so on. Competitors do not throw up their hands in bewilderment; rather they say, "OK, let's get in the game and protect our brand with the same things." The competitors understand the actions and see them as short term and targeted.

All MAGIC strategies are not good. For example, an action that cannot be matched is to link a trademarked brand name to a new product. This is only a good MAGIC strategy if the brand name brings something to the new product in terms of evaluative dimensions. UPS linking their brand name with relatively unknown partners to create a service for transmitting documents electronically would be both a MAGIC strategy and a good MAGIC strategy. If one important evaluative dimension is trust, then the UPS name brings this to the new product.

Speaking of trust (as an evaluative dimension), the company that sold aluminum siding under the Sears name decided that the royalties Sears received were too high. They negotiated a new agreement with the real estate firm Century 21. Sales dropped immediately. Why? Trust. Some people don't trust real estate agents and many people don't trust siding contractors. The Sears name added the element of trust. Was it worth a small savings in the royalty rate to get a larger percentage of smaller sales. Of course not.

MAGIC strategies allow a marketing plan to succeed.


Summary of the marketing logic

  • Protect the marketing plan against competition by using the strongest MAGIC strategies first.
  • Only use the weaker strategies if you have to.

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