Strategy

The common belief is that in the case of perfect competition (“commoditized goods”), buyers will always buy the lowest priced item, and this will dwindle down profits to practically nothing, and that’s why it’s called red ocean in the first place. While this is true in general, there is at least one notable exception to it. Consider the example of toothpaste, in the US, a toothpaste is ~1-2$ a piece. Are buyers really going to buy a white Colgate for 10¢ lower price over a red Colgate? Most would just stick to whatever they are used to. And that’s where lies the real strategy if the good’s price is an tiny fraction of the budget, it might never get optimized on.

All consumer internet products are either about consumption, production or both. A blog site is primarily about consumption. A photo transforming app is primarily about production. Social networks are consumption heavy. Good Messaging apps are symmetric. And a grievance collection product like BBB is production heavy. Building aggregation on top of similar products is a well-known strategy. The hard realization to note is that it can succeed only in very specific scenarios. Look at all the successful aggregation products, travel booking sites, news aggregators, RSS readers, discount coupon aggregators. As opposed to that, attempts to write an email aggregator, a social media aggregator etc. have not been as successful. And that’s the underlying theme, aggregator works well for consumption only interfaces where the product is sourced from many sources (more the better) and is standardized in the eyes of the consumer. They have limited success almost everywhere else. And this just doesn’t apply to software products. Microsoft tried and failed to have their own hardware stores since their offerings were similar and a subset of BestBuy whereas Apple succeeded in the same strategy despite the naysayers.

The Art of War is considered one of the classic books on military strategy. Due to the recent resurgence of China as an economic superpower, the book has garnered interest from non-Chinese who are curious to know more about its strategy.