Competitors are changing features of the product

Symptom: The basic product is undergoing rapid evolution. Some competitors are adding benefits, while others are stripping them.

Implications for the market:

• As an industry enters hostility, competitors are under increasing pressure to preserve share and margins. A typical response is the bundling and unbundling of product features.

• Competitors are wise to try to avoid loss of share. An established customer relationship — i.e., ownership of the customer — has value beyond any economies of scale that exist in the market — even between the largest and smallest competitor.

• Emphasizing product benefits may not, however, be the best approach to gaining or retaining share. In most hostile industries, feature innovations, or changes in the product's basic capabilities, are less valuable in the pursuit of share than are improvements in product availability, quality, and ease of purchase. Innovations in those areas can be more difficult to achieve and to bring to customers' attention, and therefore they move share slowly. But their effects on share are longer lasting.