Steve has a successful hotdog stand. Very successful, as a matter of fact. His stand sells over 106,000 hotdogs a day worldwide. These are simple hotdogs. They look and taste great, and offer all the essentials as far as hotdogs go - bun, ketchup, mustard, even sauerkraut and onions if you’d like. And they come in several sizes to suit your hunger. Steve is expecting to sell close to 20 million hotdogs in the Holiday quarter alone, because it is the time of year that family and friends get together and buy hotdogs for each other in a beautiful display of community.
Now, just when Steve is sitting pretty and reportedly enjoying sugar-plum fairy thoughts of extending his hotdog reign even further in the New Year by teaming up with wireless carriers like T-Mobile and Cingular, a challenger emerges.
This upstart isn’t exactly a New Kid on the Block, either. Bill, as our challenger is known, has a mega-successful hamburger business that puts Steve’s small beef operation to shame (at least when it comes to worldwide sales figures and market share), but his business has recently been plagued by the E-Coli bacteria and Mad Cow, and consumer trust in his brand has diminished. Bill hasn’t been too successful in the hotdog realm so far, but sees Steve’s continued dominance in this area to be a threat and wants to take a bite out of the very lucrative pie Steve has more-or-less created from scratch.
Seeing the holiday season approaching, Bill introduces his new product. It is a single hot-dog, equal in price and size to Steve's mid-sized frank, and includes all the requisite fixings. The wow factor - the thing that Bill hopes will push his dogs over the top - is a simple sharing feature. All customers of his hot dogs will be able to share their hotdogs with others who also have a Bill Dog. People are impressed with this innovation, simple as it may be, but in practice it fails to impress because there is just not a large enough customer pool to sustain it. It is simply too difficult to find someone with which to share. And even harder to find another individual with any sort of “taste,” after all. Further, it nearly goes without saying that the lack of a lower-priced, cocktail-sized frank (by far Steve's best selling dog) really hurts Bill’s chances. Given the commanding lead Steve has in this market, it is a real uphill battle for Bill, especially given the limits on the single innovation he brings to the field.
What, after all, could Bill do if Steve decided to add the sharing feature to his line of wieners? With the market penetration Steve currently has (and imagine after the holidays!) hardly a day goes by when one doesn’t see a dozen or more people on the street holding their Steve Dogs and bouncing along happily.
In the end, it seems as though Bill has made another misstep in his competition with Steve by introducing a new product and entering a new industry at a time when he might have been better off focusing on improving his other offerings and reclaiming his good name in the hamburger world.
How will this story end? Only time will tell.
What are your thoughts?
