Battle of the brands

Henry Ford once described competition as the “keen cutting edge of business”. It can motivate a company to be more productive, profitable, efficient, relevant, and moral, if only to get ahead of their rivals.

The reasons behind rivalries and feuds can vary. Some are pushing for a greater share of the market, like the brutal Cola Wars of the 1980s between Coca Cola and Pepsi. But rather like Star Trek versus Star Wars, it can all come down to being just a matter of personal taste. Others squabble for reasons of personal pride, which brings us nicely to our first classic example.

Ferrari vs Lamborghini

In terms of romantic extravagance, not many car brands have the prestige as the Italian powerhouses of Ferrari and Lamborghini, who have long been rivals in the luxury car industry. Yet it was a clash of egos between two men from Emilia-Romagna that started the rivalry between the prancing horse and the bull.

Ferruccio Lamborghini was the son of grape farmers who had a keen interest in mechanics, and had been hugely successful in repurposing military machines into tractors after World War Two. Like any self-respecting self-made Italian, Ferruccio was able to indulge his love of sports cars, buying one for each day of the week including a Ferrari 250GT. This car he enjoyed but felt too noisy and built with an inferior clutch. Using his knowledge of mechanics, Ferruccio was able to identify some suggestions for improvement, which he conveyed directly to Enzo Ferrari. This didn’t go down well with the prideful Enzo, who retorted that he wasn’t interested in receiving technical notes from a young tractor manufacturer.

Motivated by Enzo’s insult, Ferruccio went to work on designing his own car. Just four months later, in October 1963, he unveiled the Lamborghini 350 GTV. Within 15 months, Lamborghini had sold 13 cars, doing so at a loss just so he could keep his prices competitive with Ferrari. Over the years, the young upstart’s company has proved to be a formidable rival to Ferrari, showing the potential peril of dismissing an earnest critic out of hand.

L’Oréal vs. Estee Lauder

For nearly four years the cosmetics industry has seen many acquisitions of various beauty brands, mainly by two of the biggest-hitters going, L’Oréal and Estée Lauder. But what sparked this battle of one-upmanship to stay relevant in these erratic times? Well, it’s no exaggeration to say that in social media, the cosmetics industry has found its one true BFF (that’s ‘Best Friend Forever’ for those of you doing well to avoid depressing acronyms such as this one). The modern marvel of video-blogs, or ‘vlogs’, gave rise to a new means of marketing and demonstrated the commercial power that amateur connoisseurs of beauty products can have, with their hundreds of millions of views each month.

This level of exposure has lit up the eyes of industry heavyweights. After one widely seen review of a make-up product developed by Becca Cosmetics with superstar vlogger Jaclyn Hill, the item sold 25,000 units in 20 minutes. And little over a year later, Estée Lauder bought Becca Cosmetics for $200 million. This was only the latest addition to their flourishing portfolio of luxury brands, which now includes Bobbi Brown, La Mer, Clinique, Smashbox, and MAC. This move, however, was seen as a response to L’Oréal’s $1.2 billion purchase of another successful luxury makeup brand, IT Cosmetics. That had deepened the cosmetic titan’s luxury portfolio, L’Oréal Luxe, which now houses celebrated brands such as The Body Shop, Lancôme, Giorgio Armani, Yves Saint Laurent, Ralph Lauren, and Urban Decay.

The upshot of this rivalry has yet to be resolved, but it’s interesting to track the continuing impact that social media has on the behaviour of large industry sharks and their sustainable business models.

Nike vs. Reebok

In 1984, Nike was struggling. It had just posted its first quarterly loss, and even the success of Nike-wearing Carl Lewis in the Los Angeles Summer Olympics was unable to compete with Reebok’s latest big hit in women’s jogging footwear.

So, they took a gamble on a young rookie basketball player, and convinced him to endorse their product. That young man was Michael Jordan. The following year, Air Jordans went on sale for an eye-watering $65 a pair, and within two months sales had reached a stunning $70 million. Today, Air Jordans generate over $2 billion a year. It was a masterful recipe for success that was repeated with the likes of sporting greats such as Andre Agassi and Tiger Woods, and it blew the competition Reebok completely out the water. So much so, Adidas bought Reebok for almost $4 billion dollars in 2005, ending that rivalry with Nike as the decisive winner.

Want to learn about what it takes to successfully manage an elite brand? Have a look at the MA in Fashion Retail and Luxury Management online course.

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