When the market leader creates an opening for competition

I recently came across a news report about Swiggy and Zomato facing competition from smaller players offering restaurants lower or even zero commissions, potentially translating into lower prices for customers.

It made me think about a question that has bothered me for some time: why should a market leader, after spending enormous resources creating a market and building customer habits, leave a price umbrella large enough for competitors to enter underneath?

My own experience with Gillette is a small example. I have been a die-hard user of Mach3 Sensitive for years and had very little reason to experiment with anything else. But cartridge prices have steadily moved upwards and are now around ₹200 or more depending on the pack and where you buy it.

It is not that I cannot afford it. Somewhere, the price simply started feeling too high for what I was buying, and that did something interesting.

Gillette's competitors did not persuade me to try them. Gillette's pricing did.

For the first time in years, I started looking at Bombay Shaving Company and LetsShave. Whether they satisfy me enough to switch is another question, but Gillette itself provided the nudge to search.

I see something similar happening with Swiggy, which is again my go-to food delivery platform. As the total cost of ordering has increased, I haven't abandoned Swiggy, but I order less frequently, compare alternatives more often and occasionally check whether ordering directly from the restaurant makes better sense.

Interestingly, Swiggy's response makes the story even more fascinating. It has launched Toing as a separate value-focused app, advertising prices around 30% lower. Strategically, it makes sense to defend the value segment without disturbing the economics of the core platform.

But it raises an uncomfortable question: did the economics of the original platform itself create the space that now needs defending?

Premium pricing backed by strong brand equity is perfectly legitimate. But there must be a point at which monetising loyalty starts weakening the very loyalty that made the premium possible. Once a loyal customer who was not even considering alternatives starts searching, the competitive game has already changed.

Perhaps that is one of the peculiar risks of market leadership: in trying to monetise the market you created, you may inadvertently create the opportunity for the competitor who comes after you.

#MarketingStrategy #PricingStrategy #BrandLoyalty #CompetitiveStrategy #ConsumerBehavior #Swiggy #Zomato #Gillette #BrandStrategy