Planning for 2021: Part 2 – Changes in the competitor landscape

In the second part of our ‘Planning for 2021’ blog series, we explore how Covid-19 may have shifted the competitive landscape for your brand and the implications this may have when setting your marketing budget for next year.

Coronavirus has caused huge operational shifts

Across many sectors, huge operational shifts are occurring to comply with government policies and consumer expectations in response to coronavirus. Amongst other effects, this might decrease operational capacity and place extra pressure on margins, particularly for customer-facing businesses such as restaurants, airlines and entertainment venues. Some might not survive.

Some companies will emerge stronger than others

In many ways, the pandemic has unwittingly rewarded those companies which have done their homework over the last few years. Companies which invested in e-commerce and logistical operations, agile product development, data-driven decision-making, variable cost structures and key partnerships – characteristics which time and again have been ascribed to fast-growing companies across sectors – are proving most resilient in the post-Covid environment.

These companies are likely to suffer less and emerge from the crisis stronger than before since their less-prepared competitors might not be able to survive at all. Even if their competitors do survive, it’s likely they will have had to focus on liquidity and therefore may not have the funds for crucial projects in digital transformation.

Consolidation will be a key trend within industries

Small businesses with less financial and group resource to fall back on, are more likely to struggle. This will affect sectors ranging from the arts, retail, construction and real estate, to restaurants and professional services. These sectors will be significantly changed over the coming months, with some smaller companies exiting or being swallowed up by larger competitors and bigger companies increasing their dominance still further. This will create a loop of more investment in digital transformation, as relevant to each sector. For example:

• Retailers might decrease the stock they hold, invest more in e-commerce and delivery logistics and digital marketing
• Restaurants might invest in data-driven processes around sales promotions and loyalty.

Whilst speed will become even more important, the advantage of smaller players and category challengers who could typically move faster historically might be eroded by big companies’ financial resilience. To compete, small businesses may need to become even leaner and make sound strategic decisions about where to play. Diversification may become a riskier strategic approach.

Travel will change beyond recognition

Travel accommodation is a sector especially braced for surprises as the world of travel changes beyond recognition in response to coronavirus. (Download Oban’s briefing on the future of travel and tourism here.)

On the one hand, the advantage of challengers such as Airbnb might be put into question as consumers choose other options that feel safer, such as hotel chains. The ability of hotels to demonstrate enhanced cleaning routines, on the face of it, provides a competitive advantage, although it’s not hard to imagine how Airbnb could rise to this challenge and tout the safety of private spaces. Across the whole sector, sluggish demand and the uncertainty of travel plans might plague both players and ultimately give way to other holiday formats and types, such as day experiences and staycations. Travel businesses will need to reflect on these shifts and decide how to respond to them.

Summary

Whichever sector you are in, dealing with the immediate shifts in consumer behaviour is simply not enough. Marketers need to pay attention to sustainable competitive advantage and considering how your business is getting ready for a future that has fast-forwarded towards a digital consumer, next-day delivery marketing environment.

• Coronavirus has caused huge operational shifts for businesses – often placing additional pressure on margins
• Companies which invested heavily in digital transformation pre-crisis are best placed to weather the storm
• We can expect consolidation across industries, as smaller, weaker players are gobbled up and larger players entrench their dominance
• Travel is perhaps the sector especially likely to transform beyond recognition

Remember, if you’re suffering, it’s likely that so too are your competitors. You will either be worried or reassured by Maurice Saatchi’s words: “I don’t have to win. I just have to make you lose.”

If you’re planning your marketing budgets for next year and would like to know how to capitalise on international opportunities in a post-Covid environment, please get in touch.

Click here to read Part One of the ‘Planning for 2021’ series, which focuses on changes in consumer behaviour.

Sarah Jennings | CEO

Oban International is the digital marketing agency specialising in international expansion. Our LIME (Local In-Market Expert) Network provides up to date cultural input and insights from over 80 markets around the world, helping clients realise the best marketing opportunities and avoid the costliest mistakes.