The Herfindahl Index covered in the prior post is an excellent way of measuring competition. Sadly it involves squaring market shares. This seems too much math so in the spirit of simple metrics I’m suggesting a new measure of competitiveness; the BPI or The Bendle Panda Index. It makes Net Promoter look complex and Gigerenzer could happily certify it as “fast and frugal”.
A Fun Metric
Like the Herfindahl Index the Bendle Panda Index is merely suggestive but it is a useful, or at least fun, metric.
The BPI uses the principle that an industry’s competitiveness is inversely proportional to the effort firms expend trying to distract you from their products/service. In competitive industries the firms compare prices and service quality, things that matter to consumers (i.e. follow the marketing concept). That can be hard work. Where the market is less competitive firms often try and differentiate on less critical dimensions. Basically, if lack of competition means all firms are at roughly the same price and similar service level they must advertise something else.
Defining The Bendle Panda Index
Clever advertisers usually come up with the same answer: cute animals. The Bendle Panda Index suggests that the less competitive any industry is then the cuter the animals in the advertising. If competition is low, and creating better or cheaper offerings is hard work, then why not distract with some wonderfully cute baby mammals? To be specific the BPI is the percentage of firms using cute animals in their advertising.
BPI In Practice
Currently [written in 2013] the Canadian telecoms industry has three big players. “Known as the “big three”, the major players… [are] BCE (Bell), Rogers and Telus” (Wong and Bendle 2012). Between them the big three control over 90% of the market so I concentrate on them. Rogers have their Fido brand which, perhaps unsurprisingly, uses puppies. Telus have cycled through animals, and have currently settled on a star performer, a baby panda. Bell, the other major player, uses people in its commercials. There is nothing wrong with the people; they are the typical, inoffensively attractive, advertising stock footage actors, but they ain’t no baby pandas. So the BPI score for the Canadian telecoms market is 2/3 or 66.6%.
What should Bell do? Go with kittens? Of course not, everyone knows that kittens can’t beat pandas in a cuteness contest. Baby hedgehogs are surprisingly appealing, but maybe they don’t have quite enough to beat pandas. Otters holding hands is, of course, an excellent way to distract people from poor service quality. Finally, who doesn’t prefer diminutive elephants to an inexpensive cell phone bill. That said, my advice as a marketing professor: has Bell considered baby koalas? Okay koalas aren’t obviously connected with Canada, or telecoms, but when your competitor has pulled out the panda card you can’t respond with logic.
More on the Bendle Panda Index here.
Read: Janice Wong and Neil Bendle, (2012), Wind Mobile: Competing in the Canadian Telecoms Industry , Ivey Business School, case 9B12A061.