Reviewing traditional business models for exisiting businesses, to combat with the threat of the sharing economy.
Traditional business has the option of either changing their business model towards access over ownership, like the sharing economy, or maintain their existing model of selling ownership of products. The easiest response they can have toward the sharing economy is to keep their existing business models and try and find other ways to address this threat.
A useful approach would be to develop marketing strategies that take advantage of the shortfalls of the sharing economy, and amplify the strengths of traditional business. Consider this: a taxi company and hotel employee would enjoy better corporate support, benefits and a corporate relationship than Uber and Airbnb participants receive. A traditional company provides a certain level of protection and job security for their employees, a level that companies facilitating the sharing economy cannot usually provide.
Traditional (existing) businesses can build a strategy around the lives that they support in their employment, for example:
- Provide a human face to their employees, to show that a decision not to hire them on the cheap means the company is supporting them and their families.
- Provide flexible working hours and provide better corporate support for women.
- Show that even workers in the sharing economy would want to work for them if they had a chance because the sharing economy does not provide benefits such as superannuation contributions, holiday pay or health-care like traditional businesses.
This strategy is useful because it confronts the issue of cheap labour and their lack of security that underscores how some businesses in the sharing economy operate.
The challenge with this approach is that competitors in the sharing economy rely on a host of ordinary consumers who are so scattered that such strategic shots may miss the targets. However, these strategies can still be undertaken and when properly executed can help shift consumer perception that traditional business are the true providers for families and better supporters of people’s careers.
For those competing against business-to-consumer access, another strategic option is to emphasise the importance of ownership over access. This is a difficult strategy to pull off, but if a traditional business like Myer
in Australia, Macy’s
in the US or even luxury brands like Louis Vuitton
can convince customers that owning their product is much better than occasional access through the sharing economy —social prestige, convenience, desirability, control, not sharing personal possessions with strangers—this would be a frontal attack on the core strategy of the sharing economy. If successfully executed, it could be an important affront to the core value that the sharing economy offers.
If you were starting a traditional taxi company today, how would you compete against Uber’s sharing economy model? What features do you think are most important to your customers?
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