Sunday, December 25, 2016

Economics #101: Strategy

Consider this: A friend scores 80% marks in an exam, and our first reaction usually is, "Ohh, I must study harder and score 85% next time."
This is relative thinking, it overlooks the fact that exam allows us to aim for *100%* marks. Even if we succeed in scoring 85% and overtaking our friend, we have still fallen short of 15% marks we could have aimed for, and potentially achieved.
There's another advantage. When we choose 100 marks as the new "rival" to compete against, our friend and we cease to become competitors and can instead become partners. We can study together, help each other to score more and in the overall process, lift both of us to a higher level than we could have achieved individually.

And this strategy is not limited to schools and exams; it can succeed in factories, offices, businesses, and every other field.
When PepsiCo entered the beverages market, they soon realized that their biggest competitor wasn't the current dominant player -- Coca Cola-- but it was something else: Drinking Water and fruit juices, which practically had a 100% 'market share'. So they targeted their marketing campaigns to replace these two drinks in the minds of people by a can of Pepsi. When Coca Cola perceived the importance of this strategy, they too soon followed suit. The result is for all to see.

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