5 ms·

That example has no relation at all to the topic. You seem to think that they are mutually exclusive or that "only" (in the part you have quoted) refers to some

That example has no relation at all to the topic. You seem to think that they are mutually exclusive or that "only" (in the part you have quoted) refers to something it does not. Just read what I said again. It is reality, I worked in equity research specializing in consumer products so am reasonably familiar with the space. Consumers just see the product, but the economics are about a lot more. The actual product is but one area of competition (as I explained, just anecdotally product-focused consumer companies are the best kind of shorts because they will almost always saturate their market and be unable to build an area of solid competitive advantage...because product doesn't really matter). I suspect you will have a problem comprehending this again, so to be clear: this does not mean that companies do not compete on product. It just means that product is often not the predominant factor. I am not sure what you are saying but there is less competition in FMCG than QSR. Distribution consolidated heavily, and FMCGs have consolidated heavily too because the game is largely about expanding SKUs on existing distributor relationships (the economic model is actually very similar to Google, if you have a distribution network then it improves economics to add SKUs...this has been key for PEP) and advertising spend. If you look at QSR, a lot of the product innovation that you see is superficial because of the limits of the operating model. Most of the "product innovation" is competition on advertising, there is real competition here (unlike with FMCG where ad spend is often defensive) because of consumer behaviour/the product consumption cycle (if you have ever been outside the US, you will realise that advertising on US TV is extremely unusual in this regard). And property has definitely become more important over the past decade (the growing chains are ones that have grown into the demographic shifts of the past ten years, chains with locations in legacy areas, i.e. malls, that are in decline have suffered). Again, there is no competition at the margin. The world doesn't work that way. If MCD remove sesame seeds from their bun, there is not going to be a new entrant with more seeds. Maybe they add more seeds, maybe they add more sauce but that doesn't change that if they removed seeds to make numbers (which has happened before), there is very little risk to their competitive position. Again, the proof of this is how the world actually works, not based on some theoretical model of competition that you just thought up sitting in your bedroom.

crazygringo 3y ago
I read your comment very clearly, and you're speaking in absolutes like "nothing else matters", "only ever cut back on things like product", "no-one tries to start a new mayonnaise company". And these absolutes simply aren't true. And sure nobody starts a mayo company but Hellman's is absolutely competing in the same product category with relatively newer entrants such as e.g. Amazon Brand, or Whole Foods 365 brand, on top of other long-existing competitors. My example was directly addressing your topic -- perhaps you're the one who needs to read what I said again. Because according to you, it's inexplicable that McD's is improving their Big Mac by adding sauce. But just because you don't seem to be understanding my point, let me try one more time with another one of your examples: > If MCD remove sesame seeds from their bun, there is not going to be a new entrant with more seeds. Popeye's was winning the chicken sandwich wars, so McDonald's launched their McCrispy. Shake Shack was popularizing better-tasting burgers, so McDonald's switched from frozen to fresh made-to-order quarter pounders. Competition is alive and well. If McDonald's removed sesame seeds from all their buns tomorrow, it would be national news and they would absolutely lose sales as people switched to Burger King which would probably launch a national advertising campaign about how they've still got sesame seeds unlike a certain cheapskate competitor that seems to have forgotten what makes a burger complete. A lot of our popular consumer products and foods have reached a kind of "steady state" because they're what people like at the right price point and there isn't much innovation to be had on a yearly basis. There isn't a tastier version of Coca-Cola left to be made. But you're interpreting this as "no competition at the margin" which is completely false. The steady state is maintained because of competition. The moment a company cuts quality to deliver something consumers don't want, the competition will eat them alive (remember New Coke?). And believe me, I've worked at major corporations, not that it matters though. Please don't throw around insults like someone sitting in their bedroom, it's not for HN. But perhaps you have more of an internal corporate view and are missing the broader economic fundamentals here because of that?
- skippyboxedhero 3y ago
  I am not speaking in absolutes. I typed out specifically a section just for you to tell you that I am not speaking in absolutes. As I said, the reason you think this is because you didn't read what I am saying carefully enough. I won't bother replying or reading this for obvious reasons. Good luck.

crazygringo 3y ago

I read your comment very clearly, and you're speaking in absolutes like "nothing else matters", "only ever cut back on things like product", "no-one tries to start a new mayonnaise company". And these absolutes simply aren't true. And sure nobody starts a mayo company but Hellman's is absolutely competing in the same product category with relatively newer entrants such as e.g. Amazon Brand, or Whole Foods 365 brand, on top of other long-existing competitors. My example was directly addressing your topic -- perhaps you're the one who needs to read what I said again. Because according to you, it's inexplicable that McD's is improving their Big Mac by adding sauce. But just because you don't seem to be understanding my point, let me try one more time with another one of your examples: > If MCD remove sesame seeds from their bun, there is not going to be a new entrant with more seeds. Popeye's was winning the chicken sandwich wars, so McDonald's launched their McCrispy. Shake Shack was popularizing better-tasting burgers, so McDonald's switched from frozen to fresh made-to-order quarter pounders. Competition is alive and well. If McDonald's removed sesame seeds from all their buns tomorrow, it would be national news and they would absolutely lose sales as people switched to Burger King which would probably launch a national advertising campaign about how they've still got sesame seeds unlike a certain cheapskate competitor that seems to have forgotten what makes a burger complete. A lot of our popular consumer products and foods have reached a kind of "steady state" because they're what people like at the right price point and there isn't much innovation to be had on a yearly basis. There isn't a tastier version of Coca-Cola left to be made. But you're interpreting this as "no competition at the margin" which is completely false. The steady state is maintained because of competition. The moment a company cuts quality to deliver something consumers don't want, the competition will eat them alive (remember New Coke?). And believe me, I've worked at major corporations, not that it matters though. Please don't throw around insults like someone sitting in their bedroom, it's not for HN. But perhaps you have more of an internal corporate view and are missing the broader economic fundamentals here because of that?

skippyboxedhero 3y ago
I am not speaking in absolutes. I typed out specifically a section just for you to tell you that I am not speaking in absolutes. As I said, the reason you think this is because you didn't read what I am saying carefully enough. I won't bother replying or reading this for obvious reasons. Good luck.