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Patterns in the evolution of product competition

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  • Christensen, Clayton

Abstract

Individual products may pass through life cycles of birth, growth, maturity and demise. But product categories and brands tend to follow cycles of evolution, rather than life cycles. The character of this evolution is determined by the cumulative changes in the attributes of individual new product models that are introduced within a given category. Recent studies of new products and services introduced in four very different industries - hydraulic excavators, disk drives, executive education and diabetes care - reveal a rather stunning regularity in how the nature or basis of competition has evolved in these industries. The article describes these patterns, and shows that the basic mechanism precipitating a shift from one basis to another is when the trajectory of improvement which product developers achieve is steeper than, and hence surpasses, the trajectory of performance improvement which customers in the market demand, or can absorb. In each of these cases, the initial basis upon which companies competed and were compared was the functionality of their product or service (hereafter called 'product'). However, technologists were able to improve the products' functionality at a faster rate than the market needed, or was able to absorb. As a result, multiple competitors 'overshot' customer needs in their mainstream market - their products improved to provide greater functionality than their customers could use. Continued differentiation along traditional measures of functionality, therefore, became competitively meaningless in each of these markets. When functionality had surpassed market need, the basis of competition, or the attributes along which companies could meaningfully claim advantage for their products over competitors, tended to shift to reliability. Measures related to the companies that manufactured and distributed them, became the meaningful metrics along which products were differentiated. The same phenomenon then occurred, however: industry technologists and managers were able to improve reliability at a faster rate than the industry was able to absorb, until multiple competing products were 'reliable enough': the trajectory of improvement in reliability had overshot what the mainstream market demanded. When this happened, reliability no longer was a competitively meaning dimension of differentiation. In each case, the focus of efforts to differentiate new products then shifted toward convenience. Customers began to favor products that had enough functionality and were reliable enough, but were more convenient to use, and were supplied and distributed by companies that were more convenient to deal with. But as companies then began focusing their innovative efforts on convenience as the new basis of competition, the same phenomenon recurred: the trajectory of improvement in convenience which product developers achieved, ultimately exceeded the convenience that the market demanded or was able to absorb. When multiple competitors offered products that were convenient enough, the basis of competition among products then shifted to price. The patterns in the evolution of competition in these industries result from the interaction of trajectories of performance improvement that technologists provided to their market, with the trajectories of performance improvement that customers demanded or could absorb. This article uses these insights to derive several propositions about when, how, and why the basis of competition can be expected to evolve.

Suggested Citation

  • Christensen, Clayton, 1997. "Patterns in the evolution of product competition," European Management Journal, Elsevier, vol. 15(2), pages 117-127, April.
  • Handle: RePEc:eee:eurman:v:15:y:1997:i:2:p:117-127
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    Cited by:

    1. Rosanna Pittiglio & Filippo Reganati, 2015. "Multinational Enterprises, Technological Intensity and Firm Survival. Evidence from Italian Manufacturing and Services Firms," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(1), pages 87-106, March.
    2. April M. Franco & MB Sarkar & Rajshree Agarwal & Raj Echambadi, 2009. "Swift and Smart: The Moderating Effects of Technological Capabilities on the Market Pioneering-Firm Survival Relationship," Management Science, INFORMS, vol. 55(11), pages 1842-1860, November.
    3. García-Villaverde, Pedro M. & Ruiz-Ortega, María J. & Parra-Requena, Gloria, 2012. "Towards a comprehensive model of entry timing in the ICT industry: Direct and indirect effects," Journal of World Business, Elsevier, vol. 47(2), pages 297-310.

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