Nearly every industry faces the urge for increased price transparency and consumers’ never-ending quest for the best price. Industry disruptors have found a way to take these challenges and make them their competitive advantage. Think Airbnb, Uber, and Zipcar. They are disrupting the hotel, taxi and car rental industries and they represent the possibility of a virtually unlimited expansion of capacity and growth.
- Marriott International CEO Arne Sorenson told Wall Street that his company would add 50,000 rooms a year. Airbnb CEO Brian Chesky responded that his fast-growing firm would add that many rooms in just two weeks.
- There are about 13,000 medallion cabs in New York City, according to CNBC, yet Uber has 65,000 cars operating there, according to The New York Times
- The car rental industry has experienced flat growth recently, yet car-sharing services like Zipcar and Car2Go have doubled in size in the past five years.
The disruptors are not only providing alternatives to traditional purchases, they also are changing price points in an alarming way. For example, the price for an Uber black car from JFK to Manhattan is $85, compared to $189 for a Carey Car. An Airbnb studio apartment in New York’s Times Square can be had for $205 per night, while a room at the Marriott Marquis is $499.
So, what can companies do to counter the disruption?
For starters, they need to leverage predictive analytics and customer insights to stay ahead in today’s hyper-informed transparent economy.
Companies need to
- Predict tradeoffs consumers will make
- Embrace the granularity that mobile technology enable
- Be agile so they can respond quickly to market change.
To do this, they need to combine forecasting and pricing analytics to make real-time, targeted offers to their customers. At the same time, it is essential to enhance their brand equity which can trump any newcomers to the industry.
Implementing these strategies will give companies a means to withstand disruption and aid in increasing profits.