The Audacity of Copying Well: The Signaling Theory of Marketing

The Audacity of Copying Well: The Signaling Theory of Marketing

Introduction:
Successful companies like Apple and Google have shown the audacity to ignore naysayers and focus on what is best for their business. However, the ultimate constraint for any company is the attention and needs of the end user. This article explores the concept of copying well and the importance of signaling in marketing.

Copying Well:
In the world of social media platforms, Instagram and Snapchat stand out. While Instagram allows users to showcase the best representation of themselves through carefully curated posts, Snapchat offers a fundamentally different experience by embracing ephemerality. By giving users the freedom to be themselves without the fear of permanence, Snapchat carved out a unique niche. It is not a direct threat to Facebook or Instagram's core value proposition of owning identity, but rather complementary in its orthogonal approach.

Differentiation and Cloning:
One common mistake made by incumbents when faced with threatening competitors is focusing on winning through features. Nokia and Microsoft's attempt to build something entirely different from the iPhone and Google's emphasis on features like Circles and Sparks in Google+ demonstrate this. However, category-defining products already get the user experience right from the beginning, making it difficult for new features to provide useful differentiation.

Leveraging Unique Factors:
While cloning a successful product is not enough, companies can leverage other factors to differentiate themselves. Google's Android, for example, copied the iPhone's user interface but offered it for free, utilizing their advertising-based business model as a leverage point. Microsoft also leveraged web standards and features like ActiveX with Internet Explorer, ultimately extinguishing the threat from Netscape.

Instagram Stories and Signaling:
Instagram's introduction of Stories can be seen as a strategic move to remove the motivation for users to try out Snapchat. Getting consumer adoption for new products is challenging, especially when it requires a network effect. However, Instagram's established user base becomes a massive accelerant once the product reaches a certain threshold of friends using it. The signaling factor of "being where your friends are" makes it difficult for Snapchat to compete.

The Signaling Theory of Marketing:
Signaling theory refers to behavior aimed at conveying something about ourselves to others, often related to status. Education can serve as a signaling tool, with prestigious degrees indicating value to potential employers. Looking busy can signal importance within an organization. In marketing, everything we do is aimed at signaling value to potential customers. Consistency in branding and messaging is perceived as authentic and real, even if it may not be entirely true.

Actionable Advice:

1. Understand the needs and desires of your target audience. Focus on what they actually want to do and how your product or service can help them achieve it.
2. Instead of trying to win through features, find unique factors that can be leveraged to differentiate your product or service.
3. Embrace the power of signaling in your marketing efforts. Consistency in branding and messaging can build trust and authenticity with your audience.

Conclusion:
Copying well and understanding the importance of signaling can be instrumental in the success of a business. By focusing on the needs of the end user, leveraging unique factors, and effectively signaling value, companies can differentiate themselves and thrive in competitive markets.