This is a very revealing comment from the Discussion Board of our ongoing Tekedia Mini-MBA, a new way to co-learn. This is a comment from a former executive of one of the world’s largest athletic footwear companies on a session on MVP (minimum viable product) and product MVQ (minimum viable quality).
Permit me to add a bit of an insight. When I managed the [a global footwear] franchise in Nigeria, what I learnt about fake products was very revealing.
1. [The brand] is an aspirational brand. While the company made effort to curb fake products, they understood that the fake products allow those who otherwise could not afford the original to own the product. But this is where it gets interesting. The fake products helped to keep the visible in the market segment where it served and what happens after is that once the consumers of the fake product ascends the social ladder, they upgrade to the original brand.
2. What this implies is that even for the guy that buys the Aba shoe for 1,500 naira, once he can afford the 10,000 naira shoe most likely will go for it. So both set of shoes solve a market friction for the same customer at different times in their life. Both quality are valid as it were.*
It is amazing, and that is typical. Initially, Microsoft did not want to stop Windows pirates in China. Yes, the software piracy in China which Microsoft largely ignored provided that kept Linux out was one of the reasons China is a Microsoft nation today. As most people used the pirated Windows, everyone adopted Windows. Then over time, Linux was largely forgotten. With time, Microsoft started preaching to those users that for small fees, they could get better security and protection from malware. Already used to Windows, most customers went for that, and magically Microsoft started making money in China.
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*edited out the brand in this public domain
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As always, when it concerns humans, nothing is so dark such that it’s considered pure black, and nothing is so bright such that it’s considered pure white; in other words, they all come in different shades of grey.
The same fake products which a lot of people frown at, also serve as marketing and penetration strategy for original brands; you cannot beat that! Yes, because most people who naturally go for fake versions may never afford the original at that point, but via the ‘fake window’, the brand’s name remains impressed in their minds, for future exploitation…
That is why you do not expect a social media platform or an ecommerce platform to deploy a complex registration or payment system respectively; you are not going to attract many people, if you do so. There is a reason why some web platforms are somewhat ‘porous’, not that they can’t build a watertight platforms, but the loopholes all fit into the business model!
Before you completely dismiss or discard anything, you must first find out whether it serves other auxiliary or tangential purposes.
Nice insights.
Starbucks, a coffee chain, has a great retail app which keeps winning awards because it is cool and easy to use. Yet, Starbucks app is one of the “least” secure apps in retail. Your loyalty points can be stolen but Starbucks will replace them overnight. Starbucks can make extra $1 billion revenue for that lousy security per quarter and spend $100k to replenish stolen points. (Of course the stolen points are used in Starbucks. So, it is giving away $100k which also counts as “revenue”).
Wall Street likes the extra $1 billion, adding extra $2 billion in its market cap. It has used $100k to get $2 billion in market cap and sold a commoditized product, adding extra $1 billion in the bank. So, telling Starbucks to super-secure its app like a bank does not cut it. https://www.tekedia.com/why-starbucks-mobile-app-has-lousy-security-but-great-user-experience/
Interesting take. Yes, piracy is wrong but it equally keep products visible therefore, it’s condoned for lesser evil benefits.
In the mining sector on the other hands, inferior or compromised product quality can lead to economic ruin.