“Now, here, you see, it takes all the running you can do, to keep in the same place.”
– Red Queen, Alice in Wonderland
A pet food company makes great products. It operates factories efficiently and maintains strong distribution. Yet, that company may lose the advantages that once set them apart as value migrates to other attributes. For pet food businesses in Latin America, recognizing how competitive edges shift should guide the development of a business for the future, Marcos Giordano said during his presentation at CIPAL in Buenos Aires on Sept. 23.
Giordano focused on the migration of value: how opportunities to build a competitive advantage shift as competitors acquire similar capabilities and consumer priorities change. A strength that helped a company succeed may remain essential without providing the differentiation needed for future growth.
His message for pet food manufacturers was to assess investments according to the advantages they could produce when fully developed, rather than assuming the capabilities behind past success will deliver the same results indefinitely.
When strengths become standard
Giordano opened with a hypothetical pet food company that already had a good product, production, distribution and a recognized brand. He asked the audience which of those capabilities they would invest in to create the market’s strongest advantage over the next five years.
He then changed the scenario: What if competitors matched that advantage after three years?
The capability would not necessarily have deteriorated. Instead, its availability across the market would reduce its ability to distinguish the business. Success encourages imitation, gradually turning a competitive advantage into a basic requirement for participation, he said.
Giordano drew on his experience in veterinary pharmaceuticals to describe how competitors can catch up in product performance, packaging, scientific support and distribution. Companies therefore need to evaluate both how much customers value a capability and how difficult it is for competitors to replicate.
“A capability can be valuable, generate results and even require investment without being the source of our next advantage,” he said.
Purchasing power does not explain every choice
For pet food businesses, understanding consumer decisions requires more than estimating household income, Giordano said. The emotional relationship with pets, access to information and the influence of professional recommendations can affect how owners allocate their resources.
“Purchasing power and the logic of choice are not the same thing,” he said.
Two people with similar incomes may choose different pet foods because they prioritize spending differently. At the same time, changes in what households can afford alter their options and expectations.
Giordano identified four considerations shaping purchasing decisions: affordability, demonstrable value, selective premiumization and proximity. He argued that a single value proposition becomes less effective when consumers’ financial circumstances and reasons for choosing products diverge. Product portfolios need to reflect those differences.
He also urged companies to examine what allows a competitor to win a purchase, extending their analysis beyond comparisons between brands or product characteristics.
Preference develops before the purchase
Sales volume shows where purchases occur, but it does not fully explain where consumers develop their preferences, Giordano said.
“We need to start looking at where preference is built,” he said.
A consumer may discover a brand digitally, seek information or recommendations elsewhere, and ultimately buy through the outlet offering the most attractive price or promotion. The transaction captures only part of that process.
For manufacturers, that distinction affects where marketing resources should go. Understanding the stages that influence a decision can help a company determine where its next investment could affect demand.
Invest for the next advantage
Giordano proposed assessing capabilities through three questions: Does the capability remain relevant to consumers and difficult to replicate? How soon could competitors acquire it? How long could it continue to provide an advantage?
A capability may keep generating economic returns after its strategic advantage has weakened, he said. Companies may still need to maintain or expand it, while recognizing that additional spending serves a different purpose from developing a new source of differentiation.
He recommended watching consumer priorities, sales channels, competitors’ actions and the capabilities becoming more widely available. Those signals can help businesses identify what to protect, what to sustain and where further investment may offer diminishing returns.
Leadership, in Giordano’s view, requires deciding which capabilities will create the next competitive advantage before the company needs them.
