The Zero-Sum Claim

Product packaging prompts passion.  Lookalike love oscillates. My post on lookalike products prompted debate, and a British Brands Group (BBG), response.   In the interests of encouraging a healthy debate, the concept of the zero-sum game in relation to my arguments merits exploration. Let's start with the rather timely subject of pie -- namely market share as pie.

Love, ideally not zero-sum

The classic economics approach to brands is that branding is a zero-sum game where brands compete to gain market share.  In this scenario, one brand's gain is exactly offset by another brand's loss. If this is true, then lookalikes quite clearly benefit to the detriment of brands. But what if it isn't a zero-sum game? My argument is that brands and lookalikes not operate in a zero-sum game, (for simplicity, "brands" means mainstream brands in the remainder of the post.)

Fundamentals of zero-sum games

The story begins, as is often the case, with pie. In a zero-sum game, a player's loss results in another player's gain, and vice-versa.  If I have a bigger slice of the pie, you must have a smaller slice.  If you eat all of the pie, I get none. The size of the pie does not change.  Most recreational games, like poker and tennis, are zero-sum.  For one player to win, another must lose.

Pumpkin pie by Evan-Amos

Games are not zero-sum when wins do not correspond exactly to loses.  The size of the pie changes. This includes anything that is mutually beneficially, mutually destructive, has no impact on one player, or the benefit/loss to one is not equal to the loss/benefit of another.   For example, parties are mutually beneficial for attendees and hosts (if yours aren’t, consult Pippa Middleton.) War may look zero-sum (one side wins, the other loses), but war itself diminishes the size of the prize.

Economics makes no moral judgments as to what constitutes fair; zero-sum games are frameworks for analysing how the pie is distributed.

Branding and market share

Economists have often construed branding as a zero-sum appropriation of market share. The battle of the brands means that one brand's gain through branding corresponds to another's loss. If Apple wins, Microsoft loses. However, emerging economic interpretation suggests branding increases markets.  Readers noted that shower gels haven't always existed.  This Kat remembers the good old days when all you had was a bar of soap (and licked road clean before breakfast).  The function of soap and shower gel is largely the same, but branding and marketing created a market for shower gels.

Clean cat

Bottled water, cigarettes, sports drinks, cough syrup, and superfoods are all, in this Kat’s view, markets largely created through branding and marketing (don’t tell a coconut-oil devotee that, or they’ll have your unanointed skin.) Historically, new personal care products for women have skilfully used branding and marketing to establish their markets.  Apple is credited with skilful use of branding. Branding plays an important function in creating and growing new markets, whether it be marketing (shower gel) or innovation (Apple) driven.

To sum up, if branding grows the pie, then branding isn’t zero-sum.  Therefore, lookalikes and brands do not operate in a zero-sum game. There are other considerations, but this post covers only zero-sum.

What does this mean for lookalikes?

If branding does not function as a zero-sum game in market share, then the gains to one brand are not exactly offset by the losses to another.  It cannot therefore be assumed that lookalikes gain market share at the loss to brands. This does not preclude the possibility that a lookalike may capture market share held by brands. However, this discussion highlights that lookalikes and brands are not necessarily in an I-win-you-lose, zero-sum game.

So there we have it, the shower-gel pie (eww.)  And now I open it to readers, what do you think?

N.B. Readers noted I previously played a bit fast and loose with the term, "private labels." To clarify, non-private-label lookalikes, and non-lookalike private labels exist. Lookalikes are often private labels, but private labels are not always lookalikes.