Competition, by fostering innovation and keeping prices in check, is good for customers. But assuming that lack of competition is a nifty thing for marketers does not follow. True, if it buys a rival, a leader can cut costs, perhaps raise prices, more efficiently serve its market and, in the end, maximize profits. In a world where top marketers, agencies and media are consolidating, the theory is bigger must be better.
WWF's experience with WCW, however, raises a question about whether taking over No. 2 is always the right move. As our story noted last week, WWF became a No. 1 brand in good part by positioning itself against its rival, the WCW. "Wrestling is far more interesting when people think there's competition," a category watcher explained. Then WWF in March bought WCW from AOL Time Warner, with the plan to keep it as a separate franchise. But wrestling fans figured out there's no real rivalry when evil merges with empire.
Maybe WWF will find a creative solution; after all, it long ago learned how to get fans worked up over make-believe, choreographed wrestling matches. But in a world of consolidating brands, this gives us pause. Coke needs Pepsi. Hertz needs Avis. Time needs Newsweek. Rivalries are beneficial because they give No. 1 brands the competition they need to keep them sharp. That's good for business.