Relationships, associations, and competition: What happens when the story changes?

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The Canadian National Master Specifications: Competition is intensifying

I’m researching a challenging Canadian story relating to shifting alliances in the specialized standardized specifications business. In some respects, the details are so arcane an outsider to the specifications community would find the whole issue to be beyond comprehension. Yet there are some incredibly important marketing and competitive challenges here.

The story is this: For the past 15 years, Construction Specifications Canada (CSC), which is the Canadian counterpart of the Construction Specifications Institute (CSI) has had a strategic alliance with Digicon Information Inc. to distribute the National Master Specifications, under license from the Canadian government’s National Research Council.

There was another competitor in this field, Ottawa-based Innovative Technology Inc., which previously enjoyed the alliance with CSC but lost it in the early part of last decade to Digicon.  (Innovative Technology then coordinated another alliance with the Royal Architectural Institute of Canada (RAIC).)

Then, for reasons that CSC’s officials have not formally explained, the association switched its alliance effective Dec. 31 to a third firm, Building Systems Design (BSD).

Digicon isn’t going away, however. It recently signed a direct licensing deal with the National Research Council and will continue to deliver the specifications through the website it perviously used with CSC, Spex.ca.

So, now, instead of two players in the master specifications distribution business in Canada, there are three.

I don’t think the market for this specialized service is about to increase by 50 per cent, so it looks like there will be a slicing of the available market share among the players. My guess is that Digicon and BSD (with CSC) divide the share formerly held by CSC/Digicon, while Innovative Technology — not part of the recent break-up, will carry on much as before. (Customers generally don’t switch providers for standardized, commodity-type products, unless there is really bad service/experience or there is a price war; something that likely won’t happen here because everyone still needs to pay for the same master license from the Canadian government.)

To me, the interesting aspect of this story relates to the powerful place that associations and strategic alliances can have in marketing specialized products and services. If you can arrange an exclusive or high-profile deal with a relevant association, you have a real business advantage. For example, while BSD certainly has an uphill battle because Digicon isn’t going away, as a business it can still break into the Canadian market much more effectively with the CSC alliance than without it.

There are also interesting questions about dependency on key relationships; and the vulnerability that happens when there is a break in these relationships. The greatest strength — a powerful branding and business-building connection — can become the biggest stress — when suddenly you lose your competitive advantage and market recognition.

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