Examining the Search Franchise at Google in Relation to the Spice Franchise at McCormick
An advantage exists for Google in the market. Actually, it's possible to claim it has a web search franchise. Those are not my words. I get it; Google has a franchise, but it has never had and will never have a stranglehold on online search. A lot of people fail to notice that Google's model has some serious flaws. It fails miserably when it comes to locating specific websites that defy easy keyword description. Because of this, web search may continue to serve a purpose in niche directories and certain "social search engines" (like StumbleUpon) for quite a while.
To be clear, I am not implying that any of these services will achieve Google's level of success. What I'm trying to say is that a need is distinct from the ways by which that need can be met. Google, despite its dominance in the search industry, will only own the means (keyword search) and not the end (finding stuff on the web). Furthermore, Google is not the undisputed leader in the search industry right now. In search, no one company has established dominance. Google dominates the search engine industry. Many changes in the search industry are also sparked by it. While McCormick (MKC) is the undisputed leader in the American spice market, it has not yet established itself as the preeminent search engine.
If you want to see how Google's franchise stacks up, look no further than McCormick's. Why am I claiming that McCormick dominates the spice market on a national level, whereas Google has not yet achieved that status in the search industry? Some causes exist.
Of all spices sold in the United States, 45 percent are McCormick products. A 12% portion of the market is occupied by its nearest rival. How the web search pie is cut could be a point of contention between us. I believe we can all agree, though, that Google's market share is below 45% and that two of its rivals have market shares above 12%. Thus, there are two significant ways in which Google's stance differs from McCormick's. The search industry is less fragmented and Google has a lower share of it compared to the spice market.
There is a flip-flopping funnel in the spice market. The top tier consists of the few producers. Three channels of distribution—retail, industry, and restaurants—feed their products. As the widening occurs at the very end of each case, the geometry of the upside-down funnel remains unchanged. Even McCormick offers a wide variety of spices, not every customer gets to choose their favorite. Through indirection he always chooses. A grocery shop, food item, or eatery is his choice. Then, he has to choose out the spices that particular grocery store has in stock or that his favorite eatery uses (or makes available).
The plot takes a slightly different turn in quest. The search process still resembles an upside-down funnel. Though it's noticeably fainter now than it was when I was younger. Users access search results through dependant websites. However, the selection of dependent sites is left to the searcher. The majority of all queries are driven by just a handful of highly reliant sites. That is in stark contrast to the spice business, where no single grocery store or restaurant chain is responsible for a significant portion of the world's spice consumption. Accordingly, the searcher plays a substantially larger role in selecting his search provider compared to the spice consumer. You may occasionally search without realizing Google is the search provider, but that is not the case at McCormick. You aren't thinking about McCormick while you eat. But a McCormick product is probably what you're using most of the time. You are eating a McCormick product every time you eat a produced food product, a bag of spices you used to cook at home, or a dish you ordered at a restaurant.
According to the investor, what's important is that the end user of McCormick's product almost never freely chooses to consume it instead of all the other items on the market. Even at the grocery store, where he doesn't have any say over the placement of individual brands' wares, he still doesn't have to make a choice. The first-time searcher using Google must make a deliberate, unrestricted decision.
The issue of infrastructure comes up last. Production and distribution are the two main components of this. In terms of expenses, McCormick's current manufacturing infrastructure is useful, but not very valuable. Someone with a lot of money could come along and copy it. Almost no one can replicate McCormick's distribution infrastructure. Its value exceeds what McCormick spent to make it. It would be difficult to dissuade McCormick's customers, who are located at the bottom of the inverted funnel, from purchasing the company's products. The distribution infrastructure provided by McCormick helps to solidify their spice franchise in the United States. It will benefit McCormick in some cases as well (as some of the company's clients are going global and are likely to continue using McCormick for their international operations).
The index and algorithm that make up Google's production infrastructure are already quite easy to replicate and will only get easier from here on out. This is a really easy market to break into. Despite Google's present dominance in the search engine market, this is by no means certain to continue indefinitely. While it may be difficult to replicate, a franchise's distribution system is typically its most valuable asset.
This begs the obvious question: in the search engine industry, would people really come if you construct it? In every given situation, will the most popular search engine always be the best? Very unlikely. That works out well for Google since it means it won't have to be the top search engine all the time. Google is a fantastic company. The value of Google is derived from its brand. People using that brand won't switch to the next big thing in search engines.
Attracting searches is the ultimate determinant of all of Google's revenues. There are two things needed to get those searches. The first step is for millions of individuals to freely and actively choose to use Google. After that, Google searches must continue for those millions of people. In the first step, the brand is crucial. Step two relies on the service. Clients who use search engines do not leave. However, we should not assume that they are as sticky. On the web, taking quick action is as simple as clicking a link. Leaving Google isn't the same as leaving Windows.
So, the brand is left. It is true that Google is the first thing that comes to mind when one thinks about search. Is the brand's value $120 billion, though? No, and Google feels the same way.
