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bicycle_racers.jpgHow many categories of competition are there?

Roughly, two! Yes, textbooks talk about brand competition, total budget competition, substitutes, etc., but I prefer to think that there are two basic categories of competition: Direct and Indirect.

Direct competition is anyone who gets up every day with the specific, deliberate goal of taking that business you would otherwise have from the customers your efforts are targeting. Indirect competition is anything your target market could do other than do business with you!

If we are the local cable company, for example, even our monopoly on the market won’t guarantee our success. We have direct competition in the form of network television, satellite television, public television, and so forth. One could consider radio, the Internet, Netflix, and other media forms of competition as well.

There are also less-obvious, more indirect forms of competition that have to be considered when developing strategy. There are other opportunities that compete for the time and resources of the customer such as reading, social events, the climate/weather, tough economic times, superior technology, changes in societal norms/values, or anything else in which the customer could invest his or her resources. Doing nothing or just plain apathy is also a form of competition.

This problem is not unique to for-profit entities. Many very worthy causes don’t get the support they deserve simply because there are other opportunities competing for the resources of their target markets.

This begs the question, “How can we overcome these various forms of competition?” The answer is, once again, the customer! To protect ourselves from direct competitors, we have to make sure our value proposition is superior to theirs. We can accomplish this simply by targeting the best customers to match our core competencies and staying closer to our customers than anyone. Indirect competition may be a little tougher, just because it is rather hard to predict and impossible to control.  Indirect competition is often caused by a lack of interest, so the question we have to answer for our potential customers is, “Why should I care?” If we have a value proposition that truly benefits them and is worthy of their investment of time, money, or whatever, we can then go about telling a story that compels them to shift those resources our way.

This may seem like a simplified view of the competitive landscape, but by keeping the categories narrow we can avoid overlooking anything!

Your competition is anyone who raises customer expectations, because if someone else satisfies customers better than you, no matter what type of business, you suffer by comparison.”Inside The Magic Kingdom: Seven Keys to Disney’s Success

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basket.jpgAlbertson’s is bidding farewell to all its self-service checkout lanes. The move offers Albertson’s a fair amount of “attaboys” because in addition to restoring a more human touch to the checkout process, in order to offer that human touch, more humans will have to be hired, so they get to look like heroes for doing their part to create jobs. You can read more about it here.

This is a good idea for a lot of reasons, not the least of which is the fact that these self-service checkout lanes don’t really accomplish the improvements in efficiency that they originally promised. On paper it looks like a great way to save money. In practice, however, I’ve seen this move actually be counterproductive. There is ALWAYS something going wrong with these self-checkout stations (items won’t scan properly, and so forth), which then requires the frustrated customer to seek the assistance of the beleaguered employee who ends up spending about as much time fixing the problem as he or she would have spent ringing up the entire transaction in the first place under the traditional checkout process.

What I think we’ll see next is a system that bypasses the typical “checkout” system altogether. As items are placed in the cart, the bill can be tallied right then and the money collected electronically and the groceries need be handled only once. More labor could then be reallocated to serving the customers by helping them find items, keeping the store clean, loading the customers’ groceries in their cars, etc. The widespread usage of the smart phone will accelerate this process.

Cost control is not a matter of cost cutting but of cost prevention.” – Peter F. Drucker

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no_smoking_sign.jpgRegulators have ordered tobacco companies to put more serious warning labels on cigarette packages. There are several visuals tobacco companies will be allowed to choose from, but they will be required to have one on every pack of cigarettes they sell. If you haven’t seen these yet, you might want to brace yourself before you click this link. My first thought was, well, “Ick!” Frankly, I also thought they were all a little too extreme.

But the truth is, whatever my opinion is doesn’t count for much.  I’m not a smoker and am therefore not in the ads’ target audience, and whether or not this connects with its target audience is the only relevant question. As a point of full disclaimer, I should probably point out with some embarrassment that I did dip snuff for 11 years, and I sure empathize with how tough an addiction nicotine is to kick. I’ve also attended more funerals that are directly related to cigarettes than I care to recall, so anything that discourages smoking is fine by me.

Anyhow, as it turns out, although the new packaging hasn’t even hit the shelves yet, the number of inquiries to the National Stop Smoking Help Line have doubled since word of the new ads was shared in the press. It is estimated that the number of inquiries will climb dramatically again once the new cigarette packs make their way into distribution.  You can read the story here and you’ll see how the new packaging will transform the look of the shelf space curently occupied by cigarettes here.

As one of my favorite marketing authors, Sergio Zyman has said emphatically in his books, “Good marketing gets results!” I suppose we could argue that while the ultimate measure of results will be the number of smokers who are converted into non-smokers, I think a 100 percent increase in inquiries about how to go about kicking the smoking habit is most definitely a step in the right direction and something worth celebrating.

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highway.jpgSomeone once asked Willie Sutton why he robbed banks. He replied simply, “Because that’s where the money is!” So should it be with the selection of our target markets.

Today’s Wal-Mart strikes fear into the hearts of competitors worldwide, competing in the biggest, toughest markets. But they didn’t start out that way. Sam Walton began with what he called a “Go where they ain’t” strategy. His vision was to provide those who lived in small towns and rural areas the opportunity to buy department store quality merchandise at a bargain price. He knew the market was there and believed he could build a profitable business with that market even though the biggest retailers at the time laughed at the notion. By singularly focusing on building a system catering to a neglected customer group, ol’ Sam got the last laugh.

As you’re deciding which market segments to target, remember that what you want to target are the segments that have the most profit potential or that best align with your strengths, and those may not necessarily be the largest.

Why join the navy when you can be a pirate?” - Steve Jobs

 

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