A couple of days ago there was a piece on the BusinessInsider about ‘How To Recognize Your Competition‘. The article is from a VC perspective on start-up founders not understanding their market, but I think the advice is sound for any business. What stood out the most for me was this quote:
“One thing to always keep in mind when looking at your market and analyzing it for competition is to think of your user. Be it a consumer internet site or some sort of software. Ask yourself how your user will put your product or service to work. All too often, inexperienced founders forget to think about alternative types of competitors.”
It’s easy to put the blinders on and just see who is in front of you. For example, Starbucks main competitor is Dunkin’ Donuts, but fast food giant McDonalds has been gaining market share with their McCafe. Sony dominated the CD Walkman market, JVC and Panasonic were small players. Then came digital music and Sony was pushed aside by Apple and Microsoft – in fact, I didn’t even know Sony even had an MP3 player until I wrote this post!
Lets scale this down a bit to regular businesses. If you own a restaurant then your main competition would be other places to eat. Who else is your competition though? Why do people go to restaurants? Sure they go to eat, but they also go as a form of entertainment for people to celebrate or get together. You now have a lot more indirect competitors than you think!
The great thing about this exercise is that it opens the mind to possibilities and stops you from looking too internally. If coffee shops are booming, offer a higher end coffee or even exotic teas; if its a bar, then offer chocolate and wine/cheese pairings or craft beers. If you focus on business as usual, then you’ll find a deeper hole to try to climb out of once your competition has passed you. Be open to the possibilities and see how far you can take it.