Your business’s competitors extend well past people that have similar products

I’m likely to stick my neck out here and make a bold statement: Most entrepreneurs and small-business owners look at their competition drastically wrong.

Duck!

That’s because they’re looking at their competition through the lens of products only. They take into account the functional attributes that their businesses offer, plus they study and follow other businesses offering those same attributes. They hyper-focus on beating those businesses on price, service or promotion.

That’s much too shortsighted.

Your Value Soars When You Separate From the Herd

Sure, following your direct competition is a required evil in managing your business. You will need to keep track, on a continual basis, of your direct competition and all their activity. You will need to remain competitive with those businesses which have the opportunity to easily replicate your functional benefits.

But in the event that you actually want to defend and build your business, you then also need to think similar to a brand, and you must take a peek beyond just your products and study everything that competes together with your brand. You will need to consider all the competition that may devote some time, attention, and money from your own market.

That’s often far beyond how you compete on something level.

There’s a fitness that I teach in my own NY University class that helps bring the number of competition I am referencing alive. I call it the “Concentric Circles of Competition.”

The exercise is not at all hard, however the visualization of your rivals is incredibly insightful in analyzing your business.

In the inner most circle, simply list your closest competition: the merchandise that will be the most similar and provide the same functional benefits. They are your top-of-mind competitors you face daily.

Within the next circle out, list your competition that is perhaps just a little less direct, but nonetheless a threat to your product’s success.

Continue, layer by layer, listing competitors that are less and less direct. Once you get passed the first handful of circles, your rivals becomes more about your brand and about the emotional benefits you offer instead of just your products.

By enough time you are outlining the most indirect competition in the outer most circle, these lenders are usually fighting against your brand, challenging what it means. You are competing with them on an emotional level, often with little bearing to the merchandise features.

Let’s check out a good example. We will continue with the mega-brand Starbucks that we’ve been using in this series to illustrate the idea about competition.

In the inner most circle for Starbucks, you’ll probably list Dunkin’ Donuts, Tim Hortons, Peets and any other big national/regional restaurant chain. They are the most direct competitors to Starbucks, because they provide similar products in an exceedingly similar manner. The functional benefits are largely interchangeable, although they clearly make an effort to differentiate themselves.

3 Reasons to Be thankful for Tough Competitors

Within the next circle out, you’ll likely list junk food chains such as for example McDonald’s and convenience stores such as for example 7-Eleven as Starbucks’ next most direct competitors. Based on the location, you could also include local delis in this sphere of competition. They are all places where you are able to grab a quick sit down elsewhere each morning, or anytime during the day, exactly like at Starbucks. Of course, in these locations, the knowledge is fairly different, which factors in to the consumer’s decision.

Within the next circle out, Starbucks must think just a little harder about its competition. I’d likely list the brands of coffee that you could make in the home. Brewing a sit down elsewhere at home is obviously a competitive threat to Starbucks, but at this time it’s an emotional decision just as much as this is a functional one, and the brand must fight to prove its value. Individuals are still getting their coffee and caffeine (product), however the branded experience is a much bigger factor.

May be the Starbucks experience worth enough time of stopping right into a location and worth the bigger price? That’s a brand decision around something one.

Within the next circle out, Starbucks would need to consider other factors that contend with their consumers’ time, attention and money, such as for example investing in a magazine instead a sit down elsewhere, picking right up a breakfast bar or saving enough time and addressing work early to catch through to emails instead of waiting online in a store. Although it may seem just like a stretch, these factors do contend with stopping at Starbucks to seize a sit down elsewhere. And this is where in fact the merits of the brand help sway visitors to make an effort, spend the amount of money and swing by a Starbucks on the way to work. Or skip it, keep carefully the change and grab a cup at the job.

The last circle out gets a lot more vague, but continues to be incredibly valid as a competitive threat, maybe even more so. That’s where you see Starbucks suffering from greater societal trends such as for example caffeine consumption, financial worries and saving rates and even fair trade practices that could make a consumer choose one brand over another.

These issues in the outer most circle certainly affect Starbucks sales, and may impact the perception of the brand immensely.

If Starbucks only concentrated on the competitors in the most inner circle, then it might be missing the much larger threat to its business from consumer behaviors around their morning routines and attitudes about where and how they spend their money.

You don’t have to become a mega-brand to check out your competition this way.

Draw some concentric circles and map out your direct and indirect competition. I’m betting you’ll see that the threats to your brand are much larger than those to your products, nevertheless, you might not have ever considered it that way before. This implies your action plans will be very different consequently, as well as perhaps more impactful.