There's Always Room For Value (Part 1 - Markets and Customers)
pixabay.com
All too often, when we’re evaluating a new product or service idea, we get caught up in the notion of '“competitive dominance”. That there can only be one competitor who owns that space and, hence, competing in that market is a non-starter. Or, alternately, that there are so many players that that market has become commoditized. Either way, there’s no point playing in that space because the opportunity (for us) is gone.
Think about it. How many times have you considered a new product opportunity, or a new service to offer to a particular customer segment, only to be told (by someone else or by yourself) that “that market’s already taken”? Or that “Product X is the dominant player and that there’s no room for anyone else”? Or that “it’s a fools errand to try and tackle that space given how many other companies are already playing there”.
This type of thinking is as prevalent in intrapreneurial contexts (if you’re considering launching something within your existing company) as it is in entrepreneurial ones (though, in my view, less so in the latter because entrepreneurs tend to be, in my view, somewhat crazy).
Some of this type of thinking is necessary, of course. If we aren’t cognizant of the competition, then we won’t know (or be able to articulate) how we’re positioned and why were different. Market awareness is important. Market analysis is critical. But only to a point, and only as a means to an end.
The very existence of one (or a hundred) competitor(s) shouldn’t be the primary reason to nix your idea. (Just because Coke and Pepsi dominate the global soft drink market, doesn’t mean your idea for a specialist health-focused soft drink won’t gain traction (profitably) in your given market.)
No, the point is to use this analysis to identify what you offer and how it can and should be different from what’s already out there. It should be used to best position your brand to deliver its specific value for your target customer.
There are several (interrelated, concurrent) parameters to consider in the total analysis:
What’s your offering, for a start? How is it unique? How is it differentiated? Is what you’re selling going to be, look, feel, act different? Is that difference material enough to matter to your target? Is the uniqueness based in something tangible (economics, features, performance, look) or something more intangible (emotion, belief, feelings). Neither is right or wrong, but it does have implications for how you’ll build out the product offering as well as how you go to market.
What’s the specific sector you’re targeting? It’s important to choose one where the effort-to-value tradeoff is optimal. You might want to be the Number 1 Cola brand in the world, and I’m not going to tell you it’s impossible, but considering the (very) deep pockets of the incumbents (and their reach, and their brand awareness, and their distribution clout, etc.), it’s, at minimum, a tall order. The effort-to-value tradeoff isn’t a good one. It probably makes more sense to go after a market segment that is lesser served, that provides a unique twist to the existing category, that delivers some alternate/incremental value. All of which makes us ask:
Who is the specific customer? Which subsegment are you going after? Is there an underserved segment? A particular category of buyer that is lesser touched? Is it sizable, organized, accessible, affluent (enough) to be targeted? Does your value proposition (that thing that delivers value to the customer, that makes you unique), matter to them? Do they value that aspect of differentiation? Do enough of them value it enough? And for that matter:
Are you targeting a specific geography? Or are you planning to go global from the start? Are you in a region where you could begin to own the market? To take a prime, vocal, prominent position in your product category? The best beer in the XYZ region could be a profitable niche, if the region is one that consumes your product, is sizable, can afford it and values its identity. There are some businesses, of course, where going global from the outset is a good idea - if I aspire to be a fashion retailer/e-tailer, I don’t have to limit myself to my own geography per se. Especially given that we now have platforms that allow for reach, communications and distribution, on a global scale.
The point is, the choice to play in a specific market isn’t a binary one - it isn’t a yes or no. There are many variables at play and it’s essential to consider the full range of them as you commit to go after a specific segment (or not).
Because, at the end of the day, there’s always room for value. The key is defining that value in a way that matters to the customer, and is profitable for you.
In my next post, I’ll discuss the idea of competition in this context and how defining who you compete with, as well as how you go to market, can and should influence your decision to play in a specific space.
