There are two types of organizations: the ones that respond to market demand, and the ones that create market demand.
If you are in the business of responding to the demands of the market, your product or service is in heavy competition with other businesses similar to yours, and gaining visibility and creating strong differentiators are what will make you profitable. For example, if you are a service industry… dentists, veterinarians, mechanics, restaurants, real estate, funeral care… lawyers… the market has already adopted the idea that they will need you at some point in their journey… the question is “when who and how much.”
On the other hand, startups, nonprofits and causes, inventors, and companies can also meet demand by understanding and then filling the gaps not being addressed by existing products and services. These kinds of organizations are creating market demand by responding to the needs of the market in new and innovative ways. If this is you, your product offering has virtually no direct competition, therefore you rely on understanding the needs of the market to create a strong brand message that clearly communicates the transformation your customers will experience.
Brands that create market demand have unlimited potential for customer loyalty and are capable of creating massive impact and paradigm shifts in culture. They are the catalysts of change.
Redefining the “blue ocean” strategy
A unique opportunity arises when organizations respond to common market demand by focusing and responding to needs and offering an innovative way of solving new problems. These groups don’t just need visibility, but also a strong brand message that clearly communicates why and how their solution creates unique transformational experiences for their customers. These hybrid solutions often have strong components of mission and purpose and are heavily focused on finding and validating real solutions to problems in health, wealth, or relationships.
A great example of a hybrid creator/responder would be Lemonade Insurance. Who would believe there was room in the existing insurance market for a new insurance company? I mean, there isn’t a lot “new” in the way of what property and liability insurance companies can actually offer…
But Lemonade’s online process of signing up is simpler, faster, and cheaper than any insurance company in history, and more importantly – their mission to “transform insurance from a necessary evil into a social good” responds to the discontentment among jaded Millenials and Gen Y towards insurance nuances, by making the process fun, purpose-oriented and ultimately creating a tribe of loyal customers who would jump at the chance to leave their existing insurance company for something that feels wholesome and good. Insurance is certainly a high-demand industry, but Lemonade – by finding and filling a need that nobody else was – virtually has zero competition.
Three steps to identifying the gaps in your industry to eliminate the competition
If you’ve read Chan Kim’s Blue Ocean Strategy, you will be familiar with the idea of competing outside the known market space… instead of trying to outperform rivals and capture greater market share, you are putting your focus on new, innovative solutions to problems – creating a new market share and expanding market boundaries.
McDonald’s was able to create an entirely new customer base of milkshake drinkers by understanding the needs of morning commuters. They were able to identify an entire group of bagel and donut eaters who were fair game to make the switch to the frozen treat. But how did they do it?
Identifying need gaps is not hard, it just takes a little bit of research and innovation… and it starts by understanding the real problems of real people, mapping out the available product offerings, and then finding gaps and innovating new ideas that fit into those market boundaries.
Step 1: Understand the real problems of real people
If you haven’t heard of jobs theory, it explains why customers pull certain products and services into their lives… instead of asking “who” buys my product, jobs theory defines “why” people buy a product… what job is it doing for them and how does it uniquely solve a problem for them?
McDonald’s understands job theory. After discovering that a large population of people was buying milkshakes before 8 am, they were able to dig deeper and uncover the job that milkshake was doing for them during their morning commute… not only did the milkshake bring them some satisfaction during the most boring part of their day, but it was easy to consume while driving and kept them full until they were ready to eat again. The milkshake solves a problem that coffee… donuts and bagels could not. The milkshake was solving a real problem for real people.
Selling a product vs solving a problem
There is a difference between selling a product to a specific market and selling a product to solve a problem.
Although McDonald’s was able to understand the real problems of real people, its only focus was on expanding its market to sell more of its existing product. What they did not do, was innovate to solve the root issue of commuters… in reality, drinking milkshakes every weekday morning is going to cause commuters new problems… obesity, false hunger pains, cholesterol problems… and even day to day drowsiness and hanger pains later in the day…
There is nothing wrong with maximizing your marketing share, especially if the market is ready and waiting to buy… but if you are a purpose or mission-focused organization, then your focus should also be on solving a real problem… like Ka’Chava…
Ka’Chava is “the world’s healthiest meal shake” which… essentially… solves the root issue for commuters by offering something delicious they can sip on the go and keep them satisfied until lunch, but without the side effects of a processed, sugar-based milkshake. The difference between Ka’Chava and Mcdonald’s shakes ultimately, however, is not in solving a problem, but the ideals of the person buying it – because Ka’Chava is specifically for people who consider their health vital to their quality of life.
Unlike McD’s, Ka’Chava has a tribe of health-obsessed followers who not only love their product, but Instagram and hashtag it… their customer base aligns on a belief level with the belief and why of Ka’Chava.
Step 2: Map out the competitive landscape
Your competitive landscape is a picture of all of the potential options your customer has to solve their problem – including your company, your neighboring company, and any other product type that solves that problem. It can include both competitors in and outside of your direct industry.
Getting started with mapping out your competition should start with questions like “what dragons are we slaying?” and “why are THEY doing it WRONG?” These kinds of questions will help you frame the problem you are solving in a way that reminds you why it matters – showing you the gaps you need to fill.
Jen Bailey
There are many kinds of competitors, but in general, we will look at three: direct, indirect, and vertical:
Direct competitors are those who offer the same product or service as you do… pediatric dentist vs. pediatric dentist… or insurance policy vs insurance policy… Gala apples vs Pink Lady…
But in the example of McDonald’s, the milkshake wasn’t competing with milkshake… it was competing with donuts and bagels… or indirect competition…
Vertical competition is products or services that may complement each other but may compete for the same monies. For example, in B2B, marketing and sales often compete for the same dollars. If your goal is new customers, there are solutions offered by both marketing and sales companies to get to your goal.
By mapping out all potential company, product, and vertical competition in your landscape, you will be able to identify where the gaps are and how you can differentiate your company.
Step 3: Innovate market boundaries
Have you ever used Zillow’s map tool where you can draw your own boundary on a map? Yeah, this is funner. Because you are defining your own boundaries, you get to decide what and how – and ultimately why – your market needs you and your service or product.
Stephen R. Covey stated that “all things are created twice. There’s a mental or first creation, and a physical or second creation to all things” in 7 Habits of Highly Effective People. We are all creators. We are meant to create. And because of this, entrepreneurs have the ability to create paradigm shifts that impact the world.
Changing your market boundaries doesn’t just always follow the McDonald’s model of targeting an indirect customer base and beating out Dunkin Donuts by selling more milkshakes, sometimes it means innovating brand new systems and products that help solve problems in new ways, or solve new problems that aren’t being solved yet…
Even the most common industry can use innovation…
There are circumstances where entrepreneurs are so limited in their fields that they cannot follow this process of innovation. Some of the exceptions include highly regulated fields like financial planning, insurance… franchise owners, or network marketing businesses. Even some real estate practices are highly regulated by their broker agency.
Fortunately in marketing, there is always an ethical workaround to regulations. It’s really as simple as finding ways to communicate problems and solutions to your customers… and ultimately… just trying to start conversations with people.
10 Questions Every Business Should be Able to Answer about their Competition
Whether you are competing for demand, competing for need… or innovating for both… there are 10 questions that every single business and organization should be able to answer about their competition. If you can’t answer these… then schedule a quick phone call with us, and we can help set you in the right direction
- Do you respond to the market demands or respond to the needs of the market? Or both?
- What are the gaps between the needs of your customers and what your industry offers?
- What are the real problems of the people you serve?
- How are you better positioning yourself to respond to the needs of the market?
- What problem is your product/service solving?
- How are you solving that problem in a unique way?
- Who are your direct competitors?
- Who are your indirect competitors?
- Who are your vertical competitors?
- What dragons are you slaying?
About the Author
